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From the category archives: entitlement reform

Cutting Social Security & Medicare = Economic Patriotism?

If you had any doubt about just how stark the differences are between the Republican and Democratic approach to fixing our economy, these dueling letters between Treasury Secretary Jack Lew and GOP Senator Orrin Hatch should clear that up for you quickly.  At issue is the idea of “economic patriotism.”

First, some background...

There’s currently a loophole in our tax code that allows American companies to dodge paying taxes by renouncing their corporate citizenship, leaving operations here but claiming an overseas address. This legal tax dodge costs our nation billions of dollars each year.  

“The practice has become known as “inversion.” But what it really amounts to is desertion. And it could cost Americans tens of billions of dollars. There are 47 firms in the last decade that have exploited this loophole, according to new data compiled by the nonpartisan Congressional Research Service. But it’s a hot topic again because at least a dozen U.S. firms are currently considering taking advantage of it.”...Center for American Progress

The President’s 2015 budget would make it harder for firms to reap the benefits of being an American company while simultaneously dodging their tax obligations by requiring a minimum 50% foreign ownership to avoid U.S. taxes (it’s currently only 20%). This week, Lew sent a letter to Congress urging quick action (okay, try not to laugh...) to pass inversion legislation.

“Congress should enact legislation immediately...to shut down this abuse of our tax system. What we need as a nation is a new sense of economic patriotism, where we all rise and fall together.  We know that the American economy grows best when the middle class participates fully and when the economy grows from the middle out.  We should not be providing support for corporations that seek to shift their profits overseas to avoid paying their fair share of taxes.”

Sounds reasonable, right?  Not according to the ranking GOP member of the Senate Finance Committee who penned a testy letter in reply.  Not only does Senator Hatch reject the legislative fix offered by Senate Democrats to recoup the billions lost to corporate scofflaws he also redefines the idea of “economic patriotism” by shifting the target from known corporate tax dodgers to American families who depend on Social Security, Medicare, Medicaid and the Children’s Health Insurance Program:

“I must disagree with the administration's position that we should, in the short term, enact punitive, retroactive policies designed to force companies to remain domiciled in the United States.”

“My hope is that your definition of "economic patriotism" is not so narrow as to only include a particular business practice ... I hope that you share my view that "economic patriotism" includes a desire to fix the problems that are truly ailing our country and threatening the livelihoods of future generations. Non-partisan watchdogs and rating agencies have been issuing warnings about our ballooning national debt and runaway entitlements for years now. These issues represent the greatest threat to our fiscal and economic security...”

Welcome to Washington, where you’re an “economic patriot” if you turn a blind eye to corporate tax dodgers who owe this nation billions of dollars and instead take it from middle-class benefits paid for by average Americans , the truest patriots of all, who worked a lifetime building the economy that fuels those corporate profits to begin with. 

Real Retirement Security Solutions or More of the Same?

It’s easy to become cynical if watching Washington work (or not work, as is often the case) is your job.  So forgive us for not popping a cork in celebration of the Bipartisan Policy Center’s new Personal Savings Initiative.  Don’t get us wrong, it’s the right idea for the right time.  We’ve been saying for a long time that our nation is facing a retirement crisis far greater than the fiscal Armageddon promised by conservatives if we refused to take their advice to slash middle-class benefits. As NCPSSM President/CEO, Max Richtman, has written before:

“Three decades of stagnant middle-class incomes, disappearing pensions, limited ability to start and maintain personal savings, and the failure of the 401K experiment lay the foundation for a retirement crisis that could further threaten millions of older Americans and their families.

According to the New School for Social Research, 75 percent of Americans nearing retirement have less than $30,000 in their retirement accounts. Almost half of middle-class workers will be poor or near poor in retirement and living on a $5-per-day food budget. The National Institute for Retirement Security reports four out of five working families have retirement savings less than one times their annual income and 45 percent do not have any retirement assets at all.

While Washington has been obsessed with the federal budget deficit, there's been virtually no Congressional conversation about the $6.8 trillion retirement savings deficit. What will happen to the millions of American families who are ill-prepared for retirement? There's almost no conversation about how to prevent this retirement crisis from impoverishing our families or about how younger generations will handle parents and grandparents who cannot support themselves. In spite of this current and growing retirement crisis, Social Security and Medicare, programs vital to a basic secure retirement, continue to be the favored targets for some in Congress who are determined to use benefit cuts to reduce the federal deficit.”

