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From the category archives: Retirement

GOP Tax Cuts Could Cost Seniors in the Long Run

The GOP had scarcely emerged from the defeat of their latest Obamacare repeal legislation when they pivoted lightning-quick from healthcare to taxes.  The tax reform plan the party unveiled last week may ultimately endanger the well-being of older Americans more than the vanquished healthcare bill.  Here’s why:  The nonprofit Tax Policy Center estimates that the GOP tax plan will reduce federal revenues by a net $2.4 trillion in the next 10 years.  As the deficit grows, Congress will look to cut spending.  Republicans have already called for deep cuts to Social Security and Medicare, and would no doubt come after those programs looking for massive savings. Seniors’ earned benefits could be used as piggy banks to pay for reckless tax cuts that largely benefit the wealthy.

Americans for Tax Fairness put it his way:

"[The tax plan’s] eye-popping cost will lead to deep cuts in Social Security, Medicaid, Medicare, and public education that will leave working families in the cold."- Americans for Tax Fairness

… while House Democratic leader Nancy Pelosi predicted:

“Make no mistake: after Republicans’ tax plan blows a multi-trillion dollar hole in the deficit, they will sharpen their knives for Social Security, Medicare, Medicaid.” – House Minority Leader Nancy Pelosi 

Budget hawks (including President Trump’s budget director Mick Mulvaney and House Speaker Paul Ryan) have long dreamed of cutting Social Security and Medicare.  Once their tax plan balloons the deficit, they will have the perfect excuse for gutting those programs – even though Social Security and Medicare Part A are completely self-funded by workers’ payroll contributions; they contribute not a penny to the deficit.

In fact, the budget cutters’ knives are already sharpened. The 2018 House Budget resolution calls for nearly $500 billion in cuts to Medicaid over the next decade.  That would be devastating for the 1.4 million seniors who rely on Medicaid for long-term care, and millions of others who are dually eligible for Medicaid and Medicare.  The House budget resolution also includes nearly $500 billion in cuts to Medicare over the next ten years.  Under the House budget plan, Medicare would be privatized and the eligibility age raised from 65 to 67 (an effective benefit cut). If these changes are enacted, seniors will be left to fend for themselves in the private insurance market with vouchers that may not keep up with rising costs. 

Despite President Trump’s protestations that the GOP tax plan won’t benefit the rich, that’s precisely who would reap the biggest gains.  (Trump himself could save an estimated $1 billion in taxes!)  According to the Tax Policy Center’s analysis:

"Taxpayers in the top 1 percent would receive about 50 percent of the total tax benefit from the tax overhaul, with their after-tax income forecast to increase an average of 8.5 percent." – Tax Policy Center 

On the other hand, some in the middle class would see their taxes go up.  One in seven households earning between $48,000 and $86,000 per year would pay more in taxes next year; the proportion would double during the next decade.  For households earning $150,000-217,000 a year, one third would immediately pay more in taxes. 

Republicans claim that the tax cuts will pay for themselves through intense economic growth.  They have tried this before (Most recently, with the Bush tax cuts in the early 2000s), and it didn’t work out.  Instead, deficits swelled, reinforcing budget hawks’ instincts to cut programs for the most vulnerable members of our society, including and especially seniors.  One of the (repentant) architects of the failed trickle-down economics of the 1980s, Bruce Bartlett, put it best in a recent column for USA Today: 

"Tax cuts and tax rate reductions will not pay for themselves; they never have. Republicans don’t even believe they will, they are just excuses to slash spending for the poor when revenues collapse and deficits rise." – Bruce Bartlett, former Congressional economist

 

 

Rep. Brat at His Worst: Spreading Myths about Social Security and Medicare

In a contentious interview with CNN’s Kate Bolduan this week, Rep. Dave Brat (R-VA) perpetuated some dangerous myths about Social Security and Medicare.  Brat, a Tea Partier and fiscal bomb thrower, has been campaigning to cut seniors’ earned benefits since first running for Congress in 2014.

