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Friday, October 21, 2016

We’ve seen senior discounts for buses. We’ve seen senior discounts at movie theaters. We’ve seen senior discounts in supermarkets.

Most make some sense, helping businesses attract older customers at slow times when others are working. What makes no sense whatsoever is applying senior discounts to economic policy.

Older Americans vote, and nowadays they tend to vote Republican. Clearly, there’s political hay to be made framing President Obama’s economic proposals as attacks on seniors. But the results can be odd, especially when the fault Republicans find in one Obama plan conflicts with a fault they find in another.

For instance, you have Peter Morici, an economist at the University of Maryland and a sometime presence on Fox News Channel, strangely suggesting that Obama’s proposal to raise taxes on the overseas earnings of American businesses would be “a stealth tax on the elderly.”

The argument appears in a column with the superbly loony headline “Tax Grandma to Fund the AFL-CIO?”


Here’s how Morici gets there: Companies such as General Electric, Ford and Procter & Gamble earn profits abroad. Many retirement portfolios contain their stocks. Therefore, new taxes on those companies’ overseas profits would be taxes on retirees.

One might ask why stock portfolios owned by retirees should be of more concern than stock portfolios owned by others. The answer is politics and the partisans’ hope that working people aren’t listening in.

What does any of this have to do with the AFL-CIO? Thanks for asking. Morici explains that the taxes would go to fixing roads. Unionized workers would get jobs doing that. America would have better roads and more well-paying jobs — but where’s the upside?

(To digress, one hopes that older Americans will rebel to being referred to as grandmas and grandpas. No one belittles 40-somethings by calling them all mommies and daddies.)

This argument goes contrary to earlier Republican complaints about the Federal Reserve’s policy to keep interest rates low. You see, many seniors put their money in interest-bearing investments, such as CDs and bonds. Lower interest rates reduce the income from them.

Republicans from Paul Ryan to Mitt Romney hollered about the alleged unfairness of low rates. Republican Sen. Bob Corker of Tennessee accused then-Fed chairman Ben Bernanke of “throwing seniors under the bus.”

The point of low interest rates was to breathe life into a moribund economy. The looser monetary policy is credited with boosting the prices of stocks — stocks like GE, Ford and Procter & Gamble.

So what will it be, higher interest rates to provide more income to elderly savers or lower interest rates to help elderly stock investors? The answer should be “not applicable.” Economic policy should concentrate on economic growth, not age of investor.

Just as they twist the terms “family farm” and “small business,” many on the right try to make “retiree” a stand-in for “struggling old people.” Some members of all those categories are struggling, true. But hedge funders own family farms; law firms are small businesses; and many retirees are very rich.

Even less-than-rich retirees are pursuing lives of leisure, their medical costs covered in large part by younger taxpayers. And federal and state tax codes already offer a variety of special breaks for people of a certain age.

So this idea that retirees are being “punished” when some change in policy affects a broadly owned investment is on the wacky side. Investment income, such as that from stocks, is already more lightly taxed than the middle-class salaries earned by the sweat of someone’s brow.

Most younger Americans, one assumes, are not following the pity party for retired investors. They’re too busy working.

Follow Froma Harrop on Twitter @FromaHarrop. She can be reached at [email protected] To find out more about Froma Harrop and read features by other Creators writers and cartoonists, visit the Creators Web page at

Photo: Gage Skidmore via Flickr

  • Dominick Vila

    What Professor Morici does not understand, or ignores, is that the overwhelming majority of retirees do not have, and do not depend, on earnings from large portfolios. Most retirees in the USA depend on their Social Security benefits, some are lucky to have a small private pension, and most are struggling to make ends meet. As for interest rates, most retirees benefit from low interest rates when they purchase a house, a car, or pay the balance on a credit card. Along the same lines, we benefit from low inflation.
    Morici’s claim is classic Republican rhetoric, reminiscent of the claim that President Obama was destroying MEDICARE because he was able to reduce spending by over $700B.
    It is true, however, that most seniors are Republicans, but the reason for that has very little to do with economics, and a lot more to do with certain social matters that are increasingly evaporating among the young.

    • highpckts

      Not to mention I don’t expect any damn discounts. Just do their job fairly and treat us with the respect we deserve because without this generation none of these whelps would be here! Damn they make me angry!!

      • 788eddie

        If our tax policy taxed ALL income at the same rate, we would not be fighting each other for a fair share of the pie.

        The damn discounts given to some segments of our society (e.g. capital gains, dividends, carried interest, and income tax exemptions) are hurting us all.

