Tuesday, October 5, 2010

Only In America: Millionaires Collecting Unemployment

By Manifesto Joe

I do my share of lamenting these days about how the American people seem to have lost their minds. Anger is visible in the country today, but it seems focused on all the wrong things. I keep reading that in less than a month, it's likely that the voters are going to basically hand the country back over to the very people who were mainly behind the current economic debacle.

But now I read that U.S. millionaires, a lot of them, have been collecting unemployment benefits. I hope we have something here that most of us can agree is an outrage. I've noticed that even some conservative websites are unhappy about this news.

Here are the particulars, from Bloomberg News, plus a link to the entire article:

Oct. 1 (Bloomberg) -- After the economy slipped into recession in 2008, millions of Americans received unemployment benefits to make ends meet -- including almost 3,000 millionaires.

According to U.S. Internal Revenue Service data, 2,840 households reporting at least $1 million in income on their tax returns that year also collected a total of $18.6 million in jobless aid. They included 806 taxpayers with incomes over $2 million and 17 with incomes in excess of $10 million. In all, multimillionaires reported receiving $5.2 million in jobless benefits.

Not that $18.6 million amounts to all that much in the vast federal scheme of things, in which annual deficits can reach $1.3 trillion. Hell, the country could cut that deficit by two-thirds if it just forced rich people and big corporations to pay more, or in some cases any, income tax.

But there's a principle involved here. All these people are already doing quite well. If there was ever an area in which means-testing was needed, this seems to be it.

And yes, I understand the argument, as reported in the article, that unemployment benefits are insurance benefits, and therefore means-testing doesn't enter into it.

But let's consider that aspect for a moment. Don't insurance policies often come with certain rules and limitations? Term life expires at age 65, usually. Why doesn't unemployment insurance exclude those with incomes above a certain number?

Of course, this issue has come up before with regard to Social Security as well. What the hell is a multimillionaire doing collecting up to $3,000 a month, or something like that, from Social Security?

The rapid response is that Social Security is social insurance, and again, not subject to means-testing. But consider further: You can spend most of a lifetime paying into that system, but if you die just one day before you become eligible for benefits, you don't collect a cent. Insurance is no guarantee when the insured does not meet certain criteria.

As I understand it, Social Security is set up the way it is so that the better-off in U.S. society will be politically co-opted and willing to support and participate in the system. It's essentially a regressive payroll tax, with workers and employers each paying 6.2% on annual wages up to $106,800. After that cap, nothing is paid and nothing is accrued. It's designed so that everybody who accrues benefits will at least get something if they live long enough to collect.

Unemployment insurance was probably set up with the same considerations in mind among those who wrote the legislation. Everybody gets something, so it's more likely that the well-to-do will take part and offer at least tacit support for the program.

But, it is precisely this "what's in it for me" kind of thinking that will eventually sink this country. The paying of unemployment benefits to millionaires is just one little example of such behavior.

But, from what I've been reading, we're likely to witness a mass example of all this self-centered and misdirected rage on Nov. 2. Stay tuned.

Manifesto Joe Is An Underground Writer Living In Texas.


Jack Jodell said...

If the voters of this country really do give control of both houses of Congress back to the very same people who caused our economic collapse and then obstructed all attempts to revive it, this writer will become a very angry American dissident! We as a people CANNOT be THAT stupid, forgetful, and ignorant!!!

Anonymous said...

I'm not sure that it bothers me so much if millionaires collect jobless benefits. After all, they're simply collecting money that they paid into the system.
More significantly, the real outrage isn't jobless benefits. The latter are nickel-dime chump change for the rich.
The real money is in corporate welfare. The rich collect something like $200 billion in corporate welfare each year. That amount dwarfs any and all social programs for the poor in the U.S.
What's more, the rich don't pay anywhere near their fair share of taxes.
Don't take my word for it, though. Warrett Buffett has pointed out that he pays less of his income into taxes than does his cleaning lady and his secretary.
Even George W. Bush once said (direct quote): "The rich can always figure out how to avoid paying taxes."

Manifesto Joe said...

Hi, Jack, thanks for stopping by. It's a pleasure as always.

Anon: I obviously don't disagree with any of your points, if you re-read the piece. My point is that, symbolically, this adds insult to injury. $18.6 million is clearly chump change to many such people. It's just one small example of how our "social safety net" has become an international joke. There are millions of unemployed people out there scraping by on $300 a week, while these well-to-do people are likely getting more than that. It's a matter of principle.

Lots of people in this system are paying for things that don't bring them anything back. I've been paying taxes to support a war (Iraq) that I opposed from Day One. My reward for that is that, being born in 1956, I will have to wait until I'm 66 years and 4 months old to claim my full Social Security benefits, rather than getting them at 65 like older people can. Thanks a million, Uncle Sam!

Anonymous said...

Would you feel better if millionaires were offered the opportunity to opt out of paying unemployment tax and Social Security tax and then receive no benefits?

Manifesto Joe said...

Anon, you are clearly missing one of the major points of the post. Read it again. You can spend 40 years paying into Social Security, but if you die at age 61, you collect zero. Zilch. Social insurance programs are for those who actually NEED them. I'm arguing that means-testing could easily be entered into the equation for unemployment, since the age criterion is there for Social Security.

But actually, I would be happy enough if the wealthy were paying the marginal income tax rates they were paying only 10 years ago. The 39.6% marginal rate is still pretty low by the standards of all developed countries, and even low for here (at one time there was a 91% bracket, and even I am against that). But if the rates just went back to where they were 10 years ago, the deficit could be cut dramatically. Then, as far as I'm concerned, the fatcats can collect all the goddamned unemployment they can.