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From the category archives: Social Security

Disability Insurance is Part of Social Security Whether Mick Mulvaney Likes It or Not

The President’s budget director can’t seem to help casting doubt on the administration’s commitment to keep its hands off Social Security and Medicare. Appearing on CBS Face the Nation this weekend, Mick Mulvaney openly questioned whether disability insurance should be part of Social Security.

"Let me ask you a question, do you really think that Social Security Disability Insurance is part of what people think of when they think of Social Security?” he asked. “I don’t think so... It’s a very wasteful program and we want to try and fix that.” – Budget Director, Mick Mulvaney 3/19/17

The moderator cut to a commercial right after that statement, so Mulvaney was not asked to elaborate on what he meant by “fixing” Social Security Disability Insurance.  We can only assume that “fixing” really means cutting benefits.  His remarks demonstrate a disregard for the facts about Social Security Disability Insurance (SSDI), and its very history.

Nearly 11 million Americans currently collect Social Security Disability Insurance benefits. Disability insurance has been part of Social Security since 1956. During the two decades after Social Security was created in 1935, a consensus evolved that not only retirees – but the disabled – require social insurance to stay out of poverty.  It was a natural extension of the philosophy underpinning Social Security that President Franklin D. Roosevelt so eloquently summarized as protecting the population against “the hazards and vicissitudes of life.”

A few dangerous myths underlie Mulvaney’s statements about Social Security disability insurance.  Here are the facts:

*SSDI is not a handout.  The truth is that anyone receiving SSDI must meet the same basic qualifications as other Social Security beneficiaries do.  Beneficiaries – or their parents – must have worked and contributed payroll taxes to Social Security in order to collect disability benefits.  

*There’s a stringent set of parameters that SSDI applicants must meet.  Only 40% of applicants actually qualify for disability benefits.

*SSDI beneficiaries do not have minor disabilities. 28% of beneficiaries have serious musculoskeletal disorders; 28%, serious mental illness; 9%, nervous system disorders and 9% circulation disorders, among others.  

In case the seriousness of these conditions is still in doubt, consider this:  a beneficiary collecting disability benefits beginning at age 50 only lives an average of 8 years past that point. Some 8,000 applicants died in Fiscal Year 2016 waiting for a decision on their disability claims – due to backlogs at the Social Security Administration caused by draconian budget cuts. 

When an official like Mulvaney makes comments about “fixing” Social Security Disability with the benefit cuts that implies, he is playing off of worries about the solvency of the Social Security Disability Insurance (SSDI) trust fund.  The SSDI trust fund is separate from the retirement (OASI) trust fund, and is projected to remain solvent until 2022 if Congress takes no action to fortify it.   The National Committee supports Congressman John Larson’s Social Security 2100 Act (to be re-introduced in the House later this month), which – among other things – combines OASI and SSDI into a single, more durable Social Security Trust fund.  This, along with legislation proposed by Senator Bernie Sanders and others, could preserve the solvency of Social Security well into this century without cutting benefits – including the ones that help people with serious disabilities maintain their financial security and their dignity. 

Mulvaney Actively Subverting Trump’s Promises on Social Security and Medicare

We have been skeptical since last fall about President Trump’s promises not to touch Social Security and Medicare, partly because of the privatizers and cutters he appointed to high office.  Now, according to an article in today’s Washington Post by reporter Dave Weigel, Trump’s budget director, Mick Mulvaney, is actively agitating for the Trump administration to “work around” those promises:

"I’ve already started to socialize the discussion around here in the West Wing about how important the mandatory spending is to the drivers of our debt.  I think people are starting to grab it.”  - Mick Mulvaney on Hugh Hewitt radio program

Mulvaney claims that he is not really advocating that the President break his promises.  Instead, the budget chief seems to be playing a semantic game by redefining what Trump really meant.  

"Mulvaney… has said that any Republican reform would be consistent with Trump’s promise, by defining the act of ‘saving’ Social Security and Medicare as anything that allows them to meet obligations — even and especially if those obligations are reduced.” – Washington Post 3/6/17

That is a dubious bending of the President’s words on the campaign trail.  Mulvaney is, in effect saying, we have to cut Social Security and Medicare in order to save them, which is patently wrong.  The two programs could be kept solvent deep into the 21st century through modest and manageable measures that we have detailed many times since last Fall, with no benefit cuts.  In fact, Senator Bernie Sanders’ new bill in Congress would increase benefits and extend Social Security’s solvency until 2078.  