The CNN interview heated up when Bolduan pressed Brat about the recently-passed deal to suspend the debt ceiling and keep the government open, which he opposed.  It’s worth quoting Brat’s answer at length here, because it is only borderline comprehensible and riddled with inaccuracies:

“I was just at my convocations back home with the kids. The kindergarteners are in the class of 2030, they just told me. They will graduate college in 2034. So if you do know the context, the context is that is the year Medicare and Social Security are insolvent. I don’t think people do know the context.  Otherwise there’d be more urgency and they wouldn’t put up with the nonsense we’re doing up here on the fiscal front. Right? If the press would weigh in on what the damage -- it’s a guaranteed fiscal crisis in 2034. Guaranteed.  In law, I’m on the budget committee, we can’t touch it.  Right--You got to pass in law.  So that’s – that’s the context and so with that; if you ask the average voter how you should vote on a clean debt ceiling increase with no fiscal discipline whatsoever, it’s the whole country 90%.”

Where to begin dissecting this statement?  The relevance of kindergarteners graduating college in 2034 notwithstanding, Social Security and Medicare will not be insolvent that year.  If Congress takes no corrective action whatsoever, the Medicare Part A Trust Fund and the Social Security Trust Funds will be depleted in 2029 and 2034, respectively.  But that does not mean the programs will be insolvent.  Revenue from workers’ payroll taxes still will be flowing in, allowing Medicare to pay 88% of full benefits and Social Security 77% --- with no further action from Washington.  In fact, the 2017 Social Security Trustees Report says there is now $2.847 trillion in the Social Security Trust Fund, which is $35.2 billion more than last year --- and that it will continue to grow with payroll contributions and interest on the Trust Fund's assets.)  

Does this mean we sit by and do nothing?  Of course not.  But Rep. Brat’s prescriptions are as draconian as his statements are inaccurate.  The Congressman has championed cutting Social Security and Medicare and raising eligibility ages as the only solution.  When running for office in 2014, he told a Tea Party crowd:

“It’s not just little marginal changes, right?  In order to avoid those insolvency issues with Medicare and Social Security, you’re going to have to do some major cuts."

According to PolitiFact, Brat went on to say that people will ‘have to work longer before receiving benefits’ – meaning raising the retirement age.  This favorite proposal of fiscal hardliners is actually a benefit cut.  And it is based on the misconception that just because average life expectancy is rising, everyone can work well past 65 – even though working class Americans (especially those doing physical labor on the job) may not be physically able to continue working into their late 60s like their wealthier counterparts.

Hardliners don’t like to talk about this, but there are other ways to keep our earned benefits fiscally sound without punishing the people who depend on them. The National Committee supports legislation by Senator Bernie Sanders (I-VT), Rep. John Larson (D-CT), and others in Congress to keep Social Security solvent without cutting benefits or raising the retirement age – mainly by lifting the payroll tax income cap so that the wealthy pay their fair share.  In fact, the Sanders and Larson bills actually boost benefits and cost-of-living increases while ensuring the fiscal health of Social Security well past those kindergartners’ 2034 graduation date. That way, those kids can count on their benefits when they retire around 2077.

But some members of Congress – and Rep. Brat in particular - ignore or dismiss these modest and manageable solutions, proposing instead that seniors shoulder the burden through benefit cuts and a higher retirement age.

Now we come to the second myth that Brat likes to propagate:  that Social Security and Medicare are major drivers of the federal budget deficit.  At that same 2014 Tea Party campaign event, Brat justified Social Security and Medicare cuts by saying:

“We’re going to have to take some bad medicine… to just balance the budget. If you don’t solve it, then in 11 years nearly all federal revenue will go only to [Social Security and Medicare].”

The fact is that Social Security has no net effect on the federal budget and contributes not one penny to the deficit. It is self-financed through workers’ payroll taxes.  Ditto for Medicare Part A.  Suggesting that these programs must be cut to balance the budget is disingenuous at best, but that doesn’t stop fiscal hardliners and the mainstream media from spreading the myth.  

