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Social Security is Strong and it Deserves more Support



Last month the Social Security Trustees published their annual report on the state of Social Security. Although two of the appointed trustee positions are vacant and the Trump administration has repeatedly called for cuts to the program, the Trustees (all Trump appointees) agree the program’s long-term outlook is optimistic. 

Social Security, the program that provides retirement and disability benefits to millions of Americans every year, has a projected shortfall equal to 3.21 percent of taxable payroll over the next 75 years. The program’s benefits are fully funded through 2034, after which they are 79 percent payable, assuming no changes are ever made. 

The projected shortfall means that to fully fund the program, payroll taxes would have to be increased by 3.21 percentage points. This is an increase from last year’s 2.78 percent projected shortfall, likely due to the decreased projections in average wage growth over the next 50 years. In 2019 the trustees predicted that average real wages would grow by 1.42 percent annually over the next 30 years; this year, they predict only 1.29 percent annual growth. 

An increase in taxes is never trivial, particularly for low-income workers. However, even with this year’s lower wage growth projections, it is clear that growing wages have a much greater impact on the average worker’s financial situation than the increased taxes. These amounts are compared in Figure 1 below. 

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While it is unlikely that the Trustee’s projections will hold up over the next 50+ years, they still illustrate the relative importance of wage growth compared to the tax increase. Figure 2 shows what would happen to a salary of $50,000 per year in 2020 over the next 30 years. Based on the average wage increase, this salary would grow to $68,084 at the current payroll tax rate, and $65,754 if the tax were increased to fund the program fully.  

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In addition to being easily fixable, it is important to note that the shortfall in the Social Security trust fund is not an indicator of the function of the program itself. A large portion of the shortfall is directly tied to the increase in income inequality. The payroll tax which funds the program is only levied on the first $137,700 of wage income per year (in 2020), allowing many higher-income workers to escape paying into the program at the same rate as the rest of the population. When that cap was first established in 1983, only 10 percent of wage income was over the maximum, but by 2016 it was more than 17 percent. In this same time frame, the lower-earning population who pay a greater effective tax rate have not experienced the same wage growth as high earners. 

Social security is an incredibly popular program that supports over 62 million Americans every year. In addition to providing retirement and disability benefits, it is also responsible for pulling more children out of poverty than any other program.  

With such compelling evidence of its value and near-universal support from the American people, there is no reason Social Security should be viewed as “struggling.” Moreover, solutions to the projected shortfall are many: 1) slightly increase the payroll tax (as discussed above); 2) remove the tax cap on very high earners; or 3) to simply add money to the trust fund.  

The post Social Security is Strong and it Deserves more Support appeared first on Center for Economic and Policy Research.

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Brace Yourself for Trump’s Great Recession Trump and businesses…



Brace Yourself for Trump’s Great Recession

Trump and businesses demanded America “reopen” to revive the economy. But we’ve  reopened too soon, before Covid-19 is under control. So we’re needing to close or partly close again, which will prolong the economic downturn and wreak even more havoc on millions of Americans’ livelihoods.

It never should have been a contest between public health and the economy, anyway. The economy has always depended on getting public health right. And we still haven’t.

Trump has downplayed the risks. He got in the way of governors trying to keep people safe. And now all of us are paying the price.

Brace yourself. The wave of evictions and foreclosures in the next 2 months will be unlike anything America has experienced since the Great Depression. And unless Congress extends extra unemployment benefits beyond July 31, we’re also going to have unparalleled hunger.

Eviction protections for federally subsidized properties run out at the end of July. In some states that enacted their own moratoria on evictions, renter protections are already running out. One study estimates that 19 to 23 million renters, or 1 in 5 people who live in renter households, are at risk of eviction by September 30th.

The people most likely to be evicted are Black and Latinx people, single mothers, people with disabilities, formerly incarcerated people, and undocumented people. This is systemic racism playing out in real time.

Meanwhile, delinquency rates on mortgages have more than doubled since March.

Unemployment itself is different than what we saw back in March and April. Today’s layoffs are permanent, the result of businesses throwing in the towel or permanently slimming down.

In the public sector, loss of state tax revenue is running up against state constitutions that bar deficits. This is putting vital public services on the chopping block – schools, childcare, supplemental nutrition, mental health services, low-income housing, healthcare – at a time when the public needs them more than ever.