Mulvaney is being even more disingenuous, though, because candidate Trump explicitly promised not to cut either program.  Trump told a post-election rally in Des Moines in December:

"You’ve been paying into Social Security and Medicare… We’re not gonna cut your Social Security and we’re not cutting your Medicare.”  - President-elect Trump, December, 2016

It’s hard to see how Trump could have been any clearer, or how Mulvaney could claim the President could be convinced to cut Social Security and Medicare without violating his campaign promises.  Yet, Mulvaney’s proposals on earned benefits programs would undeniably lead to benefit cuts.   The Post points out that at his January confirmation hearing, he advocated raising the Social Security retirement age to 70, and supported means-testing to reduce Medicare spending, two unpopular measures with voters in the National Committee’s recent public poll.

Of course, Mulvaney is not the only Trump administration official gung ho to cut and privatize our retirement security programs.  HHS Secretary Tom Price played a similar word game to Mulvaney’s last week, affirming that Medicare is a “guarantee” to seniors while implying that it has to be modified in order to uphold the guarantee.   

We wrote last week about the potential bait-and-switch that the administration and Congressional leaders may use, by promising that current retirees won’t be affected by any changes, but that younger Americans might be by the time they are seniors. 

None of this lends much comfort to current or future retirees – nor offers much reassurance that the President’s promises on Social Security and Medicare won’t be eroded, if not now, then in the near future.


Trump Snubs Seniors in Speech to Congress

Millions of current and future retirees were no doubt hoping that President Trump would use last night’s speech to Congress to reaffirm his promises not to touch Social Security and Medicare.  Instead, the President ducked and covered.  He did not even utter the words “Social Security” or “Medicare” in his entire hour-long address.  As for Medicaid – which millions of American seniors rely upon for skilled nursing care – the President only touched on it once, with a veiled reference to converting guaranteed benefits into block grants, which would hurt beneficiaries.   

This begs the question – why the silence on Social Security and Medicare?  After all, during the campaign the President broke with Republican orthodoxy and repeatedly promised not to cut either earned benefit program. “I am going to protect and save your Social Security and your Medicare.  You made a deal a long time ago,” he told a crowd of supporters in November.  The most likely explanation for omitting America’s retirement security programs from last night’s speech is that the President knows his fellow Republicans on Capitol Hill vehemently disagree with him.  

There are proposals in both the House and Senate to cut and privatize Social Security and Medicare.  In fact, voucherizing Medicare is one of Speaker Paul Ryan’s highest priorities.  Perhaps the President did not want to unnecessarily ruffle feathers on the Hill last night.  If so, his refusal to recommit to protecting Social Security and Medicare is not an encouraging sign. If he’s afraid to even mention his position in a speech to Congress, he may roll over on campaign promises under pressure from the Congressional GOP.

President Trump may also be leaving himself wiggle room in negotiations with Congress over Social Security and Medicare.  The problem is, any compromise on his promise will hurt seniors and people with disabilities who depend on these programs, whether it’s cutting benefits, raising the retirement age, or trimming COLAs.  He may also be setting up a dodge, where the Congress agrees not to cut Social Security or Medicare for current retirees while leaving open the possibility of downsizing or privatizing both programs for younger Americans.  This approach is based on the falsehood that cutting benefits for future retirees doesn’t hurt current seniors, and cynically pits one generation against the others for political expediency. Mark Miller of Reuters has an excellent piece today explaining this ploy:

"The [Republicans’] political goal will be to defang public opposition, since younger workers tend not to focus much on retirement when it is several decades away. But that approach is not going to work. Retirees and their advocacy groups will fiercely resist cutting benefits down the road, because they understand the critical importance of Social Security and Medicare benefits. They also care about the future retirement of their own children.  - Mark Miller, Reuters

Social Security and Medicare are commitments that the government made to working class Americans who paid into the system most of their lives.  The President could have confirmed that commitment last night and comforted seniors who are worried about losing their retirement security and healthcare.  His silence on Capitol Hill was not reassuring.

 

New Cost of Living Formula Could Put Real Money in Seniors' Pockets

 

There is a new push on Capitol Hill to link Cost of Living adjustments (COLAs) for federal retirement programs to a much more powerful indicator of the prices seniors really pay for crucial goods and services.  It’s called the Consumer Price Index for the Elderly (CPI-E), an experimental metric by the Bureau of Labor Statistics that more accurately reflects senior’s costs than the traditional Consumer Price Index (CPI), or even the Consumer Price Index for Wage Earners (CPI-W), which the government currently uses to calculate COLAs for Social Security.  Switching over to the CPI-E could mean a substantial increase in benefits for retirees.  

