In a previous column entitled : “Numbers Count and Size Matters,” I lamented our culture’s movement away from using math and numbers and toward our dependence on gut feelings and descriptive adjectives. That column focused more on the size of American family cars recommending reductions to specific car lengths instead of generalizing adjectives like “mid size” or “compact.” I also took the opportunity to decry the excessive size of men’s bathing suits and shorts as well as most of the watches available to these gender-specific consumers.
But now I want to address our culture’s inability to do simple math on a routine basis. Here are some recent examples:
There much ado about extending the 2% reduction in payroll taxes deducted from workers’ paychecks. Everyone has agreed how vital this was for the working people and for our economy. Their payroll tax payment will continue to be reduced from 7.65% of their earnings ( 6.2% for Social Security plus 1.45% for Medicare contributions) for earned incomes of up to about $106,800 to only 5.65% for another 10 months if approved by Congress. Workers will continue to keep 2% more of their gross earned income as they did last year.
The man on the street was interviewed and in each case declared his joy for the much-needed extra money. The news media couldn’t seem to figure out how much of a real difference this $120 billion program would make. It is $750 a year in average savings, not $1,000, for 160 million workers. While the media not only incorrectly said that the average savings was $1,000 a year when it is more like $750, the media also couldn’t figure that this was less the $14.50 a week or about $2 a day. Not one report that I saw, and I watch most of them, ever mentioned this measly amount. Instead of having $721 a week, the average worker will have $735. The $2 a day difference won’t even pay for a cup of Starbuck’s coffee.
And in order to give 160 million workers an average of $2 a day more, we should lose $120 billion in revenue ($10 billion a month) when we are trying to reduce our annual one trillion dollar deficit.
Has anyone done the math?
Also in the news lately we have heard about mandatory cuts of $45 to $55 billion a year from our defense budget. Is that a lot or is that a small matter? How much do we spend on defense and what does it include? While the budget for the Defense Department is about $650 billion, that is not the total cost of our defense. We also have the Veteran’s Administration which pays the pensions and provides medical services to active and retired vets. There are costs for defense related programs in the CIA, the Energy Department, NASA and the State Department. The actual total cost of defense is a little over $1 trillion or about one third of the federal budget.
And what does that money buy and what can be lived without? No one has given us the numbers. How many military bases do we run around the world? We never hear. Estimates vary from more than 700 to as many as 1,000. The other 195 sovereign nations combined have a total of less than 200 foreign military bases. How many more war ships, fighter jets, atomic bombs, etc., do we have than the whole world combined, ten times as many, 20 times as many?
We have not been given any of these numbers without which we cannot measure or judge the significance of our cuts.
Then there is the multi-millionaire running to be his party’s unsuccessful opponent to our incumbent leader. We have learned that in 25 years of working for a private equity company he was able to amass more than $200 million. When he reluctantly released his tax return for 2010, we learned that he invested some of his fortune in Swiss banks and in companies on the Cayman Islands, not helping our struggling economy. We also learned that he paid less than 14% of his $21 million annual unearned income on taxes. But what no one mentioned is that he made over 10% interest on his $200 million. Who else gets that kind of return? If you put your money in a regular account at a major bank, as most of us do, you get .1%, if you are lucky. If you put one million dollars into CDs or a maximum savings account, you might get 1%. If you invest in stock and do real well, you might get 3% return. How does he get 10% every year now that Madoff is in prison and Milken is out but has reformed? This is the real outrage. He makes more in a day in interest ($57,500) than the average American worker earns in a year (about $33,000).
And lastly, there is the Occupy Wall Street movement. The occupiers have echoed the concern of many Americans that Wall Street has become too powerful, too greedy and too corrupt. They sense that the bonus system has encouraged otherwise decent, well-educated people to take outrageous risks with other people’s money for their own personal gain with some ruinous results.
But some people in the movement came up with this 1% versus 99% theme. They said that our country’s problems are caused by the richest 1% of our population subjugating the unfortunate, defenseless 99%.
In all this time, I have heard no one say who these 1% are. The top one percent of households in the United States, accounting for just under 1.5 million households, earn at least $386,000 a year. This top 1%, therefore includes every professional athlete and coach, every person we watch regularly on T.V., most surgeons and all the professional couples who each earn $200,000 a year. They are what most would call the high end of upper-middle class. Surely, they are not the problem.
The top .1%, representing the top-earning 150,000 households, earned at least $1 million a year. This includes many top professional athletes, news anchors, T.V. stars, movie stars as well as CEOs of large companies, Wall Street investment bankers, lawyers, hedge fund managers, and private investors. Many of these people give generously to charity and non profits like schools, hospitals and public projects. But some of these high earners pay lobbyists to coerce legislators to relax regulations and reduce personal and corporate taxes. It is these people and their lobbyists who are in part to blame for our country’s economic and political woes.
Then there is the top .01%, the billionaires like Warren Buffet, Steven Jobs and Bill Gates who are the most generous in their donations and have lobbied for the rich to pay more taxes.
So then who is the problem, now that we know the numbers? It is Wall Street money managers and the influence they bring to bear on our legislators, on our country. It is the system driven by greed for ever bigger bonuses to own ever a bigger slice of the American pie without any real concern for their fellow citizens. The problem includes an electoral system that always requires more money in donations to win continued reelection which becomes more important than the reason for which our politicians were elected - to help the people. It is lobbying, using hundreds of millions of dollars to seduce legislators into doing the special interest’s bidding. Also, it has been the conservative wing of the Republican party who has taken advantage of its constituents’ failure to understand what is in their own best interests convincing blue collar party faithful that they too will be rich someday. Something that will probably never happen, but hope springs eternal, especially when we don’t know the facts.