In April and May alone, states and localities furloughed or laid off some 1.5 million workers, about twice as many as in the entire aftermath of the Great Recession a decade ago. These cuts will be just the tip of the iceberg if the federal government doesn’t provide more fiscal aid for states and localities.

Let me remind you: Expanded unemployment benefits are set to expire by July 31, leaving at least 21 million unemployed Americans with a 60% income reduction and no stimulus check to fall back on. 

To make matters worse, over 16.2 million households have lost employer-provided health insurance. The Census Household Pulse Survey shows large losses in income in coming months, along with high food and housing insecurity.

So what’s Trump’s and Mitch McConnell’s response to this looming catastrophe?

Do nothing. 

Don’t extend supplemental unemployment benefits beyond July 31, when they’re due to expire. 

Don’t help states and cities. 

Reject the HEROES Act, passed by the House of Representatives to keep struggling families afloat and the economy from going into a tailspin.

Trump has even asked the Supreme Court to strike down the Affordable Care Act. If the Court agrees, 23 million Americans will lose their health insurance, and the richest 0.1 percent of households with annual incomes of over $3 million will receive tax cuts averaging about $198,000 per year.

This is lunacy. The priority must be getting control over this pandemic and helping Americans survive it physically and financially. Extra unemployment benefits must be extended. 

The HEROES Act must be signed into law. Moratoriums on evictions and foreclosures must be extended. If it’s necessary to go back to sheltering in place to contain this pandemic, we must be willing to do so.

This shouldn’t be controversial. It’s the bare minimum of what our government must do to prevent an even worse economic and human catastrophe. 

Anything less is indefensible.

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MiB: When America’s Warriors Need Help



Robin King did not expect to be involved with the Naval Special Warfare program. When her photographer husband decided to follow his older brother’s entry into the Navy SEAL program, the California State University at Long Beach graduate put her Bachelor of Science degree in Business Administration and Finance to good use. (her previous employers were Walt Disney Company and McDonnell Douglas Corporation/Boeing).

She began working in the finance department of a non-profit serving the special warfare community. But when a $100k donation came with a small catch: It had to go to an IRS recognized, tax deductible, 501(c)(3) organization. Thus, the Navy SEAL Foundation was born.

She began in the finance department, eventually becoming Chief Financial Officer, and then Chief Executive Officer. The national, nonprofit organization provides critical support and assistance to the Naval Special Warfare (NSW) community and its families.

King discusses the balance that all special forces spouses seem to adapt to: being both independent when your spouse goes off to battle, yet part of a larger community supporting families through trauma and tragedy. She discusses why she (and other special forces wives and husbands) don’t “stress out” while their spouses are in harm’s ways: Their equipment, training, planning and leadership are all so good it imbues them all with a reassuring sense of confidence in their team and their own abilities. It is not just that they like their chances, it is that they have done everything possible to tilt the odds in their own favor.

Her favorite books are here; A transcript of our conversation is available here.

You can stream and download our full conversation, including the podcast extras on iTunesSpotifyOvercastGoogleBloomberg, and Stitcher. All of our earlier podcasts on your favorite pod hosts can be found here.

If you would like to make a donation to the Navy SEAL Foundation, please reach out to them here.

Next week, we speak with Martin Franklin, Mariposa Capital. Franklin has founded and run numerous companies, including Element Solutions, Jarden Corporation (sold to Newell Brands in 2016). He has also created over a dozen SPACs, co-investing with managers such as Bill Ackman of Pershing Square Capital.



The post MiB: When America’s Warriors Need Help appeared first on The Big Picture.

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Market Talk – July 6, 2020




China has warned the UK not to interfere with Hong Kong following Beijing’s imposition of a sweeping new national security law. Ambassador Liu Xiaoming said the UK’s offer of a path to citizenship for up to three million Hong Kongers amounted to “gross interference.” British Foreign Secretary Dominic Raab rejected the accusation. Earlier, a spokesman for Prime Minister Boris Johnson urged China not to interfere if Hong Kongers sought to come to the UK.

The Indian government is reviewing around 50 investment proposals involving Chinese companies under a new screening policy, Reuters reported. Under new rules announced by India in April, all investments by entities based in neighboring countries need to be approved by the Indian government, whether for new or additional funding. China is the biggest of these investors and the rules drew criticism from Chinese investors and Beijing, which called the policy discriminatory.

