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From the category archives: privatization

What If Your Social Security Was Riding the Wall Street Roller Coaster too?

Today might be a good day for a financial exercise...

Chances are if your retirement savings are in a 401K or countless other market-based products, you may have seen what the latest Wall Street downturn has done to your balance. If not, go ahead and bite the bullet and check it.  After you get over the shock, check your Social Securitystatement.  Take some solace in knowing that while your market savings have taken a hit, the good news is your estimated Social Security benefit today is the same it was on Wednesday. 

That’s why Social Security exists.  That’s why it works.  That’s why it’s beyond reason that so many in the GOP still support sending your Social Security to Wall Street and destroying the stable income protection (it’s not an investment) Social Security provides. 

“In June, presidential candidate Jeb Bush said that he thinks the next president will have to try to privatize Social Security. Others have gotten behind the idea as well: Sen. Rand Paul (R-KY) drafted a plan in 2013 that included partial privatization, and Sen. Ted Cruz (R-TX) is in favor of using private accounts. Rep. Paul Ryan (R-WI) has included privatization in his budget blueprints.

The market drop, and ones before, expose the dangers of such a plan, which usually entails diverting some or all of the money workers contribute to Social Security through their paychecks into private investment accounts.” Think Progress

Governor Mike Huckabee also prefers a privatized Social Security system but says he opposes benefit cuts.  The problem is benefits would have to be cut to create private accountsJohn Kasich has also supported privatizing Social Security.

No doubt, conservatives will remind us that over the long-term the market has been good to us.  Maybe so, but as previous market collapses have shown, retirees don’t have the benefit of the long-term to rebuild savings now lost.  

“Look at successive 45-year periods, as I did for my 2005 book, "The Plot Against Social Security," and you find huge variability. The average worker who invested $1,000 every year in the stock market starting at age 20 in 1954 would have $470,000 when he or she was ready to retire in 1998. But the worker who started just five years later, in 1959, would end up with only $234,000 at age 65--half as much--despite investing exactly the same sum over the same time span. 

Market crashes could destroy a nest egg that took a lifetime to nurture. A near-retiree with, say, a half-million in stock in 2007 had just over $300,000 a year later, following a 37.22% plunge in 2008. Those who held fast managed to recover their losses, but that took five and a half years--and what about those who didn't have the luxury of time?”...Michael Hiltzik, Los Angeles Times

Trading Social Security’s guaranteed benefit for a ride on Wall Street makes no sense for Americans who need to be secure in their retirement.  That’s true whether the market is up or down.  

Populism, Promises and Privatization: Mike Huckabee and Social Security

Former Governor and GOP Presidential hopeful, Mike Huckabee, found out early in the primary race a populist tone combined with a promise not to cut Social Security and Medicare benefits would provide a political opportunity to distinguish himself from the GOP pack who’ve been racing to see who could cut more middle-class benefits faster.

Unfortunately, Huckabee’s Oped in the DesMoines Register today made it abundantly clear that, in spite of his rhetoric, his actually plans for the programs are just more of the same: repeal Obamacare and the billions in benefits and years of solvency that comes with it, privatize the programs, and replace Social Security’s funding with a regressive tax changing the program from an earned benefit into a welfare program.

You have to ask yourself, is this really how a champion of Social Security and Medicare describes these programs?

“Washington confiscates money from every American’s paycheck”

“The government grabs that money”

“Washington has been pick-pocketing us every day of our working lives.”

“Washington put a gun to your head and robbed it from your paycheck.”

NCPSSM President/CEO, Max Richtman reacted to Huckabee’s piece this way:

“While it’s encouraging to see one GOP presidential candidate finally acknowledge that Social Security and Medicare benefits should not be cut (“Don’t Cut Benefits America’s Seniors already paid for” Aug 12, 2015), it’s also clear Governor Huckabee’s reasoning is built on a flawed political premise that Social Security and Medicare were built through federal ‘confiscation’ and ‘pick-pocketing.’

No doubt, this plays well with the candidate’s Tea Party base, especially those who are conflicted in their hatred of government and love for its two largest programs, Social Security and Medicare.  However, it’s clear Huckabee’s views have far more in common with the GOP Presidential pack than the American people who value these programs in their current form, not the privatized preference he supports.  Taxing “illegals, prostitutes, pimps, drug dealers,” to pay for Social Security doesn’t seriously address income adequacy or long-term solvency while repealing Obamacare would steal years of solvency from Medicare and billions in new benefits for seniors. 

