Tuesday, May 24, 2016

What Does Retirement Mean?

I have given my last course and graded my last paper. I’ve been teaching history for 40 years and now I’m no longer employed. I’m retired. What does that mean?

It doesn’t mean lying on the couch watching the soaps. All the retired people I talk with say they seem busier than they expected. Retirement for me won’t be the end of work or a life of pure leisure, but a different kind of working life. I look forward to more reading about life on Earth, past and present. I hope to keep writing about Jacksonville and America.

My date book is nearly empty. Instead of daily appointments for classes and meetings, whole weeks are blank. I never liked schedules, and retirement offers me their absence. Retirement means getting up in the morning without a day full of activities that must be done today. I’ll have much more spontaneous control over what I do.

But many jobs don’t disappear because we get old. Dinners still have to be cooked, dishes washed, clothes cleaned, and houses maintained. The grass keeps growing, and so do the weeds for those of us who keep gardens. If one person in a household, say the wife, has been responsible for the housework, there is no such thing as retirement. Advice columns are filled with the complaints of housewives whose newly retired husbands are suddenly around all day, getting in the way.

When those of us who now are retiring were first setting up our households, those tasks were assumed to be attached to gender: men mowed the lawn, women made the meals, and so on. Those assumptions are gone. Retirement means the opportunity to reallocate all the tasks required by the modern household: shopping, paying bills, fixing leaky faucets don’t have to be determined by gender.

I should thank Uncle Sam for some of that freedom to choose how to spend each retirement day. If I want to go out for breakfast, get a cup of coffee, or buy a book to read, I’ll have enough money. Without money, there can be no retirement.

We may take the Social Security system for granted, but it is only 80 years old. Before 1935 there was no system of old age pensions for Americans. Either you saved for retirement out of your paychecks, or you had to keep working until you died.

Our most eloquent revolutionary, Thomas Paine, was a “forerunner of modern social insurance”, as the Social Security Administration calls him. In 1796, he advocated a 10% tax on the inheritance of property to create a fund which would pay a yearly pension to everyone over 50, “to enable them to live in Old Age without Wretchedness, and go decently out of the World.”

Nothing happened for decades. America’s military veterans were the first to get a pension system. Disabled veterans of the Civil War, war widows and orphans were granted a pension in 1862.

Confederate veterans were not included, partly as retribution for trying to secede, but mainly because well-off Southerners and Southern politicians, who did not need the money themselves, thought a welfare program was a dishonor to the Lost Cause.

As Americans moved off the farm and began to live longer, elderly poverty became a crisis. Those who couldn’t work starved. When the Depression struck in 1929, a national Social Security program was already standard among European nations. Americans were ready to take public responsibility to support the elderly. Part of FDR’s New Deal was a Social Security program in 1935 based on social insurance rather than “welfare”. Workers would provide for their own financial security by contributing at work and the federal government would use this revenue for the social good, in this case to support Americans who retired. Even before the federal government acted, a majority of states had enacted their own old age pension programs, but they were based on the welfare model and were inadequate. The most generous paid about $1 a day.

Many kinds of workers were excluded from the original Social Security system: agricultural laborers, domestic servants, intermittent workers. That meant that less than half of women and only one-third of African Americans were covered. Our national protection for elderly Americans has really only been fully operational for about 50 years.

The Social Security Administration has kept much better records than I have of what I have earned over my lifetime. I love seeing the table that they send me every year, showing that I earned $1126 in 1966 in my first real summer job after I graduated from high school. My earnings keep going up, but I made more than $50,000 in only one year. Over my lifetime, I and my employers paid about $55,000 each into the Social Security system. Now that I am retired, I can draw about$21,000 a year for the rest of my life, not a bad return on that investment. That puts me in the middle of the national income range, meaning it will pay for an average standard of living.

Not enough for luxury, but more than enough to avoid Wretchedness. So off I go into a new world, with Uncle Sam at my back and unknown adventure ahead of me.

