Tag: food stamps
Trump Accounts Are A Sick Joke, Not A Replacement For Social Security

Trump Accounts Are A Sick Joke, Not A Replacement For Social Security

Many of the Trump crew seem to be delusional about Trump accounts. They claim to believe that they will replace Social Security. It shouldn’t be a surprise to us that many supporters of Trump are out of touch with reality, but that is not a reason for the rest of us to take their nonsense seriously.

Let’s keep our eyes on the ball. This is not three-dimensional chess; it is an account for newborn kids in which the government deposits $1,000. Parents or other relatives can add to it each year, like they can add to an education savings accounts in most states. The amount people contribute to the account is deducted from their taxable income. Also, the money accumulated in the account is not taxed until it is withdrawn.

Some people take advantage of these accounts; most don’t. The reason is that most people don’t have an extra $1,000 or $5,000 or whatever to contribute to a Trumo account. Furthermore, the tax benefit is not a very big deal to most moderate and even middle-income people.

The overwhelming majority of households are in the 12 percent bracket or below. More than a fifth are in the zero bracket, meaning they pay no income tax and would get no benefit from tax-advantaged accounts.

Furthermore, even if they wanted to put money in a tax-advantaged account, why would they choose a Trump account rather than an education savings account or an IRA? Money in existing tax-advantaged accounts can be withdrawn, albeit with a penalty. Money in a Trump account can only be accessed by the kid when they turn 18.

This brings us to the sick joke part of the Trump account story. Trump and Congressional Republicans have been gleefully cutting Food Stamps, housing assistance, Medicaid, and the subsidies in the Obamacare exchanges. As a result, tens of millions of people will be denied benefits that they previously depended upon.

Many of these people will end up hungry, homeless, and/or unable to obtain needed medical care. This means two or three years from now, there are likely to be tens, or even hundreds, of thousands of kids with $1,000 in their Trump accounts who are living on the streets, going hungry, or unable to get necessary medical care because Trump has cut the programs their families depend upon.

This will make for great photo ops. Maybe Trump can have some homeless kids over to the White House, or even Mar-a-Lago, and they can talk about living in the streets of Chicago in winter, or the needed surgery that they can’t afford, but they still have $1,000 in their Trump account. Then Trump and his entourage can all say how great that is!

The other part of the story is the nutty illusion about how rapidly these accounts will grow. The Trump gang likes to say they will grow 10% a year. Amazingly, many who are not on Team Trump are prepared to accept this nonsense.

The 10% rate of return is based on looking at the past, where stocks have yielded somewhere close to a 10% rate of return over the last eight decades. But this is a case of incredibly bad induction, sort of like the person who falls off an 80- story building and says as they pass the 60th floor, the 59th floor, and the 58th floor, “so far so good.”

The simple and obvious point that people who make this inference miss is that the stock market was valued far lower relative to corporate earnings in prior decades than is the case today. Through most of the decades of the 40s, 50s, 60s, and 70s, the price-to-earnings ratio (PE) was generally in the low teens and often considerably lower. When the PE is low, and the economy is growing relatively rapidly, it’s possible for the stock market to generate 10 percent nominal returns, or seven percent real (inflation-adjusted). That’s somewhat oversimplifying the inflation story, but it doesn’t affect the argument.

Today, the PE is over 30, and the economy is projected to grow roughly 2.0 percent a year going forward. In that world, the only way to generate the historic seven percent real rate of return is with an ever-rising price-to-earnings ratio.[1]

The Trumper’s story gives us a PE of almost 92 when today’s newborns turn 18 in 2044.[2] If we want to ask what happens if they hold their money until they hit the Social Security normal retirement age of 67, the PE will be over 2000. A Trump administration economist may be able to make this sort of projection with a straight face, but not many other people could.

Is there a way around this story? Well, the after-tax profit share of GDP could rise further, as it has been doing for the last quarter century. This would be a bleak story for the rest of us, since it would likely mean wages are shrinking. It would also have to almost triple in the next 18 years to keep the PE constant. This is close to unimaginable and a truly horrible story, even if it were. For what it’s worth, the Congressional Budget Office projects the profit share will fall in the next decade.

People could invest their Trump accounts overseas. China is having far more rapid growth than the United States, so perhaps people can get closer to 7.0 percent real returns there. Maybe this is what the Trump gang has in mind.

If we look at the actual returns that people can expect in their Trump account, it will be close to 3.0 percent a year in real terms, assuming that they are not ripped off badly on fees by one of Trump’s Wall Street friends. That will give today’s newborn $1,700, adjusted for inflation, when they turn 18.

