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From the category archives: entitlement reform

Will the President Fight for Social Security & Medicare?

President Obama’s State of the Union address to Congress next Tuesday should provide some desperately-needed insight into just how far this administration will go to defend and strengthen America’s two most successful income and health security programs. The new GOP Congress has made their intentions clear by attacking Social Security on Day One of the new session.  The White House; however, remains silent on the GOP’s latest move:

“TPM asked multiple times last week for the White House's position on the House action, but never received a formal response, a stark contrast to the loud public pronouncements of Brown, Warren, and others. It also invokes the uneasy relationship between the White House and Social Security advocates, who were dismayed by Obama's willingness to accept cuts to the program during the 2011 grand bargain talks with House Speaker John Boehner (R-OH).” 

{Update:  The White House did respond after our initial post . A spokesperson told TPM "Generally speaking, the Administration strongly opposes any efforts to undermine Congress’ ability to reallocate funds between the Social Security retirement and disability trust funds," a White House spokesperson told TPM, "as they have done with bipartisan support numerous times in the past in both directions."}

NCPSSM has urged the President to support reallocation, as has happened without controversy 11 previous times, to avoid a massive benefit cut Americans with disabilities simply cannot afford.

“We applaud you for making middle-class mobility and economic equality one of your top priorities.  Social Security helps to provide a lifetime of economic equality by insuring millions of Americans against the risks of retirement, disability and survivorship. 

For that reason, the National Committee urges you to support the reallocation from the OASI Trust Fund to the DI Trust Fund and oppose the House majority’s demand to cut benefits in exchange for addressing the Disability Insurance program’s financing.  Your State of the Union address would be an ideal opportunity to reaffirm your support for Social Security.”  Max Richtman, NCPSSM President/CEO

In truth, the White House could have invested an entire week just responding to all of the attacks launched by GOP Congress in its opening days (so much for working together) so it’s hard to read too much into this silence on Social Security.  However, Tuesday’s State of the Union address should change that.  President Obama must set the tone and make it clear to the House and Senate that cutting benefits to families who depend on Social Security and Medicare is simply not an option. 

While Republicans certainly didn’t campaign on cutting benefits to middle-class families, now that they’re elected, GOP leaders in the House have made it clear that’s exactly their intention.  President Obama’s State of the Union provides an important opportunity to set the record straight and push back on all of the falsehoods currently being used to justify cutting benefits to the middle class.

Here are just some of the more outrageous claims:

The new Chairman of the House Budget Committee, Rep. Tom Price (R-GA), went so far as to create his own set of Social Security numbers to justify the GOP attack by claiming Social Security:

 “is a program that right now on its current course will not be able to provide 75 or 80 percent of the benefits that individuals have paid into in a relatively short period of time …”

There’s nothing about this statement that is true.  Even if Congress does absolutely nothing to improve Social Security’s long-term solvency (and no one believes that will happen) the program would be forced to reduce benefits by about 25% two decades from now. Any benefit cut is unacceptable; however, it’s not too much to expect Congressional Committee Chairmen to stick to the facts. Another House Committee Chairman, the head of the Social Security subcommittee Rep. Sam Johnson (R-Texas), led recent House the effort to hold the Disability program hostage in order to extract cuts program-wide.  He claims:

the program is “plagued by fraud” and that “the public is fast losing faith in Social Security, and I don’t blame them, because I have too.” 

Neither are true. 

The Government Accountability Office found that improper payments of Social Security benefits that include Disability Insurance had an error rate of just 0.6 percent.  SSA’s Inspector General reports less than 1% fraud in the disability program.  Any fraud is too much but what reasonable person would consider  less than 1% of anything a “plague.”

Far from losing faith in Social Security, the American people of all ages and political parties continue to show unparalleled support for the program in spite of Congressional conservatives’ campaign to undermine it. Not only do they support Social Security in its current form, by large margins they’re willing to pay more to improve it and boost benefits. The latest National Academy of Social Insurance survey of Americans found:

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.

With this State of the Union, President Obama has an opportunity to provide some truth-telling on Social Security and Medicare while also sending a clear message that the White House will not aide and abet conservatives who intend to cut middle-class benefits to pay for tax cuts for huge corporations and the wealthy.  