Steve Hochstadt
Jacksonville IL
Published in the Jacksonville Journal-Courier, May 24, 2016

Tuesday, May 17, 2016

Let’s Not Plan to Commit War Crimes

Seventy years ago, the victorious Allies created an unprecedented legal system to deal with the criminal wartime behavior of the Nazis. Nothing like the International Military Tribunal which met in Nuremberg had ever been attempted. British and Soviet representatives argued for summary executions of Nazi leaders. They were worried about giving these men a platform to espouse their dangerous ideas and perhaps whip up public support. A trial before a panel of international judges only came about because American leaders, notably Secretary of War Henry Stimson and Presidents Roosevelt and Truman, insisted on an open public legal proceeding. Stimson argued that the “punishment of these men in a dignified manner consistent with the advance of civilization will have all the greater effect on posterity.”

In the final months of the war, Allied negotiators not only created a new kind of court, they defined the legal principles on which the Nazi government could be tried. “Crimes Against Humanity” represented a new legal category, vaguely defined as “any and all atrocities committed by the regime”.

Not new was another category of crimes, “War Crimes”, violations of the already existing international agreements about the proper conduct of war. In 1899, the major nations of the world agreed to a set of “laws and customs of war on land”. The killing of prisoners of war, the use of poisons and collective punishment were all forbidden. After the German armies used poison gas in World War I, another international agreement in Geneva in 1925 explicitly forbade chemical and biological weapons. After World War II, torture was prohibited by international laws as a violation of universal human rights. The United States agreed to all of these rules of war.

Politicians campaigning for votes often ignore laws and treaties in order to whip up potential voters and prove that they are the toughest guys around. In this presidential campaign, Donald Trump and Ted Cruz went further: they openly advocated violating these international rules of war.

In December, Ted Cruz said in a speech in Iowa: “If I am elected president, we will utterly destroy ISIS. We will carpet bomb them into oblivion. I don't know if sand can glow in the dark, but we're going to find out.” Despite criticism from both Democrats and Republicans, Cruz liked this image, and repeated his promise in the FOX News debate in January: “You claim it is tough talk to discuss carpet bombing. It is not tough talk. It is a different fundamental military strategy than what we've seen from Barack Obama.” Cruz eventually backed down by redefining carpet bombing to mean its opposite, precision bombing. But the image of annihilating the places where ISIS terrorists mingle with civilians remained as Cruz’s idea of warfare.

Donald Trump openly advocated torture of prisoners and collective punishment in the war on terror. As late as the Republican debate on March 3, he repeated his support for waterboarding and for targeting families of terrorists. “We should go for waterboarding and we should go tougher than waterboarding.” When questioned about whether American soldiers would obey such orders, he boasted, “They won't refuse. They're not going to refuse me. Believe me.”

In response to widespread condemnation of this position by foreign policy and military experts, Trump partially reversed himself the next day. He issued a statement: “I do, however, understand that the United States is bound by laws and treaties and I will not order our military or other officials to violate those laws and will seek their advice on such matters.” His spokeswoman explained, “He realized they took him literally, that's why he put out the statement.”

Perhaps the problem is that people have been taking these politicians literally, assuming that they had thought about their words and meant them. If that’s a mistake, I will admit to committing it. This is not a race for small-town mayor. Every word from presidential candidates is heard around the world.

Even in political campaigns, where saying stupid things often seems like a good idea, threatening war crimes is dumb. Cruz and Trump demonstrated the foolishness of their tough talk by nearly immediately disavowing it, claiming that they really meant something else. But their words were already spinning around the world, telling friends and enemies that they had no respect for international law, for human rights, or for anything outside of their desire to win votes.

Committing war crimes is a terrible idea. It does not frighten opponents, it inflames them, ratcheting up their motivation. War crimes are remembered for generations, tarnishing nations which commit them long after the leaders who made those decisions are gone.

Politicians who promise voters that they will commit war crimes reveal how unsuitable they are as world leaders. Their words have already tarnished respect for America among nations. Their disavowals show their lack of seriousness. Men in fancy suits who have never seen war substitute tough talk for tough decisions. They and their ignorant plans would diminish America for generations.