Somehow, I don’t think this will lead people to discard Social Security. But I could be mistaken.

[1] I wrote about this issue in a paper with Brad DeLong and Paul Krugman 20 years ago in the context of the Bush Social Security privatization drive.

[2] The data for after-tax corporate profits Bureau of Economic Analysis, National Income and Product Accounts, Table 1.12, Line 15. The data for the valuation of the stock market comes from the Federal Reserve Board’s Financial Accounts of the United States Financial Accounts, Table L.2, Line 38, plus Table l.108, Line 20. The 2.0% GDP growth projection is from the Congressional Budget Office’s Long-term Budget Projections. The projection assumes that companies pay out 60 percent of their profits as either dividends or share buybacks, and the rest of the seven percent real return is made up through capital gains.


Dean Baker is a senior economist at the Center for Economic and Policy Research and the author of the 2016 book Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich Richer. Please consider subscribing to his Substack.


Shutdown May Inflict Heavy Price On Republicans In Poor Rural Districts

Shutdown May Inflict Heavy Price On Republicans In Poor Rural Districts

Members of Congress from Republican-controlled states may be about to pay a hefty political price due to one particular element of the government shutdown, according to a longtime conservative.

During a Monday segment on MSNBC's Deadline: White House, David Frum — who was a speechwriter in former President George W. Bush's administration — said Republicans' shutdown gamble is unlikely to pay off. He predicted there would be an "exit ramp" for the GOP in the form of agreeing to a deal on extending expiring Affordable Care Act (ACA) tax credits, but that a bigger problem was still looming: Trump challenging Congress' power of the purse under Article I, Section 8 of the U.S. Constitution."The Constitution awards Congress power over taxing and spending. And Donald Trump has challenged that power in a very fundamental way," Frum said. "He is taxing, without Congress, thirty-plus billion dollars a month in tariff revenue, and he is spending without Congress. He is getting other forms of revenue than taxes."

"The reason the White House ballroom story is so important: It's not just the vandalism of an historical monument. It's not just the gaudy, bad taste of this ballroom. It's that it is being funded not by taxes, but by gifts from people who have business before the government," he continued. "So he's bypassing Congress as a source of revenue, and he's bypassing Congress' control of spending, and he's claiming the authority to refuse to spend money that Congress has appropriated and that he signed. So how do you do business with someone like that?"

Frum also pointed out that with funding for the Supplemental Nutrition Assistance Program (SNAP, or food stamps) expiring on Saturday for 42 million Americans, many Republicans may already be feeling pressure from constituents to make a deal with Democrats. He pointed out that many residents of reliably red states are dependent on food stamps."There's a lot of poverty and hunger in poor, white, rural America," Frum said. "There are a lot of people on food stamps in poor white rural America that I think a lot of the people in Trump's gaudy circle assume that they can use food stamps and other things to squeeze the Democrats, because the Democrats are the 'poor people's party.' But that is not exactly true anymore."

"One of Donald Trump's achievements was to change the class basis of American politics. There are a lot more educated and affluent people in the Democratic coalition. There are a lot more poor and rural people in the Republican coalition," he added. "... If you're planning on running up the electoral score in North Carolina, for example, many of the people in the Republicans are counting on to make their gerrymander in North Carolina work, may be on food stamps."

Now Republicans Are Using Hunger As A Weapon In Shutdown Fight

Now Republicans Are Using Hunger As A Weapon In Shutdown Fight

Starving a poor, defenseless population worked in Gaza. Why not try it in the U.S.?

That seems to be the Trump regime’s emerging tactic for ratcheting up pressure on the Democratic Party to abandon its attempt to restore the Medicare cuts and Obamacare subsidies as the price for reopening the government.

In mid-October, the Department of Agriculture told every state agency administering the Supplemental Nutrition Assistance Program that they should stop sending in monthly files with the names of beneficiaries. Those files are used to send electronic food-stamp cards worth an average of $187 a month to more than 41 million people across the U.S. That’s one in out of every eight Americans.

During previous government shutdowns, Congress took steps to assure food assistance continued to flow. Earlier this year, the Republican-controlled Congress and the Trump administration agreed to an additional $300 million for the Special Supplemental Nutritional Program for Women, Infants and Children. WIC provides extra nutrition assistance to about 6 million low-income, expectant mothers and young children.