While the Pete Peterson funded Bipartisan Policy Center’s stated goal is to address personal savings, Social Security benefits received an inordinate amount of attention in today’s kickoff event.  Not so surprising when you consider that this group is chaired by former Democratic Senator and fiscal hawk Kent Conrad and Wall Streeter/former Bush appointee, Jim Lockhart.  The group is dominated by conservatives and center right former politicians and staffers, Republican political appointees, industry reps and think-tankers.  As was the case with the failed Bowles-Simpson Fiscal Commission, there are a few members who break that mold and will no doubt find themselves swimming against the tide once the discussion turns to Social Security.  Which the Chairmen made very clear today, it will, since “everything is on the table.”

Sound familiar?  It should since that’s Washington-speak for get ready for middle-class benefit cuts -- but this time they’ll be wrapped in a package to increase personal savings and strengthen retirement security?  It’s no wonder we’re cynical. 

How About Giving the Truth about Social Security "Equal Time"

Attempts to reignite the intergenerational warfare campaign against Social Security --  led by the billion dollar austerity lobby -- seem to have hit a new high.  Alternet highlights just a few of the recent instances:

A string of recent examples—rants [3] from MSNBC’s wealthy young commentator, a notorious elderly-attacking [4] House candidate, think tanks promoted [5] on NPR—generational warfare cheerleaders are proclaiming that America is heading toward an epic and immoral conflict as better-off seniors are robbing millennials of shrinking federal dollars because retirement programs cost too much. That’s simply false, as Social Security is solvent [6] through 2033, and spending on all mandatory programs as a percentage of GDP is close to [7] where it’s been since 1975, at 21 percent. 

This line of attack isn’t in a political vacuum. It comes as some Democrats are reframing [8] the debate on Social Security and campaigning [9] for increased benefits. Nor is it a new argument, as a right-wing club of libertarians, Wall Street bankers and deficit hawks have tried for decades to undermine and privatize the program.

For MSNBC’s, Abby Hunstman, this is the second time in as many weeks that she’s taken to the airwaves with a monologue chock-full of errors and political rhetoric heavy of drama and light on the facts.  NCPSSM’s Equal Time, joined the Los Angeles Times and others in pointing out just a few of those errors in her first attempt to “educate” millennials:

Millennials Face Big Problems – Abby Hunstman, MSNBC

 “Here’s the reality, at the rate we’re spending, the system (Social Security) will be bankrupt by the time you and I are actually eligible to get these benefits.”

“We can’t afford it.”

“While we’re living two decades longer we haven’t made any changes.”

MSNBC anchor Abby Huntsman (daughter of GOP Presidential Candidate Jon Huntsman) clearly misunderstands Social Security’s funding  and twists both life expectancy data and worker ratios to the breaking point to build a false case for cutting Social Security benefits for millennials.   Contrary to Huntsman’s claims, there is not a single scenario or economic projection in which Social Security goes bankrupt, most  Americans aren’t living 20 years longer and there have been numerous reforms to Social Security in the past,  including raising the retirement age.

If Washington does nothing at all by the time the Trust Fund is depleted in 2033, millennials and generations after them will receive a 25% benefit cut.  Huntsman urges raising the retirement age to 70-75 on top of that which means an even larger benefit cut for our children and grandchildren.  Unfortunately, rather than educating her fellow millennials with the facts,  her “fix” for Social Security comes straight from the multi-billion dollar anti-entitlement lobby’s talking points.   There are ways to fill the funding gap without hitting future generations with huge benefit cuts. Rather than gutting Social Security under the guise of “fixing it”, Congress should lift the payroll tax cap and enact other meaningful reforms to strengthen the program for future generations. 

Inexplicably, rather than address her mistakes Huntsman then chose to double-down on them with a second error-laden missive.  Michael Hiltzik with the Los Angeles Times tried, a second time, to help her with the “basic math” she claims to understand:

Huntsman complained that I called her out for asking how we're going to pay the rising costs of the health and social insurance programs, as though "even raising the question means you're automatically anti-Social Security or against the elderly."

No. I called her out for raising the question using bogus numbers, such as life-expectancy rates from birth, which have risen sharply since the '30s but aren't relevant to Social Security's fiscal health. Instead, the key figure is life expectancy from age 65, which hasn't risen very sharply. (Huntsman appears to accept this point.)

Huntsman offered several possible remedies for rising costs in these programs -- means-testing benefits, increasing the retirement age, raising the Medicare eligibility age to 67 from 65 -- and complained that we're not even debating these options.