The American people, of all ages and parties, support Social Security and Medicare because they work.  Promising to protect benefits, while maligning the very essence of these programs and supporting the same old GOP prescriptions may be a good political strategy but it has little to do with improving the programs for generations of Americans.”...Max Richtman, NCPSSM President/CEO

Not mentioned in his Des Moines Register piece, and only rarely discussed, is the fact the Huckabee also supports various forms of privatization ranging from ending Social Security’s guaranteed monthly benefit in exchange for a lump-sum payment to private accounts for future generations. 

“Instead of signing up for Social Security sometime between the ages of 62 and 70, which is currently the only option for eligible Americans, and receiving a monthly benefits check, Huckabee wants to offer a one-time, lump-sum cash out benefit at age 65 to participants that would be completely free of taxation. Per Huckabee, it would remove the government's ongoing involvement in providing for seniors, and it would potentially allow seniors the opportunity to invest their lump-sum payment in order to achieve inflation-topping returns.”  Motley Fool

Sound familiar?  It should, as it’s the same send-your-Social-Security-to-Wall-Street goal expressed by President George Bush during his failed campaign a decade ago to privatize Social Security – delivered in a slightly different way.  Apparently everything old is new again.

Huckabee also uses Social Security and Medicare, based on his misdiagnosis of the long-term solvency issue, to defend a terribly regressive tax policy -- the Fair Tax -- which rewards the rich and punishes everyone else: 

“Citizens for Tax Justice and the congressional Joint Committee on Taxation have each found that to raise the same amount of revenue as current law, the sales tax rate would have to be about 50 percent.

A study by the Institute on Taxation and Economic Policy (ITEP) found that under the “Fair Tax,” the top 1 percent of taxpayers would receive an average annual tax cut of $225,000. Meanwhile, the plan would increase taxes by about $3,200 on average on the bottom 80 percent of taxpayers. In other words, Huckabee’s tax plan would significantly increase taxes on the overwhelming majority of Americans to pay for huge tax cuts for the very wealthiest Americans.”

Time will tell if seniors will take the “I won’t cut your benefits” bait and ignore the details of Governor Huckabee’s plans for Social Security and Medicare.  As is always the case in every political campaign, the devil is in those details.  

Why Simply Celebrating Medicare's 50th Anniversary Isn't Enough

As we celebrate Medicare’s 50th anniversary this week it’s important to do more than just cut the cake…we must also educate and advocate. That’s because even though the American people clearly understand how vital Medicare and Medicaid are to families, too many politicians (especially those running for the GOP Presidential nod) apparently still don’t get it. 

Economist and New York Times columnist Paul Krugman wrote today about these “Zombies Against Medicare,” including their refusal to acknowledge that all the bad things they’ve predicted about Medicare for five decades have never actually happened, Jeb Bush’s promise to end Medicare and especially the Republican Party’s never-ending quest to repeal the Affordable Care Act.

“And then a funny thing happened: the act’s passage was immediately followed by an unprecedented pause in Medicare cost growth. Indeed, Medicare spending keeps coming in ever further below expectations, to an extent that has revolutionized our views about the sustainability of the program and of government spending as a whole.Right now is, in other words, a very odd time to be going on about the impossibility of preserving Medicare, a program whose finances will be strained by an aging population but no longer look disastrous. One can only guess that Mr. Bush is unaware of all this, that he’s living inside the conservative information bubble, whose impervious shield blocks all positive news about health reform.” 

Medicare advocates briefed the press today on the importance of this 50th anniversary and the ongoing battle to preserve and expand the program. 

“Anyone who thinks these programs aren’t under threat should just look at where the GOP presidential candidates stand on these issues.  Every prediction made by opponents about these programs…from claiming 'socialism' to 'they won’t work'…have been proven wrong.” Brad Woodhouse, President of Americans United for Change 

“It’s time for GOP leaders to stop threatening us with cuts and repeal, and start proposing truly bold ideas that include benefits expansion, raising the wage cap, enacting an affordable long term care program, shifting to a fully-developed consumer price index for the elderly, and negotiating drug prices. That would be a real platform for real Americans.” Max Richtman, NCPSSM President/CEO 

As the 2015 Trustees Report release last week shows, Medicare’s health has greatly improved since health care reform was passed.  Not only did the ACA provide improved benefits for seniors its long-term solvency has been extended by 13 years.  Congress should be building on these reforms to improve the program rather than continuing a politically myopic and factually bankrupt quest to “save” Medicare by killing it.

Jeb Bush Says He'll End Medicare

We suppose we should at least give Jeb Bush brownie points for honesty since he was actually caught saying out loud what the GOP has been trying to do Medicare for years, without actually admitting it.

