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Home Publications Blogs Beat the Press Robert Samuelson Redefines "Wealthy"

Robert Samuelson Redefines "Wealthy"

Friday, 29 July 2011 16:27

The Washington Post once ran a front page piece questioning whether people who earned $250,000 a year, President Obama's cutoff for his no tax hike pledge, were really rich. However, it also features Robert Samuelson on its opinion page telling readers that seniors with income of $30,000 a year are wealthy. I'm not kidding.

In a piece titled "Why Are We In This Debt Fix? It's the elderly stupid," Samuelson tells readers:

"some elderly live hand-to-mouth; many more are comfortable, and some are wealthy. The Kaiser Family Foundation reports the following for Medicare beneficiaries in 2010: 25 percent had savings and retirement accounts averaging $207,000 or more."

Let's see, we have retirees who have their Social Security checks, plus a stash of $207,000. If someone at age 62 were to take that $207,000 and buy an annuity this money would get them about $15,000 a year. Add in $14,000 from Social Security and they are living the good life on $29,000 a year. And remember, 75 percent of the elderly have less than this.

To be fair, many of the people with $207,000 in savings will be older than 62 so their money will go further, but it is hard to believe that anyone can think of this as a cutoff for being wealthy, or at least anyone other than Robert Samuelson and his colleagues at the Washington Post.

Comments (17)Add Comment
The People Have too much Money
written by zinc, July 29, 2011 8:09
The interest rate strucfture is a strange, irrational animal. Why would anyone lend money at .09 % interest? Those on fixed income are paying the price for their reluctance to protect their own interests. The Ronald Reagan legacy is complete. We now have a national economy and budget just like the one he established in California. Good grief ! In the middle ages they had a name for the charismatic idiot.... jester.

We can expect more of the same of course. How about the jobs guy Milt Romney. He followed the Wall Street formula to wealth, I think. Borrow money (from the Mormon Church ?) and buy a fiscally solvent company. Load the company with debt, using the cash to buy your shares and pay back the bridge loan. Grab the "excess" pension with-holdings, elect the board of Directors and higher your guys at extreme salaries and benefits, suck cash from the company by starving the inventory, fire the higher paid workers, live off the backlog of orders, report two quarters of higher earnings, take the company private.

The rate suggests that money is readily available, assuming the beloved "free" market euphimism was real.
written by zinc, July 29, 2011 8:23
Whoops, I forgot the most important ingreedient ( mispelled to make the point). The Wall Street Investment Bank and their butt buddies, the Rating Agencies. Someone has too pump and dump the "stock". White shoe boiler rooms are still boiler rooms. They just cost more.
written by zinc, July 29, 2011 9:07
Eric Cantor ?:

written by bmz, July 29, 2011 9:08
You didn't know that middle class seniors are wealthy? Congress not only thinks so, they have mandated that middle class seniors pay far and away the highest marginal tax rates. I am 70 years of age, and am self-employed part time. My AGI is ~$45,000/yr. At that income, I must pay, in addition to my regular tax, a tax on 85% of my SS benefits( for every marginal dollar of income, I pay a tax on $1.85). My total marginal income tax rate is: 25%(regular rate) +21.3%(85% on SS) +12.4%(self-employment tax) +7.5%(state income tax) = 66.2% total marginal income tax rate.
Of a Piece with the Orrin Hatch Obscenity
written by Hugh Sansom, July 30, 2011 3:24
There is a unifying 'idea' (if it can be called that) behind the idiocy of Robert Samuelson and like-minded conservatives. Recall Orrin Hatch's assertion that the poor and less-well-off need to bear a greater share of the burden.

What unifies this — and the general Republican willingness to redistribute burdens from the wealthy to the rest of us — is a true Orwellian doublethink — a commitment to the Divine Right of Wealth, the more wealthy, the more divine. This is a view endorsed by most Democrats. It finds a clear expression in a blog post by Gregory Mankiw from August, 2009: http://gregmankiw.blogspot.com...f-all.html. Mankiw was convinced that wealth was an indicator of superior intelligence, which in turn is genetically based; therefore, wealth is an indicator of genetic superiority. (Where have we heard this before?) This is a just a specific instance of the widespread conviction that wealth is an indicator of superiority and virtue — indeed, that wealth is itself a virtue.

On this line, there is no inconsistency in viewing subsistence-level elderly as wealthy. They 'must' be to make them plausible candidates for taxation. "America doesn't tax the poor" just as "America doesn't torture." Conversely, the really really wealthy are over-taxed, and their suffering must be alleviated through transfers from those who are under-taxed.

The logic works, if you live in the frame of mind of a 13th Century European baron.
Try Living on $29,000
written by deanx, July 30, 2011 5:56
I love when obviously wealthy people pass judgment on minimum standards of living that they themselves have never endured.
How much does Mr Samuelson have in HIS retirement account?
written by timotheus, July 30, 2011 7:30
just wonderin'
How High Should Seniors Jump to Fix the Debt?
written by izzatzo, July 30, 2011 9:02
Samuelson also redefines 'high' in other ways, reporting that while seniors are too old to participate in the Olympic High Jump they are not to old to compete in the Debt Fix Jump. All they ask is how high?

Stupid liberals.
Seniors and the Doctor Problem (and Samuelson's Attention Deficit?)
written by Rachel, July 30, 2011 10:59
Before Samuelson blames poor seniors for the deficit, he needs to pay a little more attention to the actual reason seniors seem to be costly. It's our health care system, which is seriously dysfunctional.