        • charleo1

          All incomes simply cannot be taxed at the same rate. Unless all incomes fully provided for the basics of food, shelter, clothing, healthcare, savings etc. The idea that’s behind progressive taxation. The reason for, “personal exemptions.” That allows an amount certain to be earned, before any tax obligations are created. For example it makes no sense to present a single parent of two, making, $17,000 a year, with a tax obligation to the Federal Government of $850.00, (at a 5% rate.) That would serve to lower her gross income, and most likely qualify her for even more assistance. On the other hand it makes no sense to limit taxes on capital gains to historically low levels, ostensively to increase the monies for more business expansion. Only to see the extra monies go over seas, or be stashed in off shore accounts. While the general economy suffers higher unemployment from stunted demand. Low wages, from a created glut in labor. And higher government outlays due to these unaddressed
          maladies in the economy. In other words, if tax breaks for the investor class help. Are deficit neutral. In fact
          do stimulate economic growth, and thereby create demand, and jobs, great! However, if they not only don’t help, but actually hurt. By increasing the debt. And because lack of investment capital is not the problem. But rather, a lack of good investment opportunities, in a poor lackluster economy, is. So, as
          in that case, they need to be eliminated, and taxes raised to fit the situation. And the Right, much more so than the Left has made doing so, addressing the real economic problems of the Country, a political liability. And so, refuse to pursue sound economy policies. While offering demagogic, and nonsensical rhetoric for prescribing exactly the wrong, or unnecessary remedies for the economy. Namely more tax breaks for the small sector at the very top.

          • 788eddie

            What I was referring to, charlieo1, was that I cannot see why the capital gains from stock that I own is taxed at a lower rate than the wages earned by my neighbor.

            Some have said that stock owners risk their capital when they invest (and they do), but my neighbor risks his life every time he drives to work on the parkway.

            I just think that the very wealthy should not be given even more of an advantage than they already have.

          • charleo1

            Okay, I see what you’re saying. And I think it’s very astute, and fair to point out, earning a living, or making a business investment both come with inherent risks. So, why the unlimited 15% cap on earnings derived from capital gains? What I think would be more helpful, is to limit that 15% cap on returns from investments made into businesses located within the U.S. With a 90% American workforce, with less than 250 employees. Otherwise the rate increases to 20% domestically, and 25% for investments made outside the Country. This due to several unfair advantages, and loopholes investors are able to take advantage of when investing in emerging markets in Asia as an example. Returns average 3X greater, mostly due to much lower labor costs, and the ability to keep those profits off shore. Two huge advantages not available to investors in American companies, nor to most small business owners.

          • 788eddie

            I think I would be more comfortable with ALL income being taxed as income. That way, nobody is angling for an advantage. We can still have a progressive ladder for rates (during the Eisenhower years, the top rate was just over 90% for those making over 2 1/2 million a year).

            I wouldn’t complain if I hit a top tax rate that was higher than some others. After all, I probably wouldn’t be doing as well financially in many other countries, and I wouldn’t mind helping pay for the amenities that I’ve grown to rely upon (like good roads, fire protection, police, sanitation services, reliable electricity and clean water when I turn on the tap).

          • dpaano

            Unfortunately, that’s not how the conservatives see it….they want more of the pie and want to pay less for it! It’s okay to take away money from the lower and middle class by denying them benefits (much of which they’ve paid into when they were working) than to allow their fellow men (and women) to survive. They talk incessantly about being Christians, but the Christians I know don’t turn away from people who are struggling for one reason or another!

  • jamesowens

    republicans will never understand the 99% of Americans because they have money and think everyone does. they do not realize or believe that most true Americans might be poor but would rather work hard and keep their principles than sell their soul out to corporations in the hope of being wealthy

  • jointerjohn

    This is just another demonstration of how the GOP crafts policies and issues sound-bites to appeal to the most self-centered amongst us. They are increasingly moving away from positions crafted for the common good and pandering to selfishness under the guise of personal freedom and self-reliance.

    • dpaano

      Republicans use lies and scare tactics to motivate their base….it’s a known fact. After all, look at the ebola scare…..FOX News likened it to Bengazi!! It turned out to be a very minor scare in the U.S. More lies and scare tactics….unfortunately (or fortunate for the GOP), it came at a bad time…just before elections.

  • Amanda Nevada

    In this related YouTube video we find the least popular Congressional leader, Harry Reid, obstructing funds for children with cancer:

  • Rob Erta

    As George Washington noted, the Federal debt is not meant to be perpetual but to be paid off at regular intervals.