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From the category archives: Budget

The Truth about Social Security’s Math Really Does Matter – Even in Washington

We don’t usually share this is the kind of “inside baseball” Washington story here but today’s a little different...

For months, conservative think-tankers who undermine the value of Social Security, deny the existence of a national retirement crisis and the need to boost benefits have been banging their drum for benefit cuts especially hard.  Why?  Because a scarcely reported CBO report on Social Security replacement rates (now you see why we don’t usually share these kind of stories) claimed Americans received more in benefits than previously believed or reported by Social Security actuaries.

For those who make a living advocating for benefits cuts, like the American Enterprise Institute’s Andrew Biggs, the CBO report was a golden goose.  His columns in the Washington Post, Wall Street Journal, Forbes and more tweets than we can count proclaimed the retirement crisis is phony and not only are Americans receiving enough Social Security benefits, some receive more than they need.

Now, anyone who actually works with beneficiaries knows his claim doesn’t reflect the real-world.  Today apparently, the CBO agrees.  They’ve issued a statement that their December numbers were wrong...significantly so.  

“After questions were raised by outside analysts, we identified some errors in one part of our report, CBO’s 2015 Long-Term Projections for Social Security: Additional Information, which was released on December 16, 2015.

The errors occurred in CBO’s calculations of replacement rates—the ratio of Social Security recipients’ benefits to their past earnings. The estimates reported in December inadvertently included years with earnings below those intended amounts.

The corrected version shows substantially lower mean initial replacement rates for retired and disabled workers. For example, the corrected rate for retired workers born in the 1940s is 43 percent; the value CBO reported in December was 60 percent.”

Los Angeles Times columnist, Michael Hiltzik, has been covering this story including some conversations with 

AEI’s Biggs: 

“Via Twitter, he has now retracted the Forbes piece. He says retractions of the others are coming. [Update: Biggs says by emailthat he has sent a retraction to the Wall Street Journal. His Washington Post piece, however, didn't cite the original CBO figures directly.]

 Biggs told me by email that the CBO's recalculation "doesn't radically alter the way I view the adequacy of Social Security benefits or retirement saving." That's because he had argued for a different formula that he says still shows replacement rates close to the CBO's original figures.”

In other words, the facts won’t alter conservatives’ quest to cut benefits and if the formula being used doesn’t get the results they want, the CBO should just change the formula to fit the anti-Social Security crowd’s political frame. 

Welcome to Washington. 

President Proposes Allowing Medicare to Negotiate for Lower Rx Drug Prices

“It’s long past time for Congress to acknowledge the hard truth that the sky-rocketing cost of prescription drugs is hurting average Americans and our federal budget. Medicare spends billions providing Part D drug coverage each year while beneficiaries including seniors, the disabled and their families also face rising out-of-pocket costs and higher premiums. All the while, drug makers continue to reap the profits of their price gouging. In his budget, President Obama has again proposed lifting the ban preventing Medicare from negotiating prices with the drug companies. Big Pharma has lobbied hard to keep the ban in place but seniors expect, this time, Congress will do the right thing and finally allow Medicare to negotiate for fair prices.”...Max Richtman, NCPSSM President/CEO

Among the other budget provisions beneficial to seniors include:

  • closing the Part D donut hole two years earlier
  • additional funding for in-home services
  • reforms for overpayments going to private insurers in Medicare Advantage
  • a 7.44% increase in administrative funding for the Social Security Administration

However, the President’s budget was not all good news.  Once again, the budget proposes shifting even more healthcare costs to seniors by extending Medicare means-testing to the middle class and increasing out-of-pocket costs such as the home health care copayment and the Part B deductible. 

“The average Medicare beneficiary already spends nearly $4,800 per year in out-of-pocket health care costs with half of all people on Medicare having incomes of less than $24,150. People in Medicare simply can’t afford increased cost-sharing year-after-year.  What’s especially worrisome are efforts to portray expanding means-testing in Medicare as impacting only ‘high-income seniors.’  While that may be good political rhetoric the truth is, if passed, further means testing will actually target middle-class individuals”...Max Richtman, NCPSSM President/CEO 

The GOP Poverty Solution...Do Less and the Poor Will Do Better?!?