Indian bank loans rose 6.2% in the two weeks to June 19 from a year earlier, while deposits rose 11%, according to India’s central bank, The Reserve Bank of India’s weekly statistical supplement showed on Friday. Outstanding loans rose 16.79 billion rupees ($224.95 million) to 102.45 trillion rupees in the two weeks to June 19. Bank deposits fell 732.67 billion rupees to 138.67 trillion rupees in the two weeks to June 19.

India has withdrawn a planned reopening of the Taj Mahal, citing the risk of new coronavirus infections spreading in the northern city of Agra from visitors flocking to see the 17th century monument of love.

The major Asian stock markets had a mixed day today:

  • NIKKEI 225 increased 407.96 points or 1.83% to 22,714.44
  • Shanghai increased 180.07 points or 5.71% to 3,332.88
  • Hang Seng increased 966.04 points or 3.81% to 26,339.16
  • ASX 200 decreased 43.30 points or -0.71% to 6,014.60
  • Kospi increased 35.52 points or 1.65% to 2,187.93
  • SENSEX increased 465.86 points or 1.29% to 36,487.28
  • Nifty50 increased 156.30 points or 1.47% to 10,763.65

The major Asian currency markets had a mixed day today:

  • AUDUSD increased 0.00358 or 0.52% to 0.69715
  • NZDUSD increased 0.00471 or 0.72% to 0.65638
  • USDJPY decreased 0.19 or -0.18% to 107.31
  • USDCNY decreased 0.05279 or -0.75% to 7.01446

Precious Metals:

  • Gold increased 10.27 USD/t oz. or 0.58% to 1,785.40
  • Silver increased 0.24 USD/t. oz or 1.31% to 18.2765

Some economic news from last night:

Hong Kong:

Manufacturing PMI (Jun) increased from 43.9 to 49.6


MI Inflation Gauge (MoM) increased from -1.2% to 0.6%

ANZ Job Advertisements (MoM) increased from -0.3% to 42.0%

New Zealand:

ANZ Commodity Price Index (MoM) decrease from 1.1% to -0.7%

Some economic news from today:


Consumer Confidence (Jun) increased from 77.8 to 83.8


The UK on Monday announced economic sanctions against individuals and organizations from Russia, Saudi Arabia, Myanmar, and North Korea under new UK powers to punish human rights offenders. Foreign Secretary Dominic Raab said the sanctions targeted those behind “some of the notorious human rights violations in recent years.”

The UK announced USD 2 billion rescue package for cultural and heritage institutions. Boris Johnson described this as a “world-leading” rescue package that will give a lifeline to Britain’s arts sector, which largely shuttered since March because of the pandemic and was on the verge of an imminent collapse. The organizations will be handed 1.57 billion pounds, about $2 billion, the culture ministry said on Sunday evening.

Despite the efforts, Germany’s hospitality sector has struggled to pick up speed, highlighting the difficulties facing Europe’s top economy as it confronts the steepest recession since World War II. Two months after Germany lifted its lockdowns, the small Asian restaurant, like so many others, is struggling to attract customers as coronavirus fears linger. Chancellor Angela Merkel’s government, which has pledged over a trillion euros in stimulus spending to cushion the coronavirus blow, and is hoping for an economic rebound in the second half of 2020.

France’s new prime minister, Jean Castex, has made few major changes to the cabinet after President Emmanuel Macron gambled on a reshuffle to reboot his presidency and tighten his grip on government before seeking re-election in 2022. Health minister Olivier Véran, who helped lead France’s response to the pandemic, also kept his job, as did Florence Parly at defense.

