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NTUF Special Event on Entitlement Reform
A poll out today indicates that Americans are wary about cutting entitlements, according to the New York Times. But, are there solutions to America's entitlement problems that could ease this wariness and solve these challenges in a pro-taxpayer, pro-growth way? Find out during a special NTUF event on Feb. 11th. Mark your calendar and plan to attend this vital discussion about our fiscal future.
We hope to see you there!0 Comments | Post a Comment | Sign up for NTU Action Alerts
$14.5 Billion Bill Highlighted in The Taxpayer’s Tab
Issue 22 brings taxpayers a newly scored bill, the Seniors Protection Act, which would require the federal government to pay federal benefits recipients $250 if a Cost-of-Living Adjustment (COLA) does not occur. The COLA is explained in further detail in the Tab. This year, a COLA was not implemented and so would cost taxpayers $14.5 billion. The bill would require this kind of mechanism to be in place in future payment increase considerations.
Bills covered in the latest Taxpayer’s Tab include:
Wondering how to check on the unique BillTally research going on right now to highlight the spending agendas for EVERY member of Congress? NTUF maintains a searchable database of legislatures dating back to the 107th Congress in 2001. You can also check out the latest updates on legislatures, especially ones featured in the Tab, through our Twitter feed.1 Comments | Post a Comment | Sign up for NTU Action Alerts
HT: TaxGuru1 Comments | Post a Comment | Sign up for NTU Action Alerts
Think like a Stakeholder, not like a Dependent A New Take on Unemployment Insurance
Paying people not to work will ease unemployment.
There is something wrong with this statement. Nevertheless, when it comes down to it this is exactly the rationale some have regarding the current state-sponsored unemployment insurance (UI) systems. They are programs that attempt to help people through difficult times after involuntary layoffs. The hope is to get people on their feet, by providing them an income as they look for a new and acceptable job. No argument there. However, study after study (even those conducted by economists in the Obama Administration) have shown that the current UI system actually prolongs unemployment, stalls economic growth, and discourages individual savings.
In an attempt to mitigate these problems, and preserve an unemployment insurance program, the Oregon-based Cascade Institute has proposed an interesting solution. It calls for a hybrid program consisting of tax-free Individual Asset Accounts (IAA) and a small federal common-pool fund. The idea is to make workers stakeholders in their own plans and use current tax dollars to increase private wealth.
Currently, the Social Security Act compels the states to operate Unemployment Insurance (UI) systems. The plans are predominantly run by the states and funded through payroll taxes paid by the employer based on their layoff history. Those who layoff more, pay a higher rate.
Overall, there are three problems in the current UI system worth noting.
First, studies show that unemployed workers who receive benefits take more than twice the time to find a job than those who are not eligible for benefits. Why? Alan Reynolds from the Cato Institute says it best: “When the government [in some cases] pays people 50 or 60 percent of their previous wage to stay home for a year or more, many of them do just that.” It’s the classic “when you subsidize something, you get more of it” routine. The promise of benefits discourages the unemployed from looking harder for new work. Reynolds cites a survey conducted by Bruce Meyers of the University of Chicago showing that the probability of a person leaving unemployment rises dramatically just prior to when benefits run out. For example, if benefits are extended to 79 weeks – as they were in the “stimulus” bill – there is a higher likelihood that many people will not accept work until the 76th or 78th week.
Second, the supposed economic benefits of unemployment insurance are balderdash. Spending money over a long period of time to sustain a person who is not working is not an investment in economic growth. As a matter of fact, research done by economist Sylvain Leduc shows that government spending produces a lower fiscal multiplier than do tax cuts. In other words, a dollar of added federal debt added as a result of increased spending added far less than a dollar to GDP.
Third, safety nets like UI discourage personal savings and responsibility. This occurs under the assumption the government will protect people in the event of job loss. Saving helps the economy by generating a greater supply of loanable funds, thus lowering interest rates and stimulating capital investments.
The Cascade Policy Institute has an interesting solution to the current problems of the UI system, which they hope to pilot in Oregon. Their plan calls for a hybrid system that features Individual Asset Accounts (IAA) and a small common-pool fund. Employers would still pay state payroll taxes but the funds would be put into the employee’s IAA, while the federal payroll tax would fund the common fund. The tax rate for employers to fund the IAA’s would be 1.6 percent of wages, while the federal common fund rate would remain at its current 0.8 percent of the first $7,000 of wages. This common fund would be used to subsidize qualified low balance accounts for a limited time.
The IAA would accumulate tax free for life and could be used at the discretion of each worker for unemployment insurance. At retirement, the accounts balance would be deposited into the worker’s IRA, turned into an annuity, given as a lump sum transfer, or passed onto heirs.