Notice how Brat conflates the debt crisis with Social Security and Medicare at the end of his CNN rant.  Unfortunately, this claim is made far too often, but is hardly ever challenged by on-air journalists, this time being no exception (though, in truth, Bolduan was struggling just to control the interview).

Why do the on-air rantings of Congressman Brat matter? His arch-conservative philosophy wouldn’t be so dangerous if he were truly on the margins of political debate. But for the first time in more than a decade, fiscal hawks have the power to impose their hardline views on America’s most vulnerable citizens. Brat is a member of the House Budget Committee, which has already voted to privatize Medicare and raise the eligibility age.  That’s a powerful perch for spreading myths about Social Security and Medicare in order to justify cuts that are just plain cruel. 

FDR's Grandson on Social Security... Which Turns 82 Today

President Franklin D. Roosevelt signed Social Security into law on this day in 1935 to provide seniors with basic income security after retirement, mitigating against the “vicissitudes and hazards of life.” Eighty-two years later, the program he created has kept several generations of seniors – and their families – out of poverty.  In turn, the nation is very fortunate to have had several generations of Roosevelts dedicated to preserving Social Security. 

Franklin Roosevelt’s son, Congressman James Roosevelt, Sr., founded the National Committee to Preserve Social Security and Medicare in 1982 to protect the financial security, health, and well-being of current and future generations of Americans.  FDR’s grandson, James (“Jim”) Roosevelt, Jr., carries on his family’s legacy as a leading healthcare advocate and vice-chair of the National Committee’s Advisory Board. 

Last March, Jim Roosevelt sat down with National Committee President Max Richtman for a wide-ranging Facebook Live interview.  We have included some highlights of that interview below as we look at the legacy of Social Security on its 82nd anniversary.

Jim’s grandfather, President Franklin Roosevelt, became inspired to create a national retirement insurance program after seeing older Americans relegated to the poor houses because they had no means of supporting themselves. “It tears my heart to see those old men and women there,” said then-Governor Roosevelt after visiting the poor houses of New York state.  As Jim Roosevelt explained, FDR felt that seniors deserved an assurance of fundamental financial security.

He believed (and we still believe) that Social Security is basic to the lives of the American people. And he was very clear that it was a family program.  It was created not only so that people, when they reach retirement age, have enough money for the basics of a decent life. It’s also so that their children don’t have to spend down their money to take care of them. – Jim Roosevelt

Working with Secretary of Labor Frances Perkins, FDR pushed the Social Security Act of 1935 through Congress at the height of the Great Depression.  To some, it was counterintuitive that  President Roosevelt put such a high priority on retirement insurance at a time when so many millions of Americans couldn’t find work.  But Jim Roosevelt told us that FDR viewed retirement security and employment as inextricably linked.

People said to my grandfather, “Why are you worrying about people’s retirement when people need jobs?”  And he said these are tied together. If people have jobs, they can pay into Social Security knowing that they’ll have benefits later on.  Life is then worth living, work is worth doing.  And I think that’s what has remained the vision for me, for my father, and for the National Committee over these past 30 years. – Jim Roosevelt

It was very important to President Roosevelt that Social Security be funded directly through workers’ payroll contributions.  FDR said that payroll contributions would give retirees “the legal, moral, and political right” to collect their Social Security benefits. He knew that a perpetually self-funded program would guarantee Social Security’s endurance for generations to come, and protect the program from the whims of politicians who might seek to undermine it

The reason that Social Security is structured the way it is is so that nobody, just for political reasons, can cut Social Security out of the budget or out of the law.  Because Social Security has its own dedicated income stream from the payroll tax, we don’t just trade if off against education or defense or other important things.  My grandfather famously said, “With those taxes in there, no damn politician can ever scrap my Social Security program.”  That’s as true today as it was in 1935. – Jim Roosevelt

President Roosevelt’s vision has most certainly endured. Today, Social Security provides some 61 million Americans and their families with basic financial security upon retirement or disability.  For older Americans, Social Security can mean the difference between financial well-being and poverty.  Two out of three seniors rely on Social Security for most of their income, and one-third of seniors depend on it for at least 90% of their income. Public polling consistently shows that Social Security enjoys overwhelming support from majorities of Americans across party lines.