Our problems can not be properly addressed by an inadequate free press and a public unwilling to ask to see the numbers so that decisions can be based on fully-disclosed facts and not by gut feeling or senseless adjective-filled slogans.
Numbers count but only if we know what they are and what they mean.
But now I want to address our culture’s inability to do simple math on a routine basis. Here are some recent examples:
There much ado about extending the 2% reduction in payroll taxes deducted from workers’ paychecks. Everyone has agreed how vital this was for the working people and for our economy. Their payroll tax payment will continue to be reduced from 7.65% of their earnings ( 6.2% for Social Security plus 1.45% for Medicare contributions) for earned incomes of up to about $106,800 to only 5.65% for another 10 months if approved by Congress. Workers will continue to keep 2% more of their gross earned income as they did last year.
The man on the street was interviewed and in each case declared his joy for the much-needed extra money. The news media couldn’t seem to figure out how much of a real difference this $120 billion program would make. It is $750 a year in average savings, not $1,000, for 160 million workers. While the media not only incorrectly said that the average savings was $1,000 a year when it is more like $750, the media also couldn’t figure that this was less the $14.50 a week or about $2 a day. Not one report that I saw, and I watch most of them, ever mentioned this measly amount. Instead of having $721 a week, the average worker will have $735. The $2 a day difference won’t even pay for a cup of Starbuck’s coffee.
And in order to give 160 million workers an average of $2 a day more, we should lose $120 billion in revenue ($10 billion a month) when we are trying to reduce our annual one trillion dollar deficit.
Has anyone done the math?
Also in the news lately we have heard about mandatory cuts of $45 to $55 billion a year from our defense budget. Is that a lot or is that a small matter? How much do we spend on defense and what does it include? While the budget for the Defense Department is about $650 billion, that is not the total cost of our defense. We also have the Veteran’s Administration which pays the pensions and provides medical services to active and retired vets. There are costs for defense related programs in the CIA, the Energy Department, NASA and the State Department. The actual total cost of defense is a little over $1 trillion or about one third of the federal budget.
And what does that money buy and what can be lived without? No one has given us the numbers. How many military bases do we run around the world? We never hear. Estimates vary from more than 700 to as many as 1,000. The other 195 sovereign nations combined have a total of less than 200 foreign military bases. How many more war ships, fighter jets, atomic bombs, etc., do we have than the whole world combined, ten times as many, 20 times as many?
We have not been given any of these numbers without which we cannot measure or judge the significance of our cuts.
Then there is the multi-millionaire running to be his party’s unsuccessful opponent to our incumbent leader. We have learned that in 25 years of working for a private equity company he was able to amass more than $200 million. When he reluctantly released his tax return for 2010, we learned that he invested some of his fortune in Swiss banks and in companies on the Cayman Islands, not helping our struggling economy. We also learned that he paid less than 14% of his $21 million annual unearned income on taxes. But what no one mentioned is that he made over 10% interest on his $200 million. Who else gets that kind of return? If you put your money in a regular account at a major bank, as most of us do, you get .1%, if you are lucky. If you put one million dollars into CDs or a maximum savings account, you might get 1%. If you invest in stock and do real well, you might get 3% return. How does he get 10% every year now that Madoff is in prison and Milken is out but has reformed? This is the real outrage. He makes more in a day in interest ($57,500) than the average American worker earns in a year (about $33,000).
And lastly, there is the Occupy Wall Street movement. The occupiers have echoed the concern of many Americans that Wall Street has become too powerful, too greedy and too corrupt. They sense that the bonus system has encouraged otherwise decent, well-educated people to take outrageous risks with other people’s money for their own personal gain with some ruinous results.
But some people in the movement came up with this 1% versus 99% theme. They said that our country’s problems are caused by the richest 1% of our population subjugating the unfortunate, defenseless 99%.
In all this time, I have heard no one say who these 1% are. The top one percent of households in the United States, accounting for just under 1.5 million households, earn at least $386,000 a year. This top 1%, therefore includes every professional athlete and coach, every person we watch regularly on T.V., most surgeons and all the professional couples who each earn $200,000 a year. They are what most would call the high end of upper-middle class. Surely, they are not the problem.
The top .1%, representing the top-earning 150,000 households, earned at least $1 million a year. This includes many top professional athletes, news anchors, T.V. stars, movie stars as well as CEOs of large companies, Wall Street investment bankers, lawyers, hedge fund managers, and private investors. Many of these people give generously to charity and non profits like schools, hospitals and public projects. But some of these high earners pay lobbyists to coerce legislators to relax regulations and reduce personal and corporate taxes. It is these people and their lobbyists who are in part to blame for our country’s economic and political woes.
Then there is the top .01%, the billionaires like Warren Buffet, Steven Jobs and Bill Gates who are the most generous in their donations and have lobbied for the rich to pay more taxes.
So then who is the problem, now that we know the numbers? It is Wall Street money managers and the influence they bring to bear on our legislators, on our country. It is the system driven by greed for ever bigger bonuses to own ever a bigger slice of the American pie without any real concern for their fellow citizens. The problem includes an electoral system that always requires more money in donations to win continued reelection which becomes more important than the reason for which our politicians were elected - to help the people. It is lobbying, using hundreds of millions of dollars to seduce legislators into doing the special interest’s bidding. Also, it has been the conservative wing of the Republican party who has taken advantage of its constituents’ failure to understand what is in their own best interests convincing blue collar party faithful that they too will be rich someday. Something that will probably never happen, but hope springs eternal, especially when we don’t know the facts.
Our problems can not be properly addressed by an inadequate free press and a public unwilling to ask to see the numbers so that decisions can be based on fully-disclosed facts and not by gut feeling or senseless adjective-filled slogans.
Numbers count but only if we know what they are and what they mean.
