From the category archives: Budget
Let’s take quick stock of what this lame duck Congressional session has meant for middle-class Americans, especially seniors and their families:
- Legislation that reversed 40 years of federal law protecting retirees’ pensions was tucked quietly into the massive spending bill. The change will allow benefit cuts for more than 1.5 million workers; many of them part of a shrinking middle-class workforce in businesses such as construction and trucking.
2. $42 billion in largely corporate tax breaks was passed without the “pay-fors” demanded by Congress for virtually every other spending provision. According to the Congressional Budget Office, if Congress keeps passing short-terms extensions every year or two, the tax breaks will cost $700 billion over the coming decade. As Citizens for Tax Justice so aptly put it: “If our government has $700 billion to spare, it should be devoted to paying for things we really need, not wasted on corporate tax giveaways.”
3. Congress has headed home for the holidays without confirming a Director of the Social Security Administration. This is after nearly 18 months without a permanent agency head at a time when the agency faces the largest workload increase and budgets cuts it’s faced in its history.
Since we’ve already written about the first two items, we’re going to fill in the details on the third, including why it matters so much to Social Security beneficiaries. Social Security expert, Eric Laursen provides this recap:
“Republican senators are upset about delays and cost overruns on a new computer system at the Social Security Administration—so upset, they have blocked President Obama’s nominee for commissioner. The only the trouble is, the new computer system was planned and ordered up by the prior commissioner—a George W. Bush appointee.”
“A lot of this is simply hyperventilating. It’s not clear that the GOP senators “received information from whistleblowers,” as they claim. What happened for sure was that an interim report from the Social Security Administration’s inspector general said that officials at the SSA may have misled Congress about aspects of the $300 million computer system. The report stems from an investigation that Colvin herself ordered after she took over from Astrue early last year. And when the senators point their fingers at “the activities of certain members of your immediate office” in their letter, they would be referring to officials who were in place under Astrue as well. Yet the tone of their letter suggests, misleadingly, that Colvin herself may be under suspicion.”
“It’s been an article of faith for Republicans from the early days of the Reagan administration that the heads of agencies like the SSA must not come from within the agency itself. If at all possible, they must be strongly conservative critics who are committed to “reforming” it by shrinking it and pushing back against its unionized workforce. The less experience they have with the day-to-day running of a big, complex agency like the SSA, the better. Astrue fit that bill. Colvin, by contrast, represents the so-called “permanent government” Republicans are determined to break. That they were ready to exploit any chink in her armor, however unfair, should have been foreseeable.”
Colvin’s qualifications to be SSA’s Director are undeniable, as NCPSSM’s President/CEO, Max Richtman, told the Senate in a letter last week:
“Ms. Colvin has extensive experience with the Social Security Administration (SSA) that makes her uniquely qualified to provide leadership to this vitally important agency. She has been Acting Commissioner of SSA for more than a year and, before that, had served since 2010 as the agency’s Deputy Commissioner. In addition, she has in the past held a number of other key executive positions at Social Security headquarters, including Deputy Commissioner for Programs and Policy and Deputy Commissioner for Operations.
The broad-ranging nature of Ms. Colvin’s experience has provided her with the knowledge and the temperament to lead SSA through the years that lie ahead. We personally know her to be a woman of great integrity and respect the compassionate leadership she has displayed throughout a long and distinguished career.”
Why does this matter to beneficiaries? Because the Social Security Administration needs a leader in place to tackle the challenges ahead. Leaving the agency in limbo leaves it vulnerable to even further attacks virtually guaranteed with the new Congress:
... as Social Security faces the sharpest increase in its workload and its most bitter political challenges since its creation in 1935, it will continue to chug along without an official commissioner. Colvin, 72, will stay on as acting commissioner, a post she has held since February 2013.”
“...there's no reason to doubt Colvin's commitment to Social Security, which she served as a high-level executive from 1994 to 2001, returning in 2010 as deputy commissioner. As Paul Van de Water of the Center on Budget and Policy Priorities observes, Colvin has to work with the budget cards she's dealt: "She been doing a good job under very difficult circumstances, with a continually shrinking real budget," he said.
Indeed, the problem is Social Security's budget -- and the Democrats' failure to safeguard it. The crisis emerged in 2011, when Congress started to pare the president's budget requests for the Social Security Administration. From then through fiscal 2013, Social Security got $2.7 billion less than the president sought. Some of the shortfall was restored this year, but most of the increase was designated for anti-fraud programs, not pure administration.”
Michael Hiltzik at the Los Angeles Times asks, “Are the Democrats allowing Social Security to Twist in the Wind?” We think that’s a very good question.