We hope the President will join the American people and be bold in the defense and expansion of Social Security and Medicare rather than leave the door open to continued hostage-taking and deal-making designed to unravel the economic security so many Americans depend on.

 

Conservatives Claim We Can’t Afford Social Security & Medicare While Passing Billions in Corporate Tax Breaks...Again

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,[1] a tax credit for research defined so loosely that it includes the work soft drink companies put into developing new flavors,[2] 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[3] to extending emergency unemployment benefits.[4] 

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.

Same As It Ever Was: The GOP's Post-Election Plans for Social Security and Medicare

This article was originally posted on Huffington Post.


Max Richtman, President and CEO, National Committee to Preserve Social Security and Medicare

The 114th Congress will see many new faces after the 2014 midterms; however, the face of our nation's middle class remains largely unchanged - they're poorer, more diverse, getting older and facing a retirement crisis which threatens millions. How will this new Congress address this old reality? Not one of the newly-elected Members of Congress campaigned on promises to cut benefits to Social Security and Medicare, yet it's already clear the new GOP majority considers lowering corporate tax rates and cutting benefits to middle-class seniors a priority. Same as it ever was.

The disconnect between many in Congress and average Americans on Social Security and Medicare is certainly nothing new. In poll after poll, the American people clearly do not support cutting middle-class benefits in these programs to balance the budget or bankroll tax cuts for the wealthy or large corporations already dodging billions in taxes each year. Contrary to the current political mythology that the American people aren't willing to be "grownups" and make the "tough choices" for our nation, the fact is, they simply don't support the benefit-cutting strategy preferred by many Washington politicians. Not only do they oppose cutting benefits, most Americans support boosting benefits.

A new report 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. NASI reported:

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 percent 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 percent of earnings to 7.2 percent. 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.

Exit polling after the midterm election, even in Republican-leaning states, mirrored the findings in the NASI report. Public Policy Polling found 86 percent opposition to allowing any cuts to Social Security and Medicare with 79 percent opposition among Republicans. Voters say they are also less likely to vote for a candidate who supports making cuts to Social Security and Medicare by 70 points. Of course, this isn't really a surprise to political candidates. It's why you will rarely hear politicians telling voters they plan to cut Social Security and Medicare benefits for the millions of middle-class families who depend on them. Instead, candidates have successfully deployed a dodge-and-deflect strategy built on Orwellian language in which they say they'll "preserve" these programs when they actually mean privatize, "strengthen" when they mean slash, or "give you choices" when they mean you're on your own. While that strategy has certainly worked on the campaign trail, what remains to be seen is if the new Republican majority can successfully govern using the same approach.

Congress' new leadership may want to give former President George Bush a call. Not so many years ago, he believed his "voter mandate" cleared the way to privatize Social Security - cutting benefits and putting workers' guaranteed benefits at risk on Wall Street. That didn't turn out so well for the President simply because the American people understood then, as they do today, the abiding value of America's retirement and health security programs. Outside Washington, Social Security and Medicare aren't regarded as political or partisan because they are synonymous with economic survival for millions of workers, retirees, people with disabilities and their families.

The difference between campaigning and governing is vast -- something the members of the 114th Congress will discover first hand if cuts to Social Security and Medicare remain on their legislative agenda.

Follow Max Richtman on Twitter: www.twitter.com/maxrichtman

Social Security, Medicare and the GOP Congress

The Senate’s new majority leader has been true to his word...Mitch McConnell still won’t talk about his plans for Social Security and Medicare, even now that he’s been re-elected and will serve as the new leader of the Senate.

However, House Speaker John Boehner has no problem laying out the GOP plan.  There are no real surprises here, it’s basically the GOP/Ryan Budget version 4 (or 5, we’ve lost count) which has only avoided full passage because of the formerly Democrat-controlled Senate. As usual, lowering corporate tax rates while cutting Social Security and Medicare are items #1 and #2 of the GOP 5 point plan.  Lower taxes for businesses, Couponcare for seniors and raising the retirement age for Social Security are now back on the table with the Republican-led Congress.

Is anyone really surprised?

Care About Social Security & Medicare? Then VOTE

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