For example, the average GP in the US is making about $160K, or over $80K more than many GPs in Europe. Maybe Samuelson would say, yes, but look at how med school graduates in the US come out of school owing almost 200K. If Robert Samuelson were as learned as Dean Baker's students and readers, however, he would see the fallacy of that reasoning. He would know that the price of medical school, if prudently invested, might bring in just 15K a year, enough to rent an apartment in the ghetto, with a diet of lentils and rice. Car and cable not included. It would not be a ticket to the top 5% income status.

This isn't to say that med schools aren't overpriced. They are. But their price does not justify doctors' high incomes.

And Samuelson should not forget that some 25 to 30% of US GPs were not trained in the US. So for them, that 80K extra is pure gravy.

And of course surgeons make two or three times as much as GPs.

That's just one example of the giveaways in American health care. Something Samuelson should have remembered before blaming seniors for the deficit.
written by dunkelblau, July 30, 2011 8:04
The way I read his statement is not that $207,000 in retirement accounts is wealthy, but rather that someone in this situation should be paying his or her own medical bills rather than passing them off to the taxpayer. People who aren't old enough to qualify for this program might have their medical bills covered by the government based on their income level, but there's an asset threshold that's considerably lower than this amount.

I think it's unconscionable that minors under 18 years of age are not covered by Medicare.
written by jethro, July 30, 2011 8:13
What a ridiculous comment. So you think most DRs went to med school for the money. Tell that to the heart surgeon that is going to give you a bypass and save your life some day. I am not a doctor, but the training, stress, and the hours many in the medical field endure, is more than most ordinary person deals with.

The problem with healthcare is not compensation - it is that the people do not take care of themselves - 1/3 are over weight and another 1/3 are obese. Couple that with insurance companies that keep costs in the dark for their customers (who knows what anything costs or should cost in healthcare)- those are the problems and until you fix that, nothing will work - not even your beloved ObamaCare.
bmz and marginal rates on social security income
written by AndrewDover, July 31, 2011 9:58
A marginal rate is the amount of tax you pay on one additional dollar of income. (bmz has mistakenly added two dollars of income; one in employment, and one in social security)

Another dollar of employment income, does not affect the taxes on bmz social security income at all. Another dollar of of social security income would be taxed at .85 * his marginal rate, or .25 * .85 = .2125, so the marginal rate on social security income is less than employment income.

The tax return of Joe Biden is a example of how this works:

20a.... Social Security benefits__ $27,923
20b.... Taxable amount (.85*20a)__ $23,735

bmz should recheck his 1040 lines 20a and 20b.
written by bmz, July 31, 2011 11:52
Sorry Andy--the law mandates that for incomes over $34,000 per year, Social Security beneficiaries must pay a tax on 85% of their Social Security benefits, in addition to their regular income tax. This means that a beneficiary must pay the tax on $1.85 for every additional marginal dollar of income. If you don't believe it, get the worksheet from the form 1040 and work it out yourself. Your error is in not knowing what a "marginal dollar of income" is. My Social Security income is fixed at $2200 per month; hence, it cannot be my marginal income. My marginal income is my self-employment income, and for every extra dollar I earn I have to pay tax not only on that dollar, but on $.85 of my Social Security income as well.
written by bmz, July 31, 2011 1:06
Let's see if this helps: the amount on line 20b is not fixed at 85% of 20a. The amount on my line 20a is $26,400 regardless the total amount of my AGI. However, the amount on line 20b starts out at $4500 at an AGI of $34,000; and goes up to $22,440 somewhere between $60,000 and $70,000. At my ~$45,000, it is ~$17,500, and goes up $.85 for every extra dollar of marginal income I earn.
Follow up
written by AndrewDover, July 31, 2011 5:32
At a $1,200 monthly benefit and $45,000, there is no increase in taxible social security.

I did not know at 9:58 am that BMZ had a $2200 monthly or $26,400 yearly SS benefit. For that benefit level, BMZ is correct that there is a .85 increase in SS income taxable for each $1.

There is also no increase in Joe Biden's SS income taxable at his 300K non social security income level.
Reliving the Libertarian/Corporate Days of the Robber Barons
written by FoonTheElder, August 01, 2011 12:47
We are falling further and further into the old Libertarian days of the late 19th century. Where the robber barons owned the government and had it work for them under the guise of 'limited government' and property rights. Where the fortunate few lived in opulence and acquired more property, everyone else was one step away from poverty.

Why is it that the supporters of libertarianism, property rights and limited government, think that they will be in the top 1%? It is far more likely they will be digging dirt like everyone else.

Stop, Think
written by nor, August 02, 2011 6:03
We are all trapped trying to make sense of our forced monetary existence. Playing a rigged game, but blind to who/what is the blame. Blame the rich, the poor, the old, young, health care, immigrants, ethnic groups, religeous groups, ... see the pattern?
I know you're thinking "there has to be someone to blame". There is ... and it is all of us. From those who cause the pain and gain from it, to those who toil in complacency, to those who actively speakout against the evils of the world. We ar all to blame for this mess we now find ourselves in.

There is only one way out that is beneficial to the majority of us - we must come together. The solution must be a populous one not an economic one, not a special interest one; and we must all get behind it. For otherwise there will be no 'real' change.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.