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Social Security: The Next Big Fight after Roe v. Wade

Is Social Security the next big concern for US residents?

On August 14th 1935, Franklin Delano Roosevelt signed the necessary legislation for the creation of the Social Security program. The program sends out checks to 64 million Americans over the age of 65. W-2 workers pay into the program their whole lives. Incidentally, money earned by workers after $147,000 a year isn’t taxed for Social Security. This is an important fact to remember because in 2035, one hundred years after the program’s inception, Social Security will run out of money and will be only able to pay around 80% of promised benefits. 

Now, Reps. Pramila Jayapal of Washington and John Larson of Connecticut have proposed Social Security 2100: A Sacred Trust. The bill would expand the program for the first time since LBJ’s Great Society reforms. 

Social Security 2100?

According to CNBC, the bill would do the following: “It calls for increasing all checks by about 2% of the average benefit. At the same time, it would also set the minimum benefit above the poverty line and tie it to current wage levels.”

Annual cost-of-living adjustments would be calculated differently to better reflect the real costs of living as a retiree. In addition to those changes, Widows and widowers would also receive more generous benefits, student benefits would extend to age 26 (like healthcare coverage under ACA), and children who live with relatives would have better access to benefits. The bill would also eliminate reductions for public workers, including the Windfall Elimination Provision and Government Pension Offset. It would also can the five-month waiting period for disability. 

All this sounds expensive, and they have solved that by increasing the Social Security payroll tax on wages above $400,000, which would affect an estimated 0.4% of wage earners. Employers and employees each pay a 6.2% tax on wages, for a total of 12.4%. A small group of people would be taxed more, and it would lead to new money pouring into the ailing system. 

social security administration USA
@ Social Security Administration

The Elephant in the Room

It all sounds like a good idea and something Americans need, however, the GOP is already aligning its interests against the idea. Republicans have long wanted to abolish the system, or at least starve it. Paul Ryan raised the retirement age for earners born after 1975 to 67 and back in the 1990s, Newt Gingrich reduced government budget deficits by borrowing money from the program back when it was flush with cash ahead of a new wave of retirees from the Baby Boomer generation (those born between 1945 and 1964). 

It’s not just Republicans that have ideas about the bill. Elizabeth Warren and Bernie Sanders, on the Senate side, are working on a proposal that would not just extend benefits to 2038, as in the original bill, but would extend benefits to 2096 by increasing taxes on the wealthy to pay into the program. The details on the senate proposal are slim. Although Jayapal and Larson want a vote this fall, it appears that there is much wheeling and dealing to be done.

That said, if democrats could land the bill heading into the midterms, they would be able to campaign on not only saving Social Security but improving the program for millions of seniors. 

How to Save Social Security

This is a problem that congress has been kicking down the road for thirty years. Approaching program reforms is difficult. Entitlement spending like Medicare, Medicaid, and Social Security is political “third rails.” No politician is going to suggest entirely cutting benefits or ending the programs. However, many feel like it’s politically risky to do anything and expanding the program is simply too expensive. The reality is this: 2035 seems like a long way away, but it is not. 

In 13 years, the Social Security fund won’t be able to send out checks to everyone. 13 years ago, it was 2008. That’s the distance we have between the present and cheques not going out. It seems like there’s time, but when it comes to ensuring retirement funds for millions of Baby Boomers and a few older Generation X folks, time is something that the government does not have.

Social Security 2100 doesn’t entirely solve the problem. Demographics are also not on the government’s side. The Baby Boomers had plenty of children (Millennials and early Gen Z) but workforce participation is low, wages are low, and younger people are having far fewer children than their parents. This means that from here on, there will be less money flowing into the program. Even with their new taxes, this new bill extends Social Security by only three years.

What can be done?

The new deal reforms were meant to last about 100 years. They were intended to improve the lives of the people alive in 1935 and their children. It looks like the program might not even make it that long. The time to save Social Security was about 30 years ago when it was used as a government piggy bank to solve budget problems without having to raise taxes. The reality is that the Republican Party got us into this mess, and they will be intractable while the democrats attempt to fix it. However, despite the democrats’ best efforts, the program is unlikely to be saved. 

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China’s Economy: What’s Eating the Dragon?

