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From the category archives: Budget

Republican Senators Say Now’s the Time to Cut Social Security, Medicare & Medicaid

A group of freshman GOP Senators has decided the time is right to launch a frontal assault on funding for Social Security, Medicare and Medicaid.  Led by Georgia’s David Perdue, the conservative Senators claim the only way to tackle the nation’s debt is to fundamentally change the way America’s earned benefit programs have been managed since their creation. 

Specifically, they want to give Congress new authority to cut benefits each year (or at least every other year) including the creation of arbitrary spending caps.  Both moves ignore the unique nature of how Social Security and Medicare are funded; specifically, the fact that American workers contribute to these earned benefits through their payroll taxes.

“We put those payroll contributions there so as to give the contributors a legal, moral, and political right to collect their pensions and their unemployment benefits. With those taxes in there, no damn politician can ever scrap my social security program.”...President Franklin Roosevelt

“In the 1983 Social Security Amendments a provision was included mandating that Social Security be taken "off-budget" starting in FY 1993. This was a recommendation from the National Commission on Social Security Reform (aka the Greenspan Commission). The Commission's report argued: "The National Commission believes that changes in the Social Security program should be made only for programmatic reasons, and not for purposes of balancing the budget. Those who support the removal of the operations of the trust funds from the budget believe that this policy of making changes only for programmatic reasons would be more likely to be carried out if the Social Security program were not in the unified budget." (Note that this was a majority recommendation of the Commission, not the unanimous view of all members.) This change was in fact enacted into statute in the Social Security Amendments of 1983, signed into law by President Reagan on April 20, 1983.”...Social Security Administration

For years, the billion dollar anti-Social Security lobby and their allies in Congress have tried to use our nation’s economic woes as an excuse to cut the earned benefits that millions of average Americans have paid for and depend on. This latest effort would put Social Security and Medicare on the chopping block for each and every budget battle.

Not surprisingly, Republican spin-meisters acknowledge that the vast majority of Americans, no matter their political affiliations, oppose cutting Social Security and Medicare to balance the budget.  Their solution?  Just don’t admit that’s the goal.  Instead, stick to talking points that promise you’re “saving” the program rather than the truth...that you’re slashing benefits:

“Republican pollster Whit Ayres says that despite the long-held conventional wisdom, it’s not suicide to talk about entitlement reform right before an election. But he cautioned senators to proceed cautiously.

‘Here’s what voters want to see: A healthy and thriving Social Security and Medicare system,” Ayres said. ‘If Social Security and Medicare are going to be jeopardized without any changes, then voters will support changes.’ 

 But he warned that entitlement reforms have to be framed as proposals to extend the solvency of Social Security and Medicare and not primarily as a strategy to balance the budget. 

‘The Democrats then come along and say we should not balance the budgets on the backs of our seniors and they win the argument,” he added. “But it’s very effective to argue that we have to reform our entitlement programs to preserve and protect those programs for current and future generations.’ ...The Hill, 10/1/16 

In an attempt to appeal to America’s (understandable) frustration with Congress (or more likely to deflect attention away from this attack on middle-class benefits) these GOP Senators suggest that if Congress doesn’t pass a budget (which could include cuts to Social Security and Medicare) then lawmakers would be penalized with a “steep reduction” to their paychecks. While that might make the populists out there say, “it’s about time,” don’t forget the fact that the majority of U.S. Senators are millionaires. You can be sure that the Social Security and Medicare benefit cuts they propose for you will hurt far more than any threat to trim Congressional salaries: 

“The median net worth for all senators increased to $2.7 million from $2.5 million, but in that body it was the Republicans who were better-off. Senate Democrats reported a median net worth of $1.7 million (a decline from 2011’s $2.4 million), compared to Senate Republicans, at $2.9 million (an increase from $2.5 million).”...Open Secrets 

Seniors should not fall for this political bait and switch. If Congress really wants to strengthen Social Security and Medicare for future generations then let’s talk about lifting the payroll tax cap or allowing Medicare to negotiate for cheaper prescription drug costs. However, you won’t see these proposals offered by fiscal hawks. Why? 