That's where she really goes off the rails. We have been debating those options, for years. They've all been studied, measured, calculated and scored. The reason they haven't been implemented is that none of them is simple. None of those she listed would have an appreciable positive effect on the fiscal health of the programs, and some, such as raising the Medicare eligibility age, might make the overall federal budget picture worse.

Economist Dean Baker also gave it a try:

“The far greater risk to the living standards to the people of Huntsman's generation is the risk that we will continue to see the upward redistribution of income over the next three decades that we have seen over the last three decades. As a result of this upward redistribution of income, people like Ms. Huntsman's father have benefited enormously, while most workers have seen little or none of the gains from economic growth. If this pattern continues then most people in Ms. Huntsman's cohort will not fare well financially even if we eliminated their Social Security taxes altogether.”

So Huntsman continues to take her cues directly from the billion dollar Wall Street campaign to paint Social Security & Medicare as the biggest threat to future generations while ignoring the income inequality which will curse millennials for a lifetime.  


Celebrating Our Social Security & Medicare Successes

We've seen a constant threat to Social Security and Medicare benefits coming from Washington over the past many years.   While the war to preserve and strengthen these vital programs certainly isn't over (for example the President's budget, the debt ceiling fight, are still ahead in 2014), it's important to celebrate the battles we have already won. And they are many.  Thanks to our vigilant NCPSSM activists for their hard work in reminding Washington why the vast majority of Americans of all ages and political parties do not support cutting benefits. 

30 Years of Fighting and Winning to Protect Your Benefits

2013

A year of fiscal crises repeatedly threatened benefit cuts to Social Security and Medicare. The National Committee successfully prevented a Social Security Cost-of-Living Adjustment (COLA) cut and an increase in the Medicare eligibility age from being written into the fiscal cliff bill. We also defeated efforts to continue the two-year-old Social Security payroll tax holiday that was undermining the Social Security system. 

The National Committee launched a nationwide pilot to inform America’s same sex couples of their new rights to Social Security benefits after the Supreme Court’s Defense of Marriage Act decision in 2012.

Joining with other advocates, we delivered more than 2 million petitions to the White House protesting President Obama’s plan to cut Social Security benefits through the Chained CPI.

2012

NCPSSM President/CEO, Max Richtman, met with President Obama and other national leaders at the White House to talk about fiscal challenges facing the nation. He urged the President to preserve Social Security and Medicare benefits in ongoing budget debates.

We stopped a proposal to increase Medicare premiums from becoming part of legislation to extend the Social Security payroll tax holiday.   

2011

The Congressional “Super Committee” hoped to solve the federal debt crisis by cutting Social Security, Medicare and Medicaid, but thanks to our lobbying efforts, a national ad campaign and the work of our grassroots activists, the Super Committee adjourned without reaching consensus on any plan to cut benefits.                                             

The National Committee helped win the battle to save traditional Medicare from the House Budget Committee Chairman’s dangerous proposal to privatize the program.  Privatization benefits insurance companies at your expense, making it harder for seniors to choose their own doctor while cutting prescription drug, preventive care and nursing home benefits.

For the third time in over a decade, we successfully protected Social Security and Medicare funds from being cut by a Balanced Budget Constitutional Amendment. Your signed petitions and letters along with our grassroots opposition helped turn the tide against this harmful amendment. 

The National Committee to Preserve Social Security and Medicare launched the largest grassroots mobilization and media campaign in its long history of defending  programs vital to millions of Americans.  Millions of Americans engaged Congress and we successfully fought back against benefits cuts to Social Security and Medicare.

2010

NCPSSM fought to ensure Medicare was improved and strengthened as part of the Affordable Care Act by lowering beneficiaries’ out-of-pocket costs and closing the Part D prescription drug “donut hole” and making preventive services available to people with Medicare for free.

2009

Seniors received stimulus checks as part of the federal stimulus plan thanks to our successful lobbying efforts.  The initial proposal for the Recovery and Reinvestment Act targeted all workers, but excluded non-employed seniors. Seniors were included in the final bill.  This time seniors were not required to complete any IRS filings and automatically received checks.

2008

We led the battle to stop the harmful “Medicare Trigger” that would have imposed an arbitrary 45 percent cap on the government’s funding of Medicare.  And we achieved victory, although temporary, convincing Congress to postpone this harmful provision of the Medicare Modernization Act.

The National Committee helped persuade Congress to pass the Medicare Improvements for Patients and Providers Act (MIPPA), which reduced taxpayer handouts to private Medicare plans, improved benefits for mental health and averted a 10.6 percent cut in fees to physicians who treat Medicare patients, helping to preserve beneficiary access to doctors and other practitioners.