But the SNAP program is far larger, costing the federal government about $8 billion a month. State officials are beginning to ring alarm bells about the looming SNAP shutdown. “If SNAP funds are not delivered by the federal government, the State of Illinois does not have the budgetary ability to backfill these critical resources,” the state’s Department of Human Services said in a statement late last week.

Illinois Gov. J.B. Pritzker, the most vocal governor resisting the Trump administration, asked: “Why is it that they can find the money during a shutdown to pay their masked federal agents wreaking havoc in our communities but not help people in need put food on the table? … The very least they could do is preserve SNAP access for low-income families struggling to feed their kids.”

Connecticut officials warned the federal government electronic processing system could also be shut down, which would cut off access to any food assistance dollars that remain on cards from previous months. The Associated Press reported last week that state officials in Minnesota told all counties and Native American tribes not to approve new SNAP applications, and planned to tell recipients tomorrow that monthly benefits will end in November, barring any changes.

Any prolonged shutdown in federal food assistance will have devastating health consequences. Food insecurity and housing insecurity are major contributors to ill-health in the U.S. One in eight Americans depend on food stamps and even $100 billion a year is not enough to meet the need, witness the charity-dependent food banks that exist in every major city in the country and many ex-urban and rural areas. The U.S. spends even less on subsidizing housing than it does on subsidizing food.

Yet both programs have been targeted for cuts by the Republican-run Congress. The One Big Ugly Bill signed into law last July imposed work requirements in the food stamp program for adults aged 55 to 64 and parents with children 14 and over.

Food isn’t the only area where the Trump regime is moving to administer maximum pain in its efforts to reopen the government without negotiating compromises. Last week, shortly after flip-flopping on cutting off Medicare payments to physicians, it announced it would cease offering special assistance to rural hospitals and for telehealth, programs whose funding expired at the end of September. StatNews reports “ground ambulance transport services and Federally Qualified Health Centers could also be affected by the pause in some payments.”

Most of these cuts will have their deepest impact on states run by Republicans. But that doesn’t seem to matter to the Trump administration, which could care less about the collateral damage in its war against anything and everything that smacks of social decency.

Merrill Goozner, the former editor of Modern Healthcare, writes about health care and politics at GoozNews.substack.com, where this column first appeared. Please consider subscribing to support his work.

Reprinted with permission from Gooz News

In McCarthy's Pyrrhic Triumph, The Real Winner Is The 'Eff 'Em Caucus'

In McCarthy's Pyrrhic Triumph, The Real Winner Is The 'Eff 'Em Caucus'

This is the second anniversary of my Substack column. To celebrate this notable occasion and help me continue to hold the evil fuckers accountable, you can buy a subscription right here.

I had a last line about the election of Kevin McCarthy that didn’t survive the final edit: “The word pyrrhic comes to mind.” McCarthy’s take-every-humiliating-hit-and-wear-them-down climb (or is it descent?) to the speakership is the very definition of the word: His “victory” was achieved at too great a cost to be worth anything to the victor.

We’re already getting a hint of just how fleeting his victory might be. Politico headlined, “The clock starts ticking on McCarthy’s speakership,” calling him “speaker in name only” because of the concessions he made to the right wing of his party in the House. For the first time in history, the Speaker won’t control the all-powerful Rules Committee, on which will sit three of the shut-down caucus members who caused his 15-ballot humiliation last week. They could get together with Democrats on the committee and kill any bill they don’t like. The power to control the floor of the House of Representatives lies in what doesn’t reach the floor for a vote, rather than what does.

The most interesting take I’ve seen on last week’s clusterfuck in the House arrived in the unlikely pages of the Wall Street Journal, which pointed out in an otherwise standard wrap up on the deals McCarthy made with his right-wing that “The full list of concessions hasn’t been released publicly and may never be.” That seems to me to be the hidden key to the whole thing. We know that he yielded to Freedom Caucus demands that a single representative will be able to make a motion to “vacate the chair,” essentially firing the Speaker if the motion carries.

And we know McCarthy promised to make any increase in the debt ceiling dependent on equivalent spending cuts, which puts a stake through the whole reason you have to raise the debt ceiling in the first place. Remember, the rise in the debt ceiling isn’t on new debt, it’s to pay off debts already incurred by previous spending.

There were some noises made by the Loon Caucus that McCarthy had committed to attacking in some unmentioned fashion so-called “wokeness” in the military. OMG! They’re teaching diversity training at West Point! That the U.S. military contends on a daily basis with a workforce that is probably the most diverse of any major organization in the country was not mentioned, of course. McCarthy apparently just gave the go-ahead to scream about wokeness at top volume, because they’re never going to be able to do anything about it, whatever the hell wokeness is.