Congressman John Garamendi (D-CA) is reviving a 2015 House bill to mandate that the CPI-E be used to calculate cost of living adjustments for federal retirement programs. The National Committee has endorsed Garamendi's legislatoin.

"The consumption patterns of seniors are different from those of younger people. Using the CPI-E will ensure that benefits for retirees are not diluted by disproportionately rising costs in sectors affecting seniors. The CPI-E is the most accurate and balanced measure of the real costs that seniors face in retirement."  – Rep. John Garamendi (D-CA)

Like the standard CPI, the new index calculates the prices of a typical basket of goods and serves that are affected by inflation.  The difference is that the CPI-E looks at a basket that reflects the kinds of items seniors spend money on.  For instance, housing and medical costs make up a much bigger chunk of seniors’ expenses (58%) in the CPI-E than in the traditional CPI.  On the other hand, food and transportation costs are de-emphasized in the CPI-E, since seniors typically spend less of their money on those items than the general population does. 

If Congressman Garamendi’s bill were to become law, the CPI-E could mean serious new money in retirees’ pockets.  Research compiled from Bureau of Labor Statistics data (based on the current CPI-E model) reveals:

  • If the CPI-E had been in effect for the past 30 years, retirees would have received 22% more in cost-of-living increases.
  • If you as an average worker retired in 2015 with the current CPI-E in place, you would receive nearly $30,000 in additional benefits for the rest of your lifetime.

With 1 out of 3 seniors relying on Social Security for all or most of their income, those increases could make a huge difference.  At a time when Congressional Republicans (most notably Rep. Sam Johnson of Texas) are planning to cut COLAs, the Garamendi bill plants a flag on a crucial issue that could mean the difference between financial stability and poverty for millions of seniors.

Scrapping the Cap: National Committee endorses Bernie’s new Social Security Bill; Marks the Day Millionaires Stop Paying payroll taxes.

Senator Bernie Sanders and Rep. Peter DeFazio introduced landmark legislation yesterday to keep Social Security solvent for the next six decades --- without cutting anyone’s benefits.  The National Committee endorses the bill, titled the Social Security Expansion Act, introduced on the day when the average millionaire reaches the payroll tax income cap of $127,000 per year.

National Committee President Max Richtman joined Senator Sanders, Senator Elizabeth Warren, Rep DeFazio and other dignitaries and advocacy groups on Capitol Hill to mark the day and support the new legislation, which would require high-earners to pay Social Security taxes on annual income over $250,000. 

The bill doesn’t “scrap the cap” right away; but for now only income between $127,000 and $250,000 would be exempt from payroll taxes.  Eventually the cap would phased out and completely scrapped.   The expanded payroll taxes (which only affect the top 1.5% of earners) would keep the Social Security Trust Fund flush until at least 2078.   

"We can expand the life of Social Security for 61 years, if we have the guts to tell millionaires and billionaires they’re going to have to pay more in taxes.” – Sen. Bernie Sanders

Senator Warren passionately defended the bill, saying it is necessary because, under current law:

"...Once [the wealthy] hit the cap, they can earn and earn and earn without paying into the system.  We want a Social Security system that works of all America, not just the millionaires and billionaires.” – Sen. Elizabeth Warren

NCPSSM President Max Richtman referred to a favorite metaphor involving a high-earning NBA superstar paying into Social Security.  “He’s already hit the cap and is done contributing before the first quarter of the first game of the season is over.” On a more serious note, he continued, “We are here today to say that for those who have so much, it is only right that they pay their fair share into the Social Security program.”

Richtman used the occasion to recall the words of President Franklin D. Roosevelt, who started the Social Security system:

"The test of our progress is not whether we add more to the abundance of those who have much, it is whether we provide enough for those who have little."  - FDR

In addition to lifting the cap, the Sanders-DeFazio bill increases Social Security benefits by an estimated $65 a month, improves the Special Minimum Benefit by making it easier for low-income workers to qualify for benefits, and links the cost-of-living adjustment (COLA) formula to a new Consumer Price Index for the Elderly (CPI-E) to factor in costs seniors traditionally face such as prescription drugs, utility bills and property taxes. 

 

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