2007

NCPSSM lobbied Congress to strengthen Medicare.  The House ultimately passed legislation strengthening Medicare for future generations and correcting many of the flaws in the Medicare Modernization Act of 2003.

We fought against harmful budget cuts at the Social Security Administration (SSA) and ultimately convinced Congress to increase funding levels and thereby prevent massive furloughs at the SSA.  Those increased funds averted office closures all over the nation in 2007.  After continued intense lobbying, Congress approved funding for Fiscal Year 2008 at $451 million over the previous year’s level, helping speed up disability reviews.

2005 & 2006

The National Committee successfully mobilized to stop the most serious attempt ever to partially privatize Social Security, flooding Capitol Hill with petitions and letters to Congress and the White House reaffirming seniors’ rejection of private Social Security accounts.  Town hall meetings, Capitol Hill briefings, television appearances and our member-supported media campaign also helped erode and reverse lawmakers’ support for privatization legislation.  (Today, we continue to hold the line on privatization for the 23rd consecutive year!)

2005

NCPSSM launched an aggressive campaign to protect Social Security Cost-of-Living Adjustments (COLAs) from soaring Medicare out-of-pocket costs.  Under the Medicare Modernization Act of 2003, annual increases in Medicare deductibles have joined premiums in being indexed to rising health care inflation, and out-of-pocket costs will eventually consume nearly half of the average Social Security benefit check.  Our campaign was successful in bringing Congress’ attention to this critical and growing issue, but we need to fight even harder to push Congress to take corrective action.

2004

Overwhelming grassroots support from National Committee activists helped save Social Security funds from being cut under a Balanced Budget Constitutional Amendment.  With appeals from 1.4 million National Committee members and supporters, the Constitutional Amendment was pulled from consideration before a scheduled vote in the House Judiciary Committee!

2003

Millions of NCPSSM volunteers fought to prevent the full privatization of Medicare by helping defeat a dangerous House bill creating a Medicare voucher system. The misguided Medicare Modernization Act of 2003 was passed in its place and we continue the fight to fix that flawed legislation.  To date, millions of our members have signed letters and petitions to Congress urging immediate, “corrective” Medicare bills to make prescription drugs affordable and available to all seniors. 

2000

For seniors who have reached ‘normal retirement age,’ the National Committee was instrumental in earning the unlimited right to work without losing some of their Social Security benefits.  In large part because of our efforts, the Senior Citizens’ Freedom to Work Act was passed and signed into law on April 7, 2000.

NCPSSM proudly coordinated a coalition of senior organizations’ efforts to reauthorize the Older Americans Act (OAA), ensuring continued funding for a variety of state and local programs, including meals programs, in-home support services, pension counseling programs and jobs programs for seniors.  We were successful in getting this program reauthorized again in 2006.


Five Ways Congress can Strengthen Social Security Now without Cutting Benefits

 

Social Security faces a funding shortfall in 2033 which, if not addressed, could result in  across the board benefit cuts of about 23%. While this shortfall does not pose an immediate crisis, there are reasonable changes that Congress should enact to keep Social Security solvent and strengthen it for current and future generations:

 1)           Eliminate the cap on Social Security payroll contributions. In 2014, only wages up to $117,000 will be subject to the Social Security payroll deduction. Lifting the cap will subject all wages to the payroll contribution which will help address the majority of Social Security’s projected funding shortfall.  

2)            Slowly increase the payroll contribution rate by 1/20th of one percent over 20 years. This gradual increase in the rate will significantly strengthen Social Security’s financial condition well into the future.

3)            Treat all salary reduction plans like 401ks. All workers pay Social Security and Medicare taxes  on their contributions to retirement accounts but no payroll taxes are collected from workers flexible spending accounts such as HSAs, transit and dependent care plans. This change will add money to the program.

4)            Increase the basic benefit for all current and future retirees by 5% of the basic benefit (about $55 per month). This modest but meaningful benefit improvement is a long-overdue boost, especially  for low-to-middle income beneficiaries  who rely upon their Social Security benefit  for the majority of their income.  

5)            Provide Social Security credits for caregivers. When computing the Social Security benefit, grant up to five family service years to workers who leave paid employment to provide care to children under the age of 6 or to elderly or disabled family members. This will provide greater parity for women’s benefits which are typically less than men’s due to interruptions to paid employment caused by family caregiving needs.

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