There was a brief mention on MSNBC that McCarthy had made some kind of deal to go after food stamps, now called the Supplemental Nutrition Assistance Program, or SNAP. Then that particular concession disappeared from the radar screen as the punditocracy put their focus on the thing they all agreed represented just how low McCarthy was willing to go to make himself Speaker – his life-long dream, they kept reminding us – because the “vacate” deal made him “weak.”

Going after food for poor people is one of the unwritten deals mentioned by the Wall Street Journal that we’ll never see, and it gives us a glimpse of what was really behind the drive for power by the right-wing in the House. In 2017, about 40 million Americans were recipients in some fashion of food assistance. Of that number, 49 percent had children under the age of 17, and 55 percent of those were single parents (read: mothers). Fifteen percent of households receiving food benefits had elderly residents; 20 percent were disabled; the average gross income for households receiving assistance was $731; the average net income was $336, indicating that those needing food assistance appeared to be paying one hell of a lot more in federal, state, and local taxes than He Who Will Not Be Named.

For some reason unknown to me, Republicans – and not just conservative Republicans -- are bothered by the fact that the federal government is giving stuff away to people they don’t like. That it is in the form of food that goes into their stomachs matters not. They think all those people earning $731 a month just need to work harder. Get out of that wheelchair or nursing home bed and go to work! That’s what right-wing Republicans want. If they can’t work, fuck ’em. They don’t eat.

Some political pundit famously wrote about Trump that for him, “cruelty is the point.” He or she was correct about the man, but cruelty was baked into the conservative model of politics in this country long before the Man With a Tequila Sunrise On His Head came on the scene. These assholes have been after welfare and food stamps and housing assistance and any other program that benefits poor people since Goldwater ran for president, and arguably, long before that. The Republican Party of the 1940’s and 1950’s had a goal of shutting down Social Security, you will recall.

And as soon as Medicare raised its head, it, too, was targeted for closure – and not just by the far right. The Republican Party has put this shit in their platform. How many votes did the Republican-led House of Representatives take to shut down Obamacare? In 2017, Newsweek reported that they had found “at least 70 Republican-led attempts to repeal, modify or otherwise curb the Affordable Care Act since its inception as law on March 23, 2010.” Newsweek went on to note that nearly every attempt to defund or otherwise get rid of Obamacare included provisions to defund Planned Parenthood, too.

So, you get the picture. Poor people need to eat? Fuck them. Poor women need reproductive heath care that might include pap smears, early-pregnancy check-ups, and other non-abortion care? Fuck them, too. That the people making use of Planned Parenthood health care are our mothers and sisters and girlfriends and wives and grandmothers, well, they’re not us, so fuck ’em.

Everyone seemed to agree last week that the fight in the House over the Speakership was about power, and they really got into the power dynamics of the procedural shit McCarthy caved on and how weak it made him. But nobody was asking what they’re going to do with the power they were fighting over now that they’ve got it. This is what these people are really up to. They want power, and what they want to use it for is to hurt people.

It hurts people when they scream about Critical Race Theory and ban teaching the truth about slavery and the Civil War and ban books that talk about sexuality that isn’t like theirs. It hurts people when you cut taxes on wealthy people so they can pay $750 for one year’s taxes, or zero dollars, while poor or middle-class people pay considerable percentages of their income. It hurts people when you deny them health care by disallowing the increases in Medicaid enrollment made possible by the Affordable Care Act. It hurts people, and kills people, when you sit around in the well of the House on your cellphones sneaking drinks in the “cloakroom” while freezing temperatures and violent storms rage across the country with poor people in their path.

Kevin McCarthy’s victory in the early hours of Saturday morning may have been pyrrhic, but the losses that he and his Fuck ’em Caucus will render against the American people will be all too real.

Lucian K. Truscott IV, a graduate of West Point, has had a 50-year career as a journalist, novelist, and screenwriter. He has covered Watergate, the Stonewall riots, and wars in Lebanon, Iraq, and Afghanistan. He is also the author of five bestselling novels. You can subscribe to his daily columns at luciantruscott.substack.com and follow him on Twitter @LucianKTruscott and on Facebook at Lucian K. Truscott IV.

Please consider subscribing to Lucian Truscott Newsletter, from which this is reprinted with permission.


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