Because they don’t cut benefits. That’s what this is all about.

The Sneak Attack on Social Security

Since before Social Security was created 81 years ago, the actuaries at the Social Security Administration have been tasked with making real-time analysis and long-term projections of the program’s health. Their record has been impressive. For example: in 1934, actuaries projected that the percentage of the U.S. population aged 65 and over would be 12.65 percent in 1990. It turned out to be 12.49 percent.

Given that 60 million Americans depend on Social Security, it’s obvious why accurate and consistent information on the program’s finances is vital to the economic health of so many families and our nation.  That’s why it’s also disturbing to see the possibility that politics might be interjected into Social Security’s financial analysis and projections by the creation of dueling reports.  Some background...

During the Bush administration, the Congressional Budget Office was tasked for the first time in its history to do its own analysis of Social Security.  Now, CBO is staffed with economists who examine many federal programs but they’re not actuaries or Social Security experts.  In fact, they’ve chosen different assumptions on mortality, interest rates, income inequality and disability rates for their Social Security calculations than the experts at SSA.  Not surprisingly that means their predictions are also different. 

“When CBO first got into the act, it projected somewhat smaller shortfalls than the actuaries. Then, in 2013 - soon after Senator Elizabeth Warren and other prominent members of Congress began publicly advocating for expansion - CBO’s projected shortfall increased by 73 percent in just one year. It jumped again in 2014, and yet again in 2015. According to CBO’s non-actuaries, Social Security’s projected long-range shortfall more than doubled, increasing by a whopping 125 percent in just three years. 

The smooth operation of Social Security oversight and policymaking depends on projections that are reliable and trustworthy. The actuaries spend all year long, every year, studying trends, perfecting techniques, and refining their projections. Their projections are steady and consistent, wavering only slightly from year to year. 

Not so, CBO. Estimates that more than double the projected shortfall in the span of just three years should raise red flags in and of themselves. Not surprisingly, CBO’s underlying assumptions are highly questionable.”...Nancy Altman, Social Security Works

  • CBO assumes 75 years of very low interest rates, far lower than we’ve seen over four decades. 
  • CBO predicts income inequality will grow substantially despite efforts in Congress to reverse that trend. 
  • While disability rates are slightly lower, CBO predicts they’ll increase.
  • CBO assumes longevity rates will improve, even for the oldest Americans. Meaning a 95 year old will see the same longevity increase at a 55 year old?

With hundreds of assumptions to consider, it would be logical that some changes might balance the analysis; however, in CBO’s case, each of the assumptions they changed led to a significantly larger shortfall. Coincidence? These graphs, introduced in the House Ways and Means subcommittee hearing on this issue today illustrates that dramatic shift, which more than doubled the shortfall prediction in just three years. 

Members of Congress asked the SSA and CBO today which prediction should they believe --  the nation’s actuaries whose sole job is manage the Social Security program or economists at the CBO, who’ve taken a new and different path to come up with very different answers.

Unfortunately, this case of dueling reporting isn’t happening in a vacuum.  Political pressure to exclude data on the size of Social Security’s benefit replacement rates in the annual Trustees Report (by those who’ve long claimed that benefits are much larger than can be proved) has been successful.  This important data (which has been reported for decades) is no longer provided, meaning the public can no longer see the replacement rates which Social Security benefits provide its beneficiaries.  This clears the way for those who hope to persuade Congress that benefits are more generous than the actual numbers would show.

Earlier this year, CBO also had to issue a correction for errors it made in a widely-reported brief on the exactly the same replacement rate issue.  Once again, these errors played into the same political argument that seniors are getting more from Social Security than actuaries believe, that the retirement crisis is phony and that Social Security costs more and is more generous than the actuarial evidence demonstrates.  As reported by economist Dean Baker at the Center for Economic and Policy Research, this is far from the first time CBO has made errors in its long-term analysis:

“While this was a serious error, unfortunately it was not the first time that CBO had made a major error in an authoritative publication. In 2010, in its annual long-term budget projections it grossly overstated the negative effect on the economy of budget deficits. The 2010 long-term projections showed a modest increase in future deficits relative to the 2009 projections, yet the impact on the economy was far worse. 