Steve Hochstadt
Jacksonville IL
Published in the Jacksonville Journal-Courier, May 17, 2016

Tuesday, May 10, 2016

The Republican Way of War

The Republican Party is usually perceived as stronger than Democrats on military matters. Despite the disastrous war in Iraq, American voters who worry most about defense issues continue to trust Republicans. Veterans gave Republicans a 20% edge in 2012 and 2014 voting.

Republican politicians consistently advocate higher defense spending. In this campaign, every Republican presidential candidate has supported increased military spending. Marco Rubio said in November he planned to increase defense spending by $1 trillion over 10 years. Ted Cruz advocated increasing defense spending by about 20%. Jeb Bush said, “We need to increase defense spending significantly”. Donald Trump was both more aggressive and less precise. He famously said in September 2015: “We’re going to make our military so big, so strong and so great, so powerful that we’re never going to have to use it.” In March, he told Sean Hannity that he would increase defense spending, but not by how much.

Republican voters want to hear such promises. In February, 66% of Republicans and 20% of Democrats said that the US spends too little on the military. A major difference between Democratic and Republican voters lies in their support of using overwhelming military force against the threat of terrorism. A poll in December 2015 found 72% of Republicans but only 27% of Democrats said “using military force is the best way to defeat terrorism”.

Republican lawmakers’ interest in buying expensive armaments, however, has not been combined with a willingness to support veterans when they return from combat. For Republican politicians, veterans’ benefits appear to fall into a different category, discretionary domestic spending, where they are more interested in cutting to the bone.

Republicans have a long history of opposing spending measures to help veterans once they return home. The Reagan administration consistently opposed compensating veterans who had been exposed to Agent Orange during the Vietnam War. In 1990 Senate Republicans killed a provision about Agent Orange in an omnibus veterans' health package.

In 2010, Senate Republicans opposed the Homeless Women Veterans and Homeless Veterans With Children Act, which would have increased funding for these two groups of veterans. In 2012, Senate Republicans again blocked legislation that would have helped veterans by creating a Veterans Job Corps, saying it cost too much. Mitch McConnell was open about the real reason: “We Republicans remain resolute in our commitment to deny the Democrats anything that looks like an accomplishment in an election year.”

In 2014, conservative lobbying groups, like the Heritage Foundation and the Concerned Veterans for America, a Koch-brothers funded group, argued against the Comprehensive Veterans Health and Benefits and Military Retirement Pay Restoration Act of 2014 that would have expanded medical, educational and other benefits for veterans. Although veterans’ groups overwhelmingly supported this bill, conservatives argued it would increase the number of veterans eligible for services and cost too much money. Nearly all Republican Senators voted against this bill.

Republicans use military issues as partisan hammers to beat Democrats. A recent example is the Department of Veterans Affairs Management Accountability Act of 2014, which would give the VA Secretary more power to fire poorly performing employees. The bill is useful as a dig at the Obama administration, but did nothing to help veterans.

In 2015, Senate Republicans proposed a Veterans Affairs appropriations bill in 2015 that dramatically cut President Obama’s requested funding for the Department of Veterans Affairs by over $1.2 billion. The national commander of the American Legion complained about these cuts in a letter to Mitch McConnell.

These are just a few examples among many more individual pieces of legislation targeted at improving veterans’ lives which were stopped by Republicans who claimed they cost too much. This year’s Republican presidential candidates proposed aggressive military strikes against our enemies and big increases in defense spending. Their Congressional colleagues consistently reject much less expensive plans to help veterans at home.

As long as they get the votes of Americans who care most about defense, they’ll probably keep calling that patriotism.

Steve Hochstadt
Jacksonville IL
Published in the Jacksonville Journal-Courier, May 10, 2016

Tuesday, May 3, 2016

Taxing the Poor, Sparing the Rich

Nobody likes paying taxes. I prepare my own returns with pen, paper and calculator, mainly so I can understand exactly how my tax burden is determined. Like many people, I wish the tax code were simpler.