MSNBC first reported on Jeb Bush's comments made to a room full of Koch Brothers supporters:

"We need to make sure we fulfill the commitment to people that have already received the benefits, that are receiving the benefits," Bush said. "But we need to figure out a way to phase out this program for others and move to a new system that allows them to have something, because they're not going to have anything."

Promising to protect current beneficiaries (because according to the standard GOP meme “greedy geezers” only care about their own Social Security and Medicare benefits not what’s left for their kids or grandkids) is a tried and true GOP strategy. Attempting to destroy Medicare piece by piece is also a strategy we’ve already seen tried by conservatives in Congress.  So it’s likely Bush didn’t even realize he was making news.  Vox described it best this way:

“For years now, Republicans in Congress have been unified around a plan to promise continued Medicare benefits to everyone over the age of 55 while phasing out the program for everyone else. This is the famous — or perhaps infamous — Paul Ryan plan for Medicare. But denying that this is what their plan amounts to has been an important part of the political strategy for getting it done. Except Jeb Bush messed up, and in a talk at an Americans for Prosperity event Wednesday night he said that America needs to "phase out" Medicare.

His argument is that once Medicare is phased out, the GOP can offer the 54-and-under set "something," because the alternative will be to get "nothing."

Recall that back in 2011, the GOP whined endlessly about allegations that they wanted to end Medicare, and PolitiFact dubbed the idea that the GOP wants to end Medicare their "lie of the year."

But as Jeb Bush reveals here, it was never a lie of any sort. Conservatives' preferred answer to the challenge of paying for Medicare in the future is to scrap the program, and that idea has gained wider and wider currency in GOP circles in recent years.”

Bush’s comments were chock-full of other seriously flawed assumptions which MSNBC also breaks down including:

  • The “left” hasn’t done anything to help Medicare – Uhh, how about this week’s Trustees Report which confirms (yet again) an additional 13 years of Medicare solvency thanks to healthcare reform (which the GOP would repeal). 
  • Going door-to-door has shown him the American people support phasing out benefits - We’re not sure what doors Bush is knocking on but there’s not a national poll anywhere (legitimate or otherwise) which shows Americans support ending Medicare.   


Americans Support Traditional Medicare – Say “NO” to CouponCare

A new Kaiser Foundation poll confirms (again) that the vast majority of Americans, of all political stripes, support Medicare and Medicaid and don’t want Washington to replace Medicare with CouponCare.  Kaiser reports:

“A strong majority (70%) say that Medicare should continue to ensure all seniors get the same defined set of benefits. Far fewer (26%) say that the program should be changed to instead guarantee each senior a fixed contribution to the cost of their health insurance – a system known as premium support that has been proposed to address Medicare’s long-term financing challenges.

By at least two-to-one margins, majorities of Democrats, Republicans and independents favor keeping Medicare as is rather than changing to a premium support program. Adults under 65 years old are somewhat more likely than seniors to favor premium support (28% compared to 18%), though large majorities in all age groups prefer Medicare’s current structure.”

In spite of the American people’s strong support of Medicare, Republicans in Congress continue their campaign to end traditional Medicare and replace it with a voucher program that gives seniors a coupon they then have to use to try and buy their own health coverage.  This plan would create a death spiral for traditional Medicare, make it harder for seniors to choose their own doctors while passing more costs to Americans so they’ll pay more for less coverage.  The Congressional Budget Office has predicted the Ryan CouponCare Plan could cost seniors $20,000 more each year. 

The Kaiser poll also found that Americans support reforms designed to improve Medicare’s long-term financial picture.  The most popular reform; however, has consistently been ignored by this Republican controlled Congress.

“By far the most popular change to Medicare is allowing the federal government to negotiate with drug companies. Overall, 87% of the public supports such an option, including majorities of Democrats, Republicans and independents and across generations.

 Smaller majorities favor increasing Medicare premiums for wealthier seniors (58%), which already occurs and was expanded earlier this year as part of Medicare’s physician payment reforms; and reducing payments to Medicare Advantage plans (51%). Fewer support raising Medicare’s age of eligibility from 65 to 67 (39%), raising premiums for all Medicare beneficiaries (31%), or increasing cost-sharing for future Medicare beneficiaries (24%).”

The vast majority of those polled (89%) want Medicare’s funding expanded or at least maintained.  Which is in stark contrast to ongoing efforts in Congress to use Medicare as an ATM by cutting the program to pay for other items such as the Trade Agreement.  

As we celebrate Medicare and Medicaid’s 50th Anniversary on July 30th it’s important we remain vigilant in support of these vital programs.  That means constantly reminding Congress Medicare and Medicaid should be strengthened not cut. 

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