The 2010 projections showed a drop in GDP of almost 18 percent by 2025, compared to a balanced budget scenario. This was more than twice as large as the impact shown in the prior year’s projections. The sharp projected drop in GDP could have been used to emphasize the urgency of deficit reduction. As was the case with the recent Social Security projections, CBO corrected its numbers after the error was exposed.”

The Social Security actuaries are universally respected for their straight-shooting and consistent approach to reporting and projecting on the program’s finances.  These days, that type of bi-partisan respect is hard to come by.  That’s why we say it’s time for outside influence-peddlers to quit creating confusion over a system which has served our nation well for more than three-quarters of a century. 

Social Security Administration Cuts Hurt Americans in Every State

Congress has cut the Social Security Administration’s core operating budget by 10 percent since 2010, after adjusting for inflation. Incredibly, this is happening at the same time a record number of Americans retire each year.  It’s not like the baby boom generation is a surprise.  Our nation built extra schools when they were young and housing as they reached adulthood; however, today’s Congress has chosen to ignore the fiscal realities of their retirement. 

A new report by the Center on Budget and Policy Priorities details the dramatic impact Congress’ SSA budget cuts have on service nationwide:

  • SSA’s staff has shrunk 6 percent nationwide since 2010. Five states — Alaska, Iowa, Kansas, Nebraska, and West Virginia — have lost more than 15 percent of their staff since 2010.
  • Disability Determination Service (DDS) staff, who decide whether applicants’ disabilities are severe enough to qualify for Disability Insurance (DI) or Supplemental Security Income (SSI) has shrunk 14 percent nationwide since 2010.  Seven states — Indiana, Kansas, Louisiana, Mississippi, South Dakota, Tennessee, and Texas — have lost over 20 percent of their DDS staff.
  • Staff shortages have contributed to a record-high disability hearing backlog of over 1 million applicants.
  • SSA has been forced to close 64 field offices since 2010, at least one in nearly every state.

Added to this list, according to a recent audit of the SSA, are reduced hours of service at the remaining offices, the limited mailing of the annual earnings statement, increased wait times, crowded lobbies and limited appointment availability.  

As we reported last month:

Unfortunately, this budget slashing effort is nothing new. “Starve the beast” and shrinking government “down to the size where we can drown it in the bathtub" are long-held goals for Congressional conservatives.  Today’s budget cutters are continuing that decades-long campaign to diminish successful government programs which, since the vast majority of the American public of both parties supports them, can’t be killed outright.

“Cutting staff when SSA is processing historically high claims is irresponsible and a sign that the Republicans who voted for this cut are not interested in providing tax payers with good service regarding SSA,” said Witold Skwierczynski, president of the American Federation of Government Employees SSA Council. “Instead they appear to be creating a scenario that insures the collapse of the program and will enhance the push to privatize it.  If the public loses trust and faith that the federal government can administer SSA, they will look to privatization proposals as an alternative.”...Washington Post, August 9, 2016 

We recommend you read the full CBPP report here to see what’s happening in your state and nationwide. 

Vast Majority of Private Medicare Advantage Plans Overcharged the Government

New analysis by the Center for Public Integrity of Medicare Advantage audits show that 35 of the 37 companies audited by the Centers for Medicare & Medicaid Services (CMS) overcharged the government by millions of dollars each year. By “upcoding” claims, insurance companies report patients as being sicker than they are and thus collect higher payments from Medicare. 

By overstating the severity of medical conditions like diabetes and depression, extra payments are made to health plans which claimed some diabetic patients also had complications of the disease, such as eye or kidney problems. After the CMS audits, these claims were ultimately reduced or invalidated in nearly half the cases, sometimes more.  This CPI report isn’t the first time private insurers in Medicare Advantage have come under fire. In May, a Government Accountability Office report called for “fundamental improvements” to curb excess charges linked to faulty risk scores.  In addition, at least half a dozen health-industry insiders have filed whistleblower lawsuits that accuse Medicare Advantage insurers of manipulating risk scores to boost profits.