In 2014, 46.7 million people (14.8%) were living in poverty, according to the Census Bureau. The poverty rate for people aged 65 and older was lower, at 10%, thanks to the success of earned benefit programs like Social Security and Medicare.  In spite of these programs’ undeniable success in providing improved income and health security for older Americas, GOP leaders in Congress and most running for President, continue to target Social Security and Medicare for cuts. They also have supported cuts to other vital safety net programs serving America’s poor.  

While this weekend’s GOP Poverty forum may have signaled a shift to softer rhetoric on poverty (an issue that has seldom been addressed by Republican candidates, so far) there’s no sign that their policy prescriptions have changed at all. 

Robert Greenstein is the founder and President of the Center on Budget and Policy Priorities and provides this Huffington Post analysis of the GOP’s primary poverty proposal:

Our analysis suggests Paul Ryan's "Opportunity Grant" proposal carries substantial risk of increasing poverty, rather than reducing it, for the following reasons:
  • Although Speaker Ryan has described the proposal as maintaining the same overall funding for anti-poverty programs, that would be a practical impossibility. 
  • Funds would likely be shifted away from direct assistance to needy families.
  • The proposal would jeopardize basic nutrition assistance for poor children, which research has shown reduces child malnutrition and improves children's long-term prospects.
  • Not only would food assistance funding likely decline, but total funding to assist low-income families would likely decline as well.
  • History shows that when federal policymakers merge programs into a broad block grant, federal funding typically declines over time, often dramatically.”
Economist Jared Bernstein says: 
“This is merely a gussied up version of “if your only tool is a hammer, then everything looks like a nail.” The idea, and Ryan’s budgets very much underscore this point, is that we can help the poor more by doing less for them.
The evidence points strongly in the opposite direction. As CBPP’s Arloc Sherman noted yesterday (and Ben Spielberg and I have explained in detail), a large and growing body of high-quality research...shows that the impact of income support and safety net programs like SNAP and Medicaid do not just occur upon receipt and immediately fade away. They have important, positive long-term benefits for children.  Next, the idea that liberal policies have failed is belied by…you know…data.”

Paul Ryan’s long-held and often-expressed Ayn Randian view of every man for himself and claims that federal safety-net programs (including earned benefits in Social Security, Medicare) only provide a “hammock” for the “dependency culture” of “makers and takers” remain as the core value that fuels the GOP approach to poverty.  Although, Speaker Ryan now acknowledges his “maker-taker” rhetoric was a mistake, that clearly hasn’t moderated his policy approach.  

“Under his “Opportunity Grant” proposal, Ryan has proposed converting a number of programs to state block grants, a decision that nonpartisan analysis suggests would reduce families’ ability to access key programs such as nutrition and housing assistance. In crafting this idea, Ryan and other conservatives often point to the Temporary Assistance for Needy Families program as a model—even though it does very little to mitigate poverty and hardship and is unresponsive to recessions.
Furthermore, in their most recent congressional budgets, Republicans obtained two-thirds of their cuts from programs helping low- and moderate-income families, while channeling additional resources towards tax cuts for the wealthy.” The Nation

The GOP/Ryan budgets have all been characterized by tax cuts for the wealthy, program cuts for the poor and turning Medicare into “Coupon Care.”

“Once again, the House GOP’s budget would privatize Medicare with a voucher plan, leaving seniors and the disabled – some of our most vulnerable Americans – hostage to the whims of private insurance companies.  Over time, this will end traditional Medicare and make it harder for seniors to choose their own doctor.  Vouchers will not keep up with the increasing cost of health insurance… that is why seniors will pay more.”...Max Richtman, NCPSSM President/CEO
The GOP/Ryan Budget: 
  • Ends the Medicaid joint federal/state financing partnership and replacing it with fixed dollar amount block grants, giving states less money than they would receive under current law. 

