Letter 2 America for February 25, 2014

Dear America,

The CBO (Congressional Budget Office) is an office within congress that speculates on the economic and fiscal effects of various laws for the legislators to consider as they decide whether to vote for them or not.  It is non-partisan in its composition, but what people don't realize about it is that it makes its calculations based on certain rules prescribed by congress, some of which are outlandish.  For example, when making determinations about the effects of a proposed law--a bill--on the budget, they include Social Security's trust fund and the cost of benefits in the budget.  But by law, Social Security has been "off budget," that is, not a part of the federal accounting for assessment of federal government assets, deficits, debt and expenditures, for decades because it doesn't belong there.  FDR created the trust fund for the specific reason that Social Security is intended to be an annuity in which everyone participates as if it were a private, insurance company annuity, and by law, it cannot pay out more than it has in the trust fund.  It never causes an increase in income taxes because we pay for it separately.  So when the CBO includes it in federal accounting for purposes of assessing a bill, it builds into its calculations both income and expenditures that don't belong there.  Of course, the inclusion of Social Security in calculations related to federal budget matters is only one of the accounting assumptions imposed on the CBO by congress, and candidly, I have no idea what the others are, but if they are of the same ilk as those related to Social Security, they render CBO's calculations jaded and biased, so that should be considered when we consider the report on the increase in the minimum wage proposed by President Obama, which was issued a week ago.

The report is brief, even though the Republicans, and conservatives like self-described Tea Party types, have made much of it.  The report says--with very little explanation of how these conclusions were reached or even the details of those conclusions--that the minimum wage hike to $10.10 per hour would result in fewer people working, but an a decrease in the number of people living below the poverty line.  The implications of the change in the minimum wage propounded by the report are simply that there would be 500,000 to a million fewer jobs in ten years, and that the income of those who are better off would be reduced.  That's it in a nutshell as far as I'm concerned, and it still seems to me to be a good idea because I favor shifting wealth from the top of the economic scale to the bottom.  But regardless of how you fell about it, you can read the report in a few minutes, it's that short...and sketchy...and I urge you to do so.  As I always say, think with your own mind, not someone else's.  Not even mine.  But when you do read the report, think about these tangential things.

With the minimum wage as it is, there are millions of people who can't feed their families adequately or find shelter under a roof that doesn't leak or enjoy enough heat in the winter to keep them all healthy.  On the other hand, the concentration of wealth in the hands of the richest 10% of Americans, let alone the top 1%, is as high as it was in 1928, which for perspective's sake was the year before the stock market crash of 1929, which marks the beginning of the Great Depression.  And all of that begs the question, why should someone go to work if he can't live a decent life by doing so.  What is the advantage to our society of having a million more jobs if they are to no avail in terms of their ability to sustain people, and almost as important, provide them with hope of relative prosperity at some point in the foreseeable future.  And those questions are the same ones we should ask when conservatives talk about the working poor as if they were pariahs of some kind...burdens on our society.  Tens of millions of Americans live in poverty, and many of them work.  Yes, they get food stamps, and their health insurance will be subsidized under the Affordable Care Act, but how unreasonable can that be in the richest nation in the world.  Projections by the CBO relative to what Republicans love to call Obamacare are that people will work less on account of it, but the reason is that without the pressure of providing for their insurance at outlandish cost, they can consider other things when deciding whether to work full-time or not.  They can consider retiring in their sixties rather than in their seventies.  They can consider starting their own businesses, which is the holy grail for Republicans, because they can count on health care when they need it now.  In addition, those hours that such people don't work in other people's businesses will be available to the millions of unemployed people who are now unemployed, thus lessening the unemployment rate by affording the opportunity to work for a decent wage...provided that the increase in the minimum wage gets passed by the conservatives in The Senate and The House, who have the power to prevent it as the Democrats don't have the power to pass it without them.  And there would be ancillary benefits for all of us: tax revenues would be increased even though some people stopped working full-time; with more entrepreneurs having the opportunity to try their luck in obtaining the wealth that everyone is supposed to have the opportunity to accrue under our form of capitalism, there would be more jobs created for others; and people on the lower end of the economic ladder would have happier lives because they would have more money to spend, which spending would create more jobs in the bargain.

I don't consider the CBO reports on the minimum wage and the Affordable Care Act to be definitive.  But even if they were, if you look at the whole picture that they report, those two prospects represent a measurable enhancement of the quality of tens of millions of lives, and at a cost that is minimal, even by the CBO's tendentious standards.  So, read the reports and talk about them among yourselves.  Then, when you go to the polls in November, remember who you think is on your side.

Your friend,

Mike