The major Europe stock markets had a green day:

  • CAC 40 increased 74.37 points or 1.49% to 5,081.51
  • FTSE 100 increased 128.64 points or 2.09% to 6,285.94
  • DAX 30 increased 205.27 points or 1.64% to 12,733.45

The major Europe currency markets had a mixed day today:

  • EURUSD increased 0.00665 or 0.59% to 1.13113
  • GBPUSD increased 0.00094 or 0.08% to 1.24927
  • USDCHF decreased 0.00184 or -0.19% to 0.94185

Some economic news from Europe today:


German Factory Orders (MoM) (May) increased from -26.2% to 10.4%

IHS Markit Construction PMI (Jun) increased from 40.1 to 41.3


Spanish Industrial Production (YoY) (May) increased from -34.1% to -24.5%

Spanish Consumer Confidence increased from 52.9 to 60.7


Construction PMI (Jun) increased from 28.9 to 55.3

Housing Equity Withdrawal (QoQ) decreased from -5.0B to -5.1B

Euro Zone:

Sentix Investor Confidence (Jul) increased from -24.8 to -18.2

Retail Sales (MoM) (May) increased from -12.1% to 17.8%

Retail Sales (YoY) (May) increased from -19.6% to -5.1%


Nonmanufacturing companies made their biggest one-month increase this June after advancing 11.7% to 57.1%. Fourteen of the 18 service industries rose in June due to restrictions lifted and state economies beginning to reopen. Although encouraging, states are beginning to reimplement restrictions slowly and ongoing growth is not expected to continue in a linear fashion.

Florida Governor Ron DeSantis signed House Bill 1189 last week, making Florida the first US state to enact DNA privacy laws. Disability, life and long-term care insurance companies are now prohibited from using personal DNA information, such as what is derived from services like 23andMe or AncestryDNA, and sharing that data with other service providers. Prior to this law, insurers could legally access health-related DNA information provided by third parties and use that information to limit coverage.

The UK will begin to ease restrictions for travelers from around 50 countries this Friday; however, the US is not on that list. The European Union also banned travels from the US from entering Europe. Mexico ramped up efforts to prevent Americans from crossing the border over the Fourth of July weekend. At the time of this writing, the US has experienced 2.93 million confirmed COVID-19 cases, with 879,000 people making full recoveries and 132,000 deaths.

Prime Minister Justin Trudeau said Canada stands in solidarity with Hong Kong, and has suspended its extradition treaty with Hong Kong over China’s new national security laws. Over 300,000 Canadians currently live in Hong Kong. The Canadian government is hoping the new measures will encourage Hong Kong residents to relocate to Canada to boost the economy.

US Market Closings:

  • Dow advanced 459.67 points or 1.78% to 26,287.03
  • S&P 500 advanced 49.71 points or 1.59% to 3,179.72
  • Nasdaq advanced 226.02 points or 2.21% to 10,433.65
  • Russell 2000 advanced 11.02 points or 0.77% to 1,442.88

Canada Market Closings:

  • TSX Composite advanced 79.92 points or 0.47% to 15,669.67
  • TSX 60 advanced 2.89 points or 0.31% to 942.24

Brazil Market Closing:

  • Bovespa advanced 2,172.31 points or 2.24% to 98,937.16


The oil markets had a mixed day today:

  • Crude Oil increased 0.31 USD/BBL or 0.77% to 40.6300
  • Brent increased 0.28 USD/BBL or 0.65% to 43.0800
  • Natural gas increased 0.10 USD/MMBtu or 5.92% to 1.8240
  • Gasoline decreased 0.00 USD/GAL or -0.11% to 1.2416
  • Heating oil increased 0.02 USD/GAL or 1.67% to 1.2452

The above data was collected around 15.18 EST on Monday.

  • Top commodity gainers: Natural Gas (5.92%), Lumber (2.68%), Canola (4.29%), and Orange Juice (2.06%)
  • Top commodity losers: Coffee (-6.16%), Cotton (-1.59%), Cocoa (-1.22%), and Sugar (-2.37%)

The above data was collected around 15:25 EST on Monday.


Japan 0.05%(+2bp), US 2’s 0.16% (+1bps), US 10’s 0.69%(+2bps); US 30’s 1.45%(+2bps), Bunds -0.43% (+4bp), France -0.12% (-1bp), Italy 1.31% (-2bp), Turkey 11.93% (+9bp), Greece 1.19% (+4bp), Portugal 0.44% (-1bp); Spain 0.45% (+7bp) and UK Gilts 0.20% (+1bp).

  • US 3-Month Bill Auction remain the same at 0.150%
  • US 6-Month Bill Auction remain the same at 0.165%
  • French 3-Month BTF Auction decreased from -0.523% to -0.551%
  • French 6-Month BTF Auction decreased from -0.531% to -0.557%
  • French 12-Month BTF Auction decreased from -0.530% to -0.559%


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