Chinese flag

Xi Jinping is heading into his party Congress in Beijing with unpopular covid policies, the failing of China’s economy, and Taiwan as hot topics

The Five-Year Party Congress is coming up in October for Xi Jinping. The Chinese Communist Party has its People’s Congress every five years, and the party announces a new five-year plan for the country at that time. At the last Congress, Xi Jinping made himself the leader of China, essentially for life, and he consolidated power by putting several of his enemies out of the party or at least in severely reduced roles. He surrounded himself with loyalists so that he could rapidly roll out his agenda, an agenda which includes reunification with Taiwan. However, five years later, things aren’t looking so good for China’s economy and the country Xi Jinping has built. And now, party insiders are questioning his leadership. Between the lockdowns and political unpopularity both within the CCP and in the public, it appears that Xi Jinping is surrounded by problems. China’s Economy is faltering and civil unrest abounds. So, what is eating the great dragon of the East? 

China's Economy
Xi Jinping @ Getty Images

Real Estate Comes Tumbling Down

China’s real estate sector, the only way the average Chinese person could store wealth, is in the middle of a collapse. The Chinese real estate market collapse is far bigger than the 2008 mortgage-backed-security crisis in the United States. Real Estate companies in China would take deposits on new properties they had not built and then use that money to start more projects rather than finish the projects they had already committed to building. This has turned China’s big real estate firms into Ponzi schemes at best and weak giants at worse. 

Evergrande is the classic case of a real estate company that borrowed far more money than it should have and is now essentially in government receivership. However, with empty apartment buildings dotting the country and people refusing to pay mortgages on unfinished properties, the real estate debt bomb in the Chinese market is only beginning. 

Many argued that China has had a debt problem for 10 years, but few took it seriously. Now, it is obvious that China has an issue and but, because the numbers are unreliable, we don’t really know how far that debt problem really goes. The real estate bubble is just the tip of the iceberg. 

The Export Trap Destroying China’s Economy

The zero-Covid policy has created havoc for the Chinese people and global supply chains. Goods are not moving out of China as fast as the world demands them due to the various shutdowns Beijing continues to push on the country. Even if China’s factories were open and working, China has fallen into something that many developing countries fall into; the export trap. 

The Export Trap is when a country’s economy becomes so dependent on exports and bringing in foreign capital that it never truly develops a domestic market for its goods. Japan suffered from this in the 1980s. Japan was the East Asian country that was going to own the world. However, the country was deeply dependent on exports and had weak consumer demand within its borders. After its real estate collapse in 1991, Japan struggled to get its economy moving again and the resulting deflation raised the price of exports, which undermined their export economy.

China is facing a similar problem. For China, the problem is two-fold, they don’t have enough consumer demand for their products at home, and American companies are looking at reshoring much of their manufacturing either to the United States or to Canada and Mexico. This exodus will undermine China’s position as the world’s workshop and will further damage its economic output. 

China also has flagging domestic demand for its products, which leaves it with a tremendous trade surplus and the government unable to achieve its goal of reducing its dependency on exports. China also has a real estate crisis in its hands. These two factors could do to China what it did to Japan 30 years ago: grind the economy to a halt. In Japan, this economic condition has become the ‘lost decades’. For China, the concern could be far deeper as its population ages and the results of the one-child policy reduce their population by half over the next 30 years. China could not just have a lost decade, they could have a lost century. 

China's economy
Beijing @ Getty Images

Taiwan

When Russia invaded Ukraine in March of 2022 and subsequently fell flat militarily, the world came together and isolated Russia in nearly every way possible. NATO expanded into countries that had opposed membership before. Ukraine received western arms and Putin’s “easy war” ground to a halt. Several commentators saw this as a sign of what would happen to China if they invaded Taiwan. Some even posited that the global response to Russia would give China pause about annexing Taiwan. This was not the case. 

There has been some significant saber-rattling over Taiwan between China and the United States. House Speaker Nancy Pelosi recently visited the island, despite the protests of Beijing and warnings that there would be consequences. President Biden seemed to make overtures about Taiwan’s security. China has long complained over arms sales to the country. China seemed to amp up its rhetoric about Taiwan in the face of the Ukraine invasion. The failures of the Ukraine invasion do not seem to have chastened Beijing in any fashion. 