Over the years, Social Security has been modified (with bipartisan support) to expand benefits and keep the system financially sound. This year, Social Security has come under new threat from budget hawks in the Trump administration and on Capitol Hill.  But as generations of Roosevelts have shown us, Social Security is worth fighting for.  On this, Social Security’s 82nd anniversary, we at the National Committee recommit ourselves to preserving this landmark program for current and future generations of Americans.

Watch our full interview with Jim Roosevelt on Facebook Live

The Best Mother's Day Gift of All: Retirement Security

Let’s add something to the gift list for mom this Mother’s Day along with flowers and candy: financial security in retirement.   Our nation’s mothers – indeed, all American women – are at greater risk of financial insecurity in their senior years than fathers (and other men). For myriad reasons, the women in our lives are less able to save for retirement than men, and their Social Security benefits are typically lower.  At the same time, nearly half of elderly unmarried women rely on Social Security for 90% of their income.  Working women who take time off to care for loved ones pay an especially steep price, losing an average $324,000 in wages and retirement benefits over their lifetimes.  

As we discussed on Facebook Live from Capitol Hill on Thursday, the major factors contributing to women’s poorer retirement status include:

 *Pay inequity, which means women can’t save as much as men during their working lives. (Women working full-time still earn only about 78 cents annually for every dollar earned by men doing the same job.)

 *Loss of wages during time spent caring for children, parents and spouses. (Women make up 66% of unpaid caregivers). 

 *Women’s tendency to work part-time rather than full-time for family reasons. (26% of employed women work part time compared with only 13% for men.)

 *Lack of retirement savings plans or pensions in jobs predominantly held by women.

 *Women, on average, live longer than men, meaning their retirement savings are stretched thinner.  (The average life expectancy for women in the U.S. is 81.2 years compared to 76.5 years for men.)

Even when women continue to work past 65, they face a startling wage gap.  Women in this age group earn 25% less than men.  By the age of 80, the gender wage gap widens to 44%!

Since 2014, our Eleanor’s Hope initiative has advocated for common sense measures to reverse the retirement security crisis for women.  The initiative honors first lady (and first mother!) Eleanor Roosevelt –  a fierce advocate for women’s rights and her husband President Franklin Roosevelt’s Social Security Act.  Their son, James Roosevelt, Sr., founded the National Committee to Preserve Social Security and Medicare.

Our founder’s son, James Roosevelt, Jr., reflected on his grandmother’s legacy during a recent “Behind the Headlines” Facebook Live interview:

“My grandmother would say many important things, but one was, ‘It’s up to the women.’   Eleanor would tell my female siblings and cousins, ‘You’ve got to get out, and you’ve got to be part of fighting for what’s been done already (Social Security) and moving things farther forward.’” – James Roosevelt, Jr. 3/23/17

We believe Eleanor Roosevelt would be dismayed by the retirement inequities plaguing today’s women.  Fortunately, the solutions are intuitive, if too long in coming.  Here are a just a few:

*Public policies to promote pay equity between the genders.

*Reforms to the employer-based system to encourage retirement plans that are universal, secure, and adequate – where financial risk is not borne entirely by workers.

*Spousal consent in defined contribution plans similar to those required for traditional pension plans.

To close the tremendous gap in women’s Social Security benefits, we support legislation to credit caregivers for time spent out of the workforce attending to loved ones.  Such credits would count toward future Social Security benefits.  Rep. Nita Lowey (D-NY) is reintroducing legislation to do just that.  Her Social Security Caregiver Credit Act would “provide caregivers with a… credit when they take unpaid time off from their job to provide care.” For example, a full-time caregiver would receive a Social Security credit of about $22,000 per year, increasing her future benefits.  Senator Sherrod Brown (D-OH) plans to introduce similar legislation based on the National Average Wage Index (currently, $48,099) to formulate caregiver credits.  We at the National Committee feel these bills could go a long way toward equalizing women’s and men’s Social Security benefits. 

