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Let's Get it Right on Social Security

Barbara B. Kennelly, President/CEO The Washington Post and FactCheck.org made several errors recently in their comments about Social Security privatization.  Let's start with the Post.  Ruth Marcus says the 2005 Bush privatization proposal, which Senator McCain supported, would have reduced annual Social Security benefits for an average earner, retiring in 2045, by only about 16 percent and 28 percent if retiring in 2075. However, the Bush privatization plan cuts Social Security benefits in two ways, one of which was ignored in the Post's coverage. The first benefit reduction, cited by the Post, occurs because of the price indexing of benefits. However, private account holders would also be subjected to an additional cut in traditional Social Security benefits that reduces benefits by the amount contributed to private accounts, plus an interest charge. For the average wage earner, the cut would amount to almost half of their Social Security benefit.  Once you add these cuts together, as Jason Furman at the Center for Budget and Policy Priorities did in 2005, the medium wage earner retiring at 65 in 2075 would have a 73 percent cut in benefits. A worker at a higher income, around $60,000 in today's dollars, would see a 97 percent cut in his or her traditional Social Security benefit. Virtually all of this worker's retirement income would depend on a private account and additional savings. Clearly, the events of the last few weeks have shown us, having every dime of your retirement savings subject to the ups and downs of Wall Street is not a good idea.            Meanwhile, Factcheck.org calls this statement from Senator Obama in Florida 
"But if my opponent had his way, the millions of Floridians who rely on it would've had their Social Security tied up in the stock market this week"
a "whopper" because the privatization plan that Senator McCain supported would have excluded current seniors.  O.K., so maybe Senator Obama could have thrown in another "would" into his sentence for clarity as in "who would rely" but is that really such a whopper?  Hardly.  While proponents of private investment accounts would exclude people 55 and older from their plans at the time of implementation, people reaching 55 thereafter would not be excluded from private accounts and their consequences.  Workers nearing retirement are particularly vulnerable to drops in the stock market since they have less time to recover from their losses.  Senator Obama was correct  when he said, "if my opponent had his way" - that is, if privatization had been fully in effect - millions of Americans would have had their retirement money tied up in the stock market in Social Security private accounts. If private accounts had been in effect, Americans would have been worrying not only about the future of their money markets and their 401(k)s, but also about the future of their market-based Social Security accounts. Also, participation in private accounts cannot be said to be truly voluntary. Many privatization plans, including the Bush plan, contain features, such as cuts in traditional Social Security benefits, which were so large that Americans would be forced to participate in the account and take market risk in the part of their retirement income that is supposed to be secure. That's the problem with privatization and that's the issue that Senator Obama was raising. All privatization plans have the same problem. Private account plans don't work without huge cuts in future benefits or increases in taxes - more than necessary to just fix Social Security - or trillions of dollars in increased public debt.      We should care about tomorrow's widows as much as we do today's. We should be worried about the retirement security of tomorrow's grandparents as much as today's. Those who retire under a privatized Social Security system, as supported by Senator John McCain, are going to have some unhappy surprises.

2009 Medicare Part B Premiums

CMS has announced next year's Part B premiums, for monthly outpatient care, will remain the same for about 95% of Medicare recipients at $96.40.  Kaiser has a good roundup of coverage and analysis of the announcement.  Here is the CMS release.

Social Security Privatization and CNN

Kudos to CNN and Jack Cafferty for being among the first of the main stream media to catch the critical link between the mess we're seeing on Wall Street and the still possible privatization of Social Security.  While we highly recommend you watch this whole segment we have to highlight our favorite comment from the Cafferty file: 
Grace writes:  If it wasn't for FDR and Social Security, I would be living with my Republican children. Enough said.  

Trying to Have it Both Ways on Social Security

Senator John McCain continues to slam Wall Street but at the same time supports sending American retirees' Social Security to investors. Here's one of his latest having-it-both-ways-moments on CNN:   
"We will come back from this crisis, but right now we are the victims of greed, excess and corruption on Wall Street" and "It's a very tough crisis and we are the victims of the violation of the social contract between capitalism and the American citizen"...Senator John McCain, CNN, September 16, 2008
Here is the National Committee's President/CEO, Barbara Kennelly's, reaction:

 "If Senator John McCain believes the American people are the victims of ‘greed, excess, and corruption on Wall Street' how can he continue to justify his support for a plan which would send billions of Social Security dollars to Wall Street through private accounts?  Social Security privatization would put retirees' guaranteed benefits in the hands of the very same people Senator McCain chastised today. Investing on Wall Street has always been and continues to be a gamble, which is why the American people rejected Social Security private accounts years ago.  Yet privatization remains a part of the GOP platform and Senator McCain's Social Security strategy.   Senator McCain can't have it both ways. We deserve a straight answer on how Senator McCain will protect America's true social contract, which exists between generations of working families who contribute to and depend on Social Security, without destroying that contract through privatization".  ...Barbara B. Kennelly, President/CEO