  • Repeals Medicaid expansion. Since 2014, states have had the option to receive federal funding to expand Medicaid coverage. Over half of the states have expanded their Medicaid programs, and others will likely do so in the future.  Repealing this option would result in at least 14 million people losing their Medicaid coverage and state Medicaid programs would lose a total of $900 billion over 10 years. 

  • Cuts Medicare by $431 billion over ten years.  Over half of Medicare beneficiaries had incomes below $23,500 per year in 2013, and they are already paying 23 percent of their average Social Security check for Medicare cost-sharing in addition to out-of-pocket costs.

Talking about poverty in America is a welcome first step from the Republican candidates; however, talk is cheap if action is just more of the same benefit cuts to pay for tax cuts.  

 

Even the Mainstream Media Supports Boosting Social Security

We live in a media era in which, more often than not, stories about America’s federal retirement programs do little more than parrot quotes offered up by Washington’s billion dollar anti-Social Security lobby.  For decades we’ve been told Social Security and Medicare are to blame for federal debt and deficits and the only way to be fiscally responsible is to slash benefits for America’s seniors.  Of course, the truth has proven to be just the opposite.

The budget deficit for 2015 is expected to drop to roughly $425 billion, according to a report released Friday by the nonpartisan Congressional Budget Office (CBO).That’s down from the $486 billion the CBO projected in March. If it drops to $425 billion by the end of the fiscal year on Sept. 30, it would be a seven-year low for the government’s annual budget shortfalls...MSNBC

Social Security and Medicare NOT the cause of our deficits and cutting already modest benefits would have devastating consequences for millions of American families and our economy overall. That’s why this weekend’s New York Times editorial on the 2016 Presidential campaign and Social Security marks an important shift in perspective.

This election season offers an opportunity to reframe the debate over Social Security. It is necessary, of course, to ensure the program’s long-term health beyond 2034, when the system is projected to come up short. But this can’t be done by broadly cutting benefits. In fact, there’s mounting evidence that Social Security, which has become ever more important in retirement, needs to be expanded.

Is it possible that the national media is finally coming around to the fiscal reality that the American people, no matter their political party, have long known to be true?

The latest survey by the National Academy of Social Insurance shows large majorities of Americans, both Republicans and Democrats, agree on ways to strengthen Social Security, without cutting benefits. Of those polled, 74 percent of Republicans and 88 percent of Democrats agree that “it is critical to preserve Social Security even if it means increasing Social Security taxes paid by working Americans.”  Simply put, the American people are willing to pay more for Social Security.  They understand the growing impact these benefits have on individual lives and on our larger economy.

2016 marks the National Committee’s third year of our “Boost Social Security” campaign.  We’ll continue to spread the word, reframe the debate and keep the pressure on Presidential candidates to stop taking their lead from the billion dollar anti-Social Security lobby and instead listen to what the American people support for the future of Social Security.

UPDATE: Congress Funds 9-11 First Responders Without Targeting Medicare

The Omnibus Budget bill came out late last night and it appears Congress did the right thing.  It will provide about $3.5 billion for the vitally important World Trade Center Health Program, guaranteeing that more than 72,000 known responders and survivors will have access to health care for 75 years.  Another $4.6 billion will go to extend the 9/11 Victims Compensation Program for five more years. Huffington Post reports:

The major battles were focused on the question of how the bill would be paid for, with a number of the sponsors' offers being rejected. Ultimately the bill used funding that had been earmarked for other measures that were running into opposition. One of the funding streams used for the 9/11 compensation fund will also provide over $1 billion to compensate U.S. victims of the Iran hostage crisis, the 1983 attacks on the U.S. Marine barracks in Lebanon and the 1996 bombing of the Khobar Towers in Saudi Arabia. That was a key goal of House Judiciary Chairman Bob Goodlatte (R-Va.). 

Congress still has to pass the spending bill, but Republican leaders expect that to happen by Thursday.

As always, the devil is in the details and advocates are pouring through the legislation now to ensure there are no other “surprises” hidden there.  However, news that Congress will reauthorize the 9-11 Fund without using Medicare and Medicaid as an ATM (once again) is good news for our brave 9-11 first-responders and also millions of Americans and their families who depend on Medicare and Medicaid for their healthcare. 

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