Militarily, no one is sure how a show-down between the US and China over Taiwan would go. Chinese planes have improved, and they have drones that are just as powerful as US drones. They are moving ahead on another aircraft carrier, although they only have one, and they bought it from Russia. It has rarely sailed out of port due to technical issues. It seems, with 12 aircraft carriers and the power of the US Navy and the US Air Force, that the US could attempt to control the skies. However, it is not clear what a ground offensive would look like. China has not done an amphibious invasion before (the US has some experience in this area) and it is not clear how long the Taiwanese self-defense forces could hold out. From my view, this conflict seems like it would be over quickly with a US victory. However, the US has stretched supply lines, a problem the Chinese do not suffer from. China, in its typical military strategy, could throw enough bodies at the problem to possibly get their way. It is a conflict that would be the greatest challenge the US military has faced since WWII. 

For China, the Taiwan problem is a thorn in the side of Beijing. They do not consider Taiwan independent and rather consider them a runaway province and that Taiwan is still a part of China. During the Hong Kong protests, a poll was taken in Taiwan about reunification, and the vote failed miserably. It is clear that Taiwan desires true independence and international recognition, while Xi Jinping wants to be the leader who brought them back to heel after 70 years. In his mind, he would be greater than Mao. It is expected that he will double down on this stance at the party congress this fall. 

Conclusions

China’s economy is facing some headwinds. There are problems for the great dragon, both within and without. How Xi Jinping navigates them, or if he even gets to navigate them, remains to be seen. However, it appears that China’s story has hit a rough patch. The world is watching and waiting to see what the great dragon of the East will really do.

 

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Mini-Budget Gambles with UK Economy Says ASDA Chairman

uk mini-budget

Chairman of Supermarket Giant Asda, Sir Stuart Rose, has criticised the UK’s mini-budget

Last week, the UK government announced their mini-budget, which details changes to income and corporation tax, national insurance, benefits and other financial procedures in the UK. However, the changes that the conservatives revealed have had an overwhelmingly negative response.

Sir Stuart Rose, the chairman of ASDA and former chief executive at Marks and Spencer, spoke out this week against the financial decisions made by Liz Truss’ government, saying “They have put the entire UK economy on the 3:30 at Epsom. If it comes in people will cheer but if it doesn’t people will be in a very difficult position indeed.”

And, Rose’s opinion is echoed throughout the country and across the globe, with businesses losing faith in the British economy to such an extent that it caused the pound (GBP) to drop to a record low, becoming almost equivalent to the US dollar for the first time in history. On Monday, the pound was valued at $1.03.

mini-budget causes pound to fall
© Bloomsberg

So, why has the world lost faith in the British pound? Firstly, there’s the alarming case of the cost of living crisis. As Stuart Rose pointed out, the poorest people in the UK are already paying £60 per month more than usual, meaning they’re more likely to pull away from premium brands. On top of that, with unpredictable changes being made to taxes, there’s a lot that could go wrong for the UK.

In the mini-budget, it was revealed that basic income tax would be cut down to 19%, while the planned increase of corporation tax (an increase of 6%), would be scrapped and the tax rate would remain at 19%. Benefits will also be cut and made more scarcely available. Essentially, the poorest will be poorer and the richest, richer.

And, while the overall aim is to improve the economy, there is a lot of scepticism surrounding the current tactics. So, it’s yet to be seen whether the pound will make a significant comeback or if another financial recession is on the horizon.

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Price Increases: ‘Outrage’ As McDonald’s Cheeseburger by 20p

McDonald's cheeseburger price increases
McDonalds (Eat This Not That)

McDonald’s ‘savers’ menu needs a name change following price increases

The much-loved burger at fast food giant Mcdonald’s will have a price hike of 20p soon – the first increase in 14 years! The McDonald’s cheeseburger will be one of several items that will see price increases of up to 20p. The decision is an apparent response to the cost of living crisis sweeping the UK and other major economies around the world.