Mother’s Day is a reminder of all we owe our mothers.  They dried our tears and calmed our fears. One of the best things we can do for them – and all the other women in our lives – is make it possible to live out their retirement years without fear of financial strife. 

 

 

No Spring Break Ceasefire in the War on the Working Class

Congress may be home for Easter break and President Trump is busy dropping bombs in Syria and Afghanistan, but the War on the Working Class continues unabated.  In fact, it was quite a busy week for floating dangerous ideas about our nation’s healthcare and retirement security. 

First, the Associated Press ran a story based on information from an unnamed “GOP lobbyist” saying that Republicans are considering repealing the Social Security payroll tax.  Under this alleged plan, Social Security would be funded from general revenue and therefore subject to competition with other domestic programs --- and the whims of Congressional budget cutters.  Never mind that the payroll tax is what makes Social Security an earned benefit.  President Franklin D. Roosevelt set it up that way on purpose to “give the contributors a legal, moral and political right to collect” their Social Security checks.  Plus, the current payroll tax deduction has been working pretty well for the past 80 years.

Since enough members of Congress realize this is an awful proposal that would never pass the House and Senate, clearly someone is out there floating crazy ideas in the press.  (In addition, the A.P. story itself lacked any real sense of balance or context.) While the source for the A.P. story was unnamed, a top Trump administration official very publicly floated notions that seem to undermine President Trump’s promise not to touch Social Security and Medicare.  In an interview with CNBC’s John Harwood on Tuesday, Budget Director Mick Mulvaney just couldn't say whether President Trump would veto legislation to privatize Medicare.  “Let [Congress] pass that and let’s talk about it,” he demurred. 

When Harwood asked if Social Security Disability Insurance (SSDI) was on the list of potential programs to be cut, Mulvaney offered this non-reassuring response:

“I continue to look forward to talking to the president about ways to fix that program. Because that is one of the fastest growing programs that we have. It's become effectively a long-term unemployment, permanent unemployment program.” – Mick Mulvaney

Of course, that response is riddled with inaccuracies.  SSDI is not growing, it’s leveling off at a lower rate that is likely to plateau for the next 20 years.  It most definitely is not an unemployment program of any kind – permanent or otherwise. SSDI is one of the strictest federal disability programs in the world in terms of qualifying for benefits.  Only those who are able to demonstrate that they are unable to work for medical reasons qualify.  Among all the people who apply, only 40% are accepted.  If accepted, the average beneficiary receives only $1,170 per month, less than one could earn in a full time job at the federal minimum wage.

That didn’t stop the Washington Post from echoing some of the same right-wing myths about SSDI in a recent feature story and an editorial entitled, “The Social Security Disability Program Needs Reform.”  The story wrongly intimates that rural, working-class Americans are using SSDI as a unemployment program.  On Monday, Media Matters for America attempted to correct the record:

“The Post’s mischaracterization of SSDI follows a long history of misinformation from mainstream outlets, which often publish error-riddled stories filled with anecdotal evidence portraying disability recipients as undeserving. These pieces sound as if they come from right-wing media, which have spent years attacking the program and its recipients.” – Media Matters, 4/10/17

While the press was replete with nutty notions about Social Security and Medicare, the President and Congressional Republicans were reviving the specter of the moribund GOP healthcare bill.  Just when you thought it was dead, Freedom Caucus members say they are close to a deal with the White House and Speaker Ryan to repeal and replace Obamacare within three weeks.  Meanwhile, Politico reports that President Trump is threatening to cut off cost-sharing subsidies that help pay for low income earners’ health coverage in order to force Democrats to the negotiating table on the GOP health plan.

Fortunately, protesters are out in full force this week at town halls pushing back against supporters of the Republican bill, including one of the National Committee’s own grassroots volunteers who organized a rally outside a Florida congressman’s office.  This proves that Spring break is a good time for grassroots action. Just because it’s holiday time doesn’t mean those waging war against the working class won’t put some rotten eggs in our Easter baskets.

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