Virtually the first order of business for Congress after November’s Congressional election was to pass $42 billion in tax breaks going largely to corporations. The House has already approved these giveaways (without providing the “pay fors” they’ve demanded for bills to help average Americans like unemployment extensions or even disaster relief) and the Senate is expected to follow suit this week. Incredibly, it could have been much worse as the House originally wanted ten times more in corporate giveaways. A veto threat from President Obama is all that derailed that plan. Bill Moyers detailed the original package:
“The 10-year, $444 billion package includes a few provisions that were popular with Democrats, but would phase out existing tax credits for clean energy development. Mostly, it’s a boon for some of the top corporate tax-avoiders in America. Some 90 percent of the cuts would benefit their bottom lines. One of the biggest beneficiaries would be GE, which, according to Citizens for Tax Justice, claimed tax refunds of $3.1 billion on $27.5 billion in profits between 2008 and 2012. That means the company had a negative tax rate of 11 percent. Other big winners would include Wall Street financial firms, pharmaceutical companies and computer and Internet businesses.”
Frank Clemente, executive director of Americans for Tax Fairness, highlights one especially outrageous provision in this legislation:
“The most disturbing part of this legislation is it provides $6.2 billion in tax breaks to companies that ship profits offshore. One of these loopholes – the Active Financing exception, otherwise known as the GE Loophole – benefits General Electric and big Wall Street banks. Congress should be closing offshore tax loopholes, not continuing them.”
Citizens for Tax Justice offered this analysis:
Here are just a few of the problems with H.R. 5771:
■ Most of the tax breaks fail to achieve any desirable policy goals. For example, they include bonus depreciation breaks for investments in equipment that the Congressional Research Service have found to be a “relatively ineffective tool for stimulating the economy, a tax credit for research defined so loosely that it includes the work soft drink companies put into developing new flavors, and a tax break that allows General Electric to do financial business offshore without paying U.S. taxes on the profits.
■ The tax breaks cannot possibly be effective in encouraging businesses to do anything because they are almost entirely retroactive. The tax breaks actually expired at the end of 2013 and this bill will extend them (almost entirely retroactively) through 2014. These tax provisions are supposedly justified as incentives for companies to do things Congress thinks are desirable, like investing in equipment or research, but that justification makes no sense when tax breaks are provided to businesses for things they have done in the past.
■ The bill increases the deficit by $42 billion to provide tax breaks that mostly benefit businesses, even after members of Congress have refused to enact any measure that helps working people unless the costs are offset. The measures that Congress refused to enact without offsets include everything from creating jobs by funding highway projects to extending emergency unemployment benefits.
As we’ve said before, budgeting is all about priorities. Did you cast your vote in November supporting candidates who promised to drain billions of dollars from federal revenues for America’s largest corporations, while simultaneously claiming our nation can’t afford programs benefiting average Americans like Social Security and Medicare?
Probably not. However, that’s exactly the course currently being charted in the lame duck and beyond to the 114th Congress.
While the well-financed Wall Street-backed campaign
to convince Americans that Social Security is in crisis (even though the facts
prove just the opposite) has sputtered over time, that hasn’t stopped some in Congress from inflicting a death-by-a-billion-cuts budget strategy on the Social Security Administration's administrative finances. SSA has received less than its budget request
in 14 of the last 16 years. In FY 2011-2013 alone, SSA received nearly $3 billion
less than it requested from Congress to do its job. A job that is increasingly challenging as the agency serves near record number of visitors as the nation’s baby boomers retire. Not surprisingly these short-sighted “serve more with less” budgets mean beneficiaries
are paying the price:
“Each day, almost 163,000 people visit field offices and more than 348,000 people try to reach an SSA agent for assistance. In FY 2014 about 13% of SSA’s visitors waited over an hour for service. Despite agency online service initiatives and the reductions of public service ours, field offices in FY 2014 served 40.7 million visitors. Field office visitors waited 50% longer in FY 2014 than in FY 2012. In FY 2014, nearly 5.5 million SSA visitors waited over an hour to be served and over 2 million visitors left without service. SSA’s 800 number network had a marked deterioration in FY 2014 in answering calls to agents, demonstrated by an answer rate of about 54%. The field office answer rate was about 67%, which also represents a substantial degradation in performance over the past few years.” -- Letter to Office of Management and Budget, signed by 35 Social Security advocacy organizations, November 2014
64 SSA field offices and 533 temporary mobile offices have closed, which is the largest five-year decline in the agency’s 79 year history. In testimony submitted to the Senate Aging Committee earlier this year, NCPSSM President/CEO Max Richtman urged the SSA to reject suggestions that online and self-service options should replace in-person services currently provided in field offices:
“...the National Committee believes any individual who has paid Social Security taxes has the right to face-to-face service within a reasonable distance of their home. The National Committee also is concerned that seniors and low-income individuals who are accustomed to conducting business on a face-to-face basis will suffer undue hardship when faced with the need for a benefit verification letter or SSN printout. Many in this population lack access to and are not familiar with computers and printers. I am also concerned that shifting this administrative burden to SSA call centers will only increase the current average wait time of 26 minutes.”