McDonald's cheeseburger price increases
McDonald’s (The Independent)

Mcdonald’s executives have announced that the Cheeseburger will rise to £1.19 in all stores nationwide. The changes will come into effect on Wednesday. Ironically named, Alistair Macrow, the CEO of the UK and Ireland Mcdonald’s said, “Some prices remain unaffected, and some will continue to vary across our restaurants,” Macrow continued, “We understand that any price increases are not good news, but we have delayed and minimised these changes for as long as we could.” Although a small increase, it is likely to trigger an avalanche of fast-food price hikes across the country. “Just like you, our company, our franchisees who own and operate our restaurants, and our suppliers are all feeling the impact of rising inflation,” explains Macrow.

But, Mcdonald’s is not the only company that’s losing profits due to the rise of inflation. Earlier this week, Unilever – which has 400 brands from Dove to PG Trips – also announced a substantial rise in prices: 11.2% to be exact. The changes come at a time when “inflation is running at a 40-year high of 9.4%” – reports the Guardian. Now, British supermarkets and food chains are looking to follow suit, adding immense pressure on poor families up and down the country who have already felt the tightening of the money belt, thanks to the rise of fuel and energy bills.

McDonald's cheeseburger price increases
McDonald’s Cheeseburger (Sky News)

McDonald’s has over 36,000 restaurants in over 100 different countries, making it one of the most well-known and popular fast-food brands on the planet. The simple price change of a McDonald’s cheeseburger may seem insignificant, but it sets a precedent for the rest of the industry. Regrettably, poorer communities are often the biggest consumers of fast food. Therefore, a price rise is likely to hit those with less money the hardest.

Some may argue that the price increase could deter people from unhealthy habits; maybe people should be encouraged to stay away from unhealthy foods. Well, research from the London Economic found that fast food is actually an addiction and something very hard to quit. Targeted ad campaigns prey on certain demographics, which help embed the food chain into part of the weekly diet. “By targeting certain subsets through child-targeted ads and price promotions, McDonald’s’ social media ads may exacerbate healthcare issues in the most vulnerable countries in the world.” The 20p increase, therefore, is more than what meets the eye. It’s the beginning of further struggles for those crying out for financial relief.

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Why are so Many Young People Leaving Wales?

Welsh Dragon
Welsh Dragon vecteezy

Census data reveals that Wales is experiencing record low growth

Census information provided by Ceredigion Senedd member Elin Jones reveals that, whilst the population of Wales remains at its highest in history, its population growth is at a record low.

Ceredigion has experienced a 28% drop in young demographics ranging from 15 to 19-year olds, and the number of 40 to 44-year olds also fell by 26%. Many centennials want to work in Wales but are deeply concerned with the lack of opportunities available. Those who grew up in Wales feel at home but want to see the world.

Brecon Beacons in Wales
Brecon Beacons in Wales © Vecteezy

Most centennials expect to face financial pressures as a challenge while living in rural areas. They believe rising costs will make things harder for them to keep a job and children as young as ten are concerned with the lack of opportunities growing up and believe they’ll need to leave the area to achieve what they want.

This is a problem known as the brain drain: a situation where talented young people move out of the country looking for better jobs and opportunities elsewhere. The reason authorities consider this as a problem is the most highly competent individuals who usually contribute a substantial amount to the economy, are leaving, which could lead to economic hardships due to the lack of know-how in the local environment.

However, while many are leaving in search of more opportunities, others feel the need to stay in their hometown and give back to the community that raised them. The Guardian interviewed many professionals aged 22-30. Some are more attracted to being a big fish in a smaller pond. The development of Wales in many industries seems alluring to them. Other factors, such as England’s government run by Boris Johnson, are seen as a drawback for those interested in making a career there and prefer the management of the Welsh government.

The Conwy Estuary in Wales
The Conwy Estuary in Wales © Vecteezy

Wales has a peaceful and calming environment. The pace of life is slower and there’s less emphasis on productivity and professionalism, which allows young people to enjoy their environment more than they might when living in more bustling areas.

It’s also possible that those young people who have moved away may one day return to Wales, bringing their work experience, skills and economic contributions with them. However, rising costs continue to push centennials into hardships, causing them to look for better opportunities in economies other than their own. 

So what’s the solution to the brain drain in Wales? Many local governments are providing job finding programs to increase the incentive to stay. Councils are also creating higher standards of living, such as improving and expanding hospitality, retail and community facilities, which might help mitigate the pull factors of other countries and motivate professionals to stay in Wales.