Americans understand that Social Security is secure...Wall Street is not.   It's why the privatization plan President Bush proposed and John McCain supported was overwhelming rejected.  Now we're seeing first hand the true meaning of the so-called "ownership" society.  If Social Security had been privatized and our money was in private accounts now...American seniors and their families would be on their own. There are number of good articles and blogs on the Wall Street meltdown and Social Security today including: Huffington Post, the Atlanta Journal Constitution, RTT Financial News and CNN’s Cafferty File

Don't Ignore Social Security in Debates

Presidential Debate season is upon us and I believe these debates could be among the most important in decades, especially for Americans who are feeling the pinch of these tough economic times.  Even though there will be so many issues demanding answers from our Presidential and Vice Presidential candidates, I sincerely hope Social Security isn't ignored. Following is a letter I sent to the VP debate moderator, Gwen Ifill, urging her to talk to the candidates about their positions on Social Security and privatization.
Gwen Ifill PBS Senior Correspondent & Managing Editor 3620 27th Street S Arlington, VA 22206 Dear Ms. Ifill, Good luck as you prepare for the October 2nd Vice-Presidential debate. It is a well-deserved recognition of your skills as a journalist and moderator and I will be among the millions of Americans watching with anticipation. Watching and hoping that Social Security is not ignored in your conversation with the Vice-Presidential nominees. The future of millions of seniors, disabled, survivors, and their families depend on the answers to questions about Social Security, private accounts and the program's long-term solvency. Four years ago, Social Security was not even a footnote in the Presidential campaign. In fact, during the last Vice-Presidential debate the candidates did not offer a single Social Security proposal. However, the day after the election the American people were blindsided with the most dramatic Social Security reform proposal in its history. President Bush's plan to privatize the program would have increased retirement risks, severely cut Social Security benefits, robbed from the Social Security trust fund, and added a multi-trillion dollar increase to the federal debt. During the 2004 Presidential campaign, President Bush did not want to talk about his plans for Social Security and, given the many other challenges we faced in 2004, he didn't have to. I hope we won't make that mistake again. Millions of Americans would be in poverty without Social Security and given the current economy, even more feel threatened. Americans cannot allow candidates to dodge and weave, parse words or avoid talking about Social Security during this 2008 Presidential campaign. Specifically, our more than 3 million members and supporters would like a clear description of where the candidates stand on the privatization of Social Security through private accounts. While Senator Joe Biden has a voting record on Social Security and private accounts, it is likely few Americans are aware of his positions. The American people know absolutely nothing about Governor Sarah Palin's views on Social Security or privatization. As the Vice President will be a "heartbeat away" from the presidency, we believe it is critical that the public knows the candidates' positions on our nation's most important and popular social insurance program. The American people have been told Social Security is bankrupt and that the program won't be there for younger generations in spite of the 2008 Social Security Trustees Report and a recent Congressional Budget Office Report that shows Social Security will be fully funded until 2041(Trustees), and 2049 (CBO) respectively. Beneficiaries will receive 78% of promised benefits after that, even if nothing is done to shore up the program in the out-years and no one believes that will happen. Senator Biden and Governor Palin should be given the opportunity to discuss whether they share these views and how they would address Social Security's finances. You rarely hear a politicians say they don't support Social Security and the word "privatization" has now become political dynamite. However, the goal of creating Social Security private accounts is still very much alive. Given these truths, we would like to know how our Vice-Presidential candidates would respond to two basic questions: • If Social Security, as we currently know it, was proposed for the very first time would you support it? • Would you support Social Security reform that includes private accounts? For years, Americans have been told revenue-slashing tax cuts are the answer to our financial woes and a borrow-and-spend economy is not a problem. Now, when faced with the ensuing budget deficits and an economic meltdown, we're being told we can't afford Social Security. This is not "speaking the truth" as some have claimed. Instead, we are seeing the same old anti-Social Security and anti-Medicare ideology now masquerading as fiscal responsibility. I hope this debate will clearly define where our Vice-Presidential candidates stand on the critical issues of our day, including their plans for Social Security. Thank you, in advance, for the important role you will play in this historic event. Sincerely, Barbara B. Kennelly, former Member of Congress President and CEO of the National Committee to Preserve Social Security and Medicare

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