CPI also found: 

Auditors on average could confirm just 60 percent of more than 20,000 medical conditions plans were paid to treat. The confirmation rates were much lower for some conditions, such as diabetes with serious complications, depression and some forms of cancer.

Overpayments triggered by unsupported medical diagnoses at the 37 plans audited topped $10,000 per patient for more than 150 patients. The health plans overcharged the government by $2,000 or more for at least 3,500 people in the 2007 sample group.

The health plans overall were three times as likely to charge Medicare too much as too little for some of the 70 medical conditions examined as part of the audits.

None of the plans faced closer scrutiny following the audits, no matter the size of the overpayment. The 2007 audits, which collected a total of $12 million in overpayments, are the only ones CMS has completed since officials adopted risk scores in 2004 at the behest of Congress. In some cases, health plans are still appealing the results, nine years later.  

17 million seniors are enrolled in Medicare Advantage and in 2014, Medicare paid the health plans more than $160 billion. The Center for Public Integrity reported that overspending tied to inflated risk scores has cost taxpayers tens of billions of dollars in recent years.

Social Security Offices Close, Staff Furloughed and Waits Increase if SSA Budget is Cut by Congress Yet Again

As the baby boom generation ages and a record number of Americans retire, it’s hard to imagine why Congress has chosen this time in history to continue slashing the administrative budget for the Social Security Administration. It’s a glaring example of Washington’s penny-wise and pound-foolish budget approach and its real-world impacts on the lives of millions of average Americans.  It’s especially hard to understand given that the Social Security Administration isn’t funded by general revenues. As we’ve reported before, American workers’ contributions through the payroll tax support Social Security:

“In fiscal terms, there’s no earthly reason for Congress to be stingy with Social Security’s administrative budget. The money comes out of workers’ payroll taxes and the system’s other revenue, not from the general treasury. And it’s spent with painstaking care: The Social Security Administration is one of the government’s most efficient agencies, with a core administrative budget of 0.7% of benefits, devoted to upholding a decades-old reputation for superb customer service.” ...Michael Hiltzik, Los Angeles Times columnist

Today, the Washington Post reports on what the latest round of cuts proposed by Republicans in the House and Senate would mean for the Social Security Administration:

 “There would be up to two weeks of furloughs for all employees,” the agency said in information obtained by The Washington Post. “During this time, our offices would be closed to the public.  Additionally, a full hiring freeze would cause service degradation and long wait times and delays.  As a result, many Americans may wait longer to receive the benefits they have been planning to use during their retirement, and the most vulnerable of our citizens will have to wait even longer for disability claims decisions, causing more hardship and frustration for millions of families. 

It’s not like Social Security is operating in the flush now. Since 2010, its operating budget has shrunk 10 percent after inflation while the number of beneficiaries rose by 12 percent. President Obama has proposed an $11.1 billion administrative budget for fiscal year 2017, $522 million more than this year. House Republicans have proposed $772 million less than the president’s budget, according to SSA figures, while Senate Republicans would reduce agency spending by $582 million. The administrative budget is separate from the trust fund that pays benefits to recipients.”

Unfortunately, this effort is nothing new. “Starve the beast” and shrinking government “down to the size where we can drown it in the bathtub" are long-held goals for Congressional conservatives.  Today’s budget cutters are continuing that decades-long campaign to diminish successful government programs which, since the vast majority of the American public of both parties supports them, can’t be killed outright.

“Cutting staff when SSA is processing historically high claims is irresponsible and a sign that the Republicans who voted for this cut are not interested in providing tax payers with good service regarding SSA,” said Witold Skwierczynski, president of the American Federation of Government Employees SSA Council. “Instead they appear to be creating a scenario that insures the collapse of the program and will enhance the push to privatize it.  If the public loses trust and faith that the federal government can administer SSA, they will look to privatization proposals as an alternative.”...Washington Post, August 9, 2016 

It’s August recess for Congressional Members which means they’re in their districts attending town halls, meeting constituents and in many cases running for re-election. Now's the time to ask:  Do you support Congressional budget plans to cut Social Security’s administrative funding? 

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