The complications result from hundreds of individual Congressional decisions. Depending on whether you have other income, Social Security benefits could be tax free or up to 85% of them could be taxed. If you itemize deductions, you can deduct medical expenses that are more than 10% of your gross income, unless you are a senior, in which case anything over 7.5%. You can deduct business costs incurred as an employee that are more than 2% of your income.

Some parts of the tax code are so complicated that the IRS recommends not doing it yourself. If you have earned income from which payroll taxes were not deducted, the total amount withheld for federal taxes might be much less than what you owe. In that case you have to pay a penalty determined by form 2210, about which the instructions say, “Because Form 2210 is complicated, you can leave line 79 blank and the IRS will figure the penalty and send you a bill.”

It’s hard to see the forest for the trees in our tax system. We can miss the big issues, because the details are so convoluted. Why are we allowed to deduct fewer medical expenses than employee business expenses? If your income is $50,000, you can only deduct medical expenses more than $5000, but employee expenses over $1000 are deductible. That’s a benefit for high-spending professionals who can deduct travel expenses, while poorer families might face crushing medical bills with no tax break.

One feature of the forest that we often miss is the presence of other taxes. Illinois has a flat income tax of 3.75% and a state sales tax of 6.25%. Even the website Investopedia considers the sales tax regressive, meaning it “takes a larger percentage from low-income people than from high-income people”.

Nearly all the discussion in Illinois is about the income tax. Across the nation, and in Illinois, income taxes are the only tax that is not regressive. The proportion of their incomes that poor people pay in sales taxes across the country is an amazing eight times more than the proportion paid by the top 1%.

A non-partisan study of each state’s tax system finds this: “Combining all state and local income, property, sales and excise taxes that Americans pay, the nationwide average effective state and local tax rates by income group are 10.9 percent for the poorest 20 percent of individuals and families, 9.4 percent for the middle 20 percent and 5.4 percent for the top 1 percent.” That is, at the state level, total taxes fall heaviest on the poorest people.

Illinois has the fifth most regressive state tax system in the nation. We have the third highest effective tax rate on the poorest fifth of the population, 13.2%. Illinois taxes its poorest residents nearly 3 times as much as its richest 1%.

Republicans have made taxes into enemy #1 of Americans. But the policies they propose mainly help the wealthy. They always attack the income tax, the most progressive tax. They mock the work of the IRS and keep cutting its budget for enforcement, which means less ability to catch wealthy tax cheats. And they try to substitute sales taxes for income taxes.

The tax proposals of Ted Cruz show what conservative tax reform means. He would shift the burden of taxes onto the shoulders of the poor. No more corporate taxes at all. No estate taxes, a boon for the rich passing their wealth to the next generation. No more progressive federal income tax, instead a flat rate of 10%. The wealthy would gain enormously from that provision. And a new 16% sales tax, the most regressive of all taxes.

Overall tax revenue would decline, what Republicans always point to first about their tax plans. That decline, however would come from cutting the yearly burden of the richest taxpayers about $2 million EACH. Middle income taxpayers would get an average cut of about $1800, and over the long run, the poorest 20% would see an INCREASE in their total taxes.

Bruce Rauner won election as Governor of Illinois by demanding that the recent tax hike from 3% to 5% be rolled back. But he doesn’t really believe that Illinois can live with our new lower rate of 3.75%. He admits the need to raise the Illinois income tax again. He just won’t agree to a tax hike unless it is paired with anti-union labor reforms he wants. In his budget speech in February, he said that: “Let’s work together to enact a bipartisan, balanced budget with a mix of reforms, cost reductions and revenue.”

It turns out that even Rauner recognizes that taxes are necessary. The budget impasse in Illinois has mainly hurt the poor, by reducing their social services, by cutting MAP grants which help poor kids go to college, by threatening the existence of Chicago State University, whose students are the least advantaged.

Nobody is proposing reducing the burden on the poor. In that way, the Illinois tax system and the larger federal system are bipartisan and tilted toward the rich.

Steve Hochstadt
Jacksonville IL
Published in the Jacksonville Journal-Courier, May 3, 2016