This innovative plan would encourage individuals to think like stakeholders, since they are the ones who own the account. In the event of layoff, individuals could draw from their account. At the same time they would be more cost conscious and encouraged to step up their job search efforts. In addition, the savings being built up with the IAA’s would have a positive effect on the economy by providing more capital for businesses to expand. And lastly, many who currently pay into the Oregon UI system but are not eligible for benefits (either because they have not worked the required minimum 500 hours or have not earned sufficient wages) would now be able to participate in the system.
At a time when the country faces high unemployment rates all options should be on the table for policymakers. Evidence shows that the current UI system actually prolongs unemployment and economic recovery. As such, reforms to this system should be front and center on the minds of those in state governments. IAA’s are a good start.1 Comments | Post a Comment | Sign up for NTU Action Alerts
The NTU Foundation wants you to be the most informed voter, armed with the best, up-to-date information, as America heads into the mid-term election season. The Taxpayer’s Tab is one of the tools NTUF provides to keep track of Congress' potential spending agenda. This will be our 12th issue in which we highlight the highest and lowest cost bills, as well as the most cosponsored bills working their way through Congress and into law. In those 12 issues, we have articled over 40 bills and shown you the ways our BillTally data can help you in deciding if the priorities your legislator supports match your own.
As our country heads into one of the most contentious election cycles in recent memory, be sure to keep the Taxpayer’s Tab at the top of you inboxes and forefront of your minds. NTUF’s research is independent and nonpartisan. We do the grunt work so you can cut through the campaign rhetoric about Congress's spending habits.
The new issue of the Taxpayer’s Tab tackles yet another bill eliminating waiting periods for Medicare and Social Security Disability Insurance. Then we navigate through some of the Department of Defense’s weapons programs in a bill calling for their cancellation. A bill requiring earmark transparency is also showcased in our “Most Friended” section. Last, but not least, our Wildcard section centers on a bill which would continue and expand price reporting for businesses in the dairy and meat industries.
The specific bills of The Taxpayer’s Tab #12 include:
To help everyone get the most out of this upcoming election and The Taxpayer’s Tab, encourage your friends and family to join NTUF, follow NTUF on Twitter, subscribe to the Tab, and forward this important newsletter to others. Remember, transparency is everyone’s business and an issue in and of itself this election.0 Comments | Post a Comment | Sign up for NTU Action Alerts
Reducing Federal Workforce, Gun Law Modernization in Taxpayer’s Tab
This week, the Taxpayer’s Tab brings you a Most Friended bill with the most cosponsors to date, 240 Congressmen and 35 Senators. Think you know what the bill covers? The answer may surprise you. NTU Foundation also presents a Least Expensive Bill section only rivaled by Issue 2’s HR 5615, which repealed the medical device tax. To check out all the exciting content the Taxpayer’s Tab offers you, subscribe and help NTUF bring Congress’s potential spending agendas to light.
The Taxpayer’s Tab Issue 11 content includes:
The NTUF Policy Analysis Team has received many requests for bill cost estimates. Do you have a suggestion? Email us and let us know what’s important to you! While you’re emailing us, send your friends a copy of the Tab and tell them if they followed us on Twitter, they could stay on top of all the ongoing research.0 Comments | Post a Comment | Sign up for NTU Action Alerts
France to Raise Retirement Age
The BBC reports that France will raise its retirement age from 60 to 62 in an attempt to deal with its growing budget deficit. According to the BBC, "the country's annual pension deficit is expected to total 32bn euros (£26.7bn; $39.5bn) this year, and could rise to as much as 114bn euros by 2050 without reform."
The hike will bring the age closer to the retirement age in other European countries:
Opposition from labor unions is expected.0 Comments | Post a Comment | Sign up for NTU Action Alerts
Health Care Costs to Rise
In a report released yesterday by the Health and Human Services Department, it has been concluded that Obamacare will cause health care costs to rise. According to the AP:
The report projected that Medicare cuts could drive about 15 percent of hospitals and other institutional providers into the red, "possibly jeopardizing access" to care for seniors.
As the report's grand finale:
In another flashing yellow light, the report warned that a new voluntary long-term care insurance program created under the law faces "a very serious risk" of insolvency.
Wow. The program will increase costs, ration care, and is ultimately unsustainable. If only there had been somebody, somewhere, who could have seen this coming. I'll try to contain my shock.1 Comments | Post a Comment | Sign up for NTU Action Alerts
Where is Al Gore's Lock Box?
Where is Al Gore's Lock Box when Social Security needs it most? Remember the Lock Box?
I ask this question because the New York Times just happens to report today that Social Security will pay more in benefits this year than it receives. Apparently, this might be a problem:
Thank goodness no one would think to pass a massive entitlement expansion at a time like this.
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