Social Security advocates, including NCPSSM's Max Richtman, SSA Acting Commissioner Carolyn Colvin and Chairwoman of the Senate Appropriations Committee, Senator Barbara Mikulski (D-MD) were among the attendees of a Capitol Hill conference on the challenges facing the Social Security Administration. All agreed on the need to fund SSA far beyond what Congress has approved in recent years. Results of a new national poll were also released showing the majority of Americans want to keep Social Security field offices open to serve the millions of Americans who need the one-on-one attention they provide.
It’s time to end the “starve the beast” politics promoted for decades by those opposed to programs like Social Security. Annual defunding of SSA fulfills a political goal at the expense of millions of American seniors, the disabled, survivors and their families who depend on Social Security.
It’s that time of the year (just days before Election Day) when every Congressional candidate extolls the virtue of Social Security. Too many of these candidates will then return to Congress (with your vote) singing a different tune lamenting that America simply “can’t afford entitlements” like Social Security and Medicare. Only after Election Day will you discover that “save” actually means “slash” and “protect” means “privatize.” They’ll claim your benefits must be cut or programs privatized to “save” the programs for future generations. The problem is...that’s simply not true and the American people of all political parties, ages and incomes don’t believe that cutting benefits is the best way to strengthen Social Security.
This Social Security disconnect is illustrated in a big way in a new report released today by the National Academy of Social Insurance. “Americans Make Hard Choices on Social Security” shows that Americans’ support for Social Security is unparalleled and they are willing to pay more in taxes to stabilize the system’s finances and improve benefits. We highly recommend you read the entire study (it’s important!) but here are some key highlights:
To gauge Americans’ policy preferences, the survey used trade-off analysis — a technique that is widely used in market research to learn which product features consumers want and are willing to pay for. The trade-off exercise allowed survey participants to choose among different packages of Social Security changes. As lawmakers would do, they weighed how each policy change would affect workers, retirees, and the program’s future financing gap, and then chose among different packages of reforms.
Seven out of 10 participants prefer a package that would eliminate Social Security’s long-term financing gap without cutting benefits. The preferred package would:
- Gradually, over 10 years, eliminate the cap on earnings taxed for Social Security. With this change, the 6% of workers who earn more than the cap would pay into Social Security all year, as other workers do. In return, they would get somewhat higher benefits.
- Gradually, over 20 years, raise the Social Security tax rate that workers and employers each pay from 6.2% of earnings to 7.2%. A worker earning $50,000 a year would pay about 50 cents a week more each year, matched by the employer.
- Increase Social Security’s cost-of-living adjustment to reflect the inflation experienced by seniors.
- Raise Social Security’s minimum benefit so that a worker who pays into Social Security for 30 years or more can retire at 62 or later and have benefits above the federal poverty line.
Again, not only do Americans value Social Security they are willing to pay to sustain and improve it. This package was preferred by large majorities across political parties and income levels. 68% of Republicans, 74% of Democrats, and 73% of independents favored this no-cuts plan, as do 71% of study participants with incomes above $75,000 and 68% of those with incomes under $35,000.
We suggest that if you see a political candidate on the campaign trail between now and Election Day ask him/her about this plan and its support by the vast majority of all Americans. Will they support fixing Social Security’s long-term solvency while also improving benefits without cutting the program?
It can be done, if only there was the political will to do it.
We were happy to find this in our email box today:
I am pleased to announce that, beginning this month, we are resuming periodic mailings of paper Social Security Statements to workers age 18 and older. Even though most workers will receive a mailing every 5 years, we encourage everyone to create a secure my Social Security account at socialsecurity.gov/myaccount, which will allow them immediate access to their online Statement anytime.
The Statement is a valuable financial planning tool providing workers with important individualized information regarding their earnings, tax contributions, and estimates for future retirement, disability and survivors benefits.
Please read the full press release, including a statement by Social Security’s Acting Commissioner, Carolyn W. Colvin, here.
Thank you for your continued support as we strive to keep workers informed about Social Security. Please help us encourage all workers to sign up for a my Social Security account to regularly review their earnings record and obtain estimates of future benefits for themselves and their families.
We've long advocated for the resumption of mailing paper statements to the many seniors who don't have access to or fluency on the internet and are thankful the SSA has resumed these mailings.
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