Deficit-hawks: Same Song, Umpteenth Verse
Yet another in a long line of deficit hawk fiscal reports has been released today, this one by Fiscal Commission member Alice Rivlin and former GOP Senator Pete Domenici. Once again, cutting Social Security and Medicare benefits play a prominent role while largely ignoring the fact that our deficit crisis is really a healthcare crisis. The proposal, also ignores the fact that Social Security is not responsible for our deficits and without the $2.6 trillion dollar trust fund built up by American workers over decades, it would actually be much worse. Like the Simpson/Bowles proposal, this plan would cut benefits, reduce theCOLA and even though it doesn?t explicitly raise the retirement age it achieves basically the same end result :
This plan would “index the benefit formula for increases in life expectancy” starting in 2023. In both cases, the net result would be lower monthly benefits. It would also dramatically reduce benefits by changing the calculation of cost-of-living adjustments, and by chopping checks for top quarter of beneficiaries.
One approach unique to the Rivlin/Domenici plan is a one-year tax ?holiday? that suspends payment of $650 billion in Social Security payroll taxes for employers and employees. This tax holiday isn’t expected to affect the solvency of the trust funds because the authors claim the funds will be reimbursed in full from general revenues. Hmmmm. Let?s think about the current debate over extending the Bush tax cuts which have been scheduled, since their passage, to expire this year. The American people are now being told by deficit hawks that allowing the tax law to expire as promised is a ?tax hike?. Why wouldn?t they make the same argument about this payroll tax cut when it expires one year after its passage? Thereby positioning Social Security to lose $650 billion each year in lost payroll tax revenue, forcing it to be funded by general revenues (which we don?t have by the way). In short, future Social Security funding is thrown into the deficit/debt debate in an unprecedented way.Social Security has no place in a conversation about solving our deficit problem. Commission member Rep. Jan Schakowsky understands that. She?s proposed a deficit plan that doesn?t force the middle class to foot the bill. She?s proven it can be done, if there?s the political will to do it.Schakowsky proposes cutting $427.7 billion from the federal budget deficit by 2015, along with $200 billion in new stimulus spending to create jobs, $144.6 billion in tax increases, $110.7 billion in defense cuts and $17.2 billion in healthcare savings through a public option. The Huffington Post reported on her plan this way:
Schakowsky’s recommendations stand in stark contrast to the Bowles-Simpson recommendations which would reduce the rate of increase of Social Security benefits and gradually raise the retirement age, among other things.“Social Security has nothing to do with the deficit,” Schakowsky told reporters. “Addressing the Social Security issue as part of the deficit question is like attacking Iraq to retaliate for the September 11 attacks,” said Schakowsky.
And these deficit hawk proposals are being sold in much the same way?if you don?t support cutting benefits to millions of American retirees, the disabled, survivors and their families then you?re a ?political coward.?
Will Lame Duck Congress Pass COLA Relief?
Legislation in the House and Senate to provide one-time emergency COLA relief for seniors is expected to beconsidered in the lame duck session of Congress before it wraps up its work next month. House Speaker Nancy Pelosi has includedCOLA reliefon her list of must-pass items and Majority Leader Harry Reid has promised to take it up in the Senate.Let?s be clear about what this bill would do. The legislation would not provide an actual COLA increase, since under current law the COLA formula mandated no increase in 2010 and 2011; however, this legislation would provide a single $250 payment next year. You may remember, a similar provision was included in the 2009 stimulus bill and was successful in providing modest relief to seniors hit hard by the recession and also providing desperately needed economic stimulus.But passage of this COLA bill is anything but certain. Deficit hawks continue their campaign against anything vaguely resembling help for the middle class and, in fact, the chairmen of the Fiscal Commission now suggest that the current formula (which led to zero COLA?s for two years) is actually too generous. They want a new and less ?generous? COLA formula enacted as soon as 2012. Cutting the COLA during the worst economic crisis in decades would be disastrous for millions of Americans but it is exactly what multi-billionaire and anti-entitlement crusader Pete Peterson has advocatedas far back as the 1970?s. We detailed some of that history here:
Peterson is no stranger to the battle against America?s retirement safety net. He?s called the current cost of living increases in Social Security, which provide adjustments of roughly 3% a year, ?one of the greatest fiscal tragedies of American history? because he considers them excessive. At the same time, Peterson steadfastly defends a controversial private equity tax break that benefits America?s wealthiest investors. So much for fiscal responsibility.
With$1 billion dollars invested in his anti-Social Security , oops we mean fiscal responsibility campaign, passage of this COLA relief legislation will be difficult. In fact, members of Congress are being told they?re ?political cowards? if they don?t cut Social Security. Now is the time for you to let Congress know that cutting Social Security while extending tax breaks for the wealthy shows anything but political courage.Send your representatives in the House and Senate an email directly from our Legislative Action center on our website or from our Facebook page. You can use the sample letter we?ve provided or, even better, write your own. The COLA vote could come at any time so please forward the links to your friends and tell Congress to support COLA relief legislation.
When Shared Sacrifice Really Just Means Cut Social Security
Fiscal Committee Chairmen, Alan Simpson and Erskine Bowles, have argued their plan for Social Security is solely about solvency. Really? As the Social Security actuaries have said, beneficiaries would face a potential 22% benefit cut after 2037, if Congress does nothing. Yet under Simpson/Bowles, workers who earned $37,400 annually (that’s about half of Social Security recipients) would actually take a 35-41% cut! While Simpson/Bowles promise these benefit cuts will only impact high income earners, there’s a catch. Anyone who made $38,000 a year during their working years is considered a “high income” earner. Yes, that’s right. When it comes to raising the payroll tax, Simpson/Bowles worries that a .1% payroll hike phased in over decades might be too big a burden for workers making $100,000 a year, yet when it comes to benefit cuts you’re considered “upper income’ if you earn a third of that. In short, a so-called “high income” worker making $38,000 can afford to pay their taxes and take a benefit cut but don’t expect those making six-figures to pay their share of payroll taxes. Angry Bear describes it this way:
Coberly and I (and some others) have been warning for years about the dangers of turning Social Security from an insurance program with mild progressive transfers to a welfare system. Well this is a pure illustration of that, I can’t imagine any scheme designed to more undermine support for Social Security than one that calls for earners in the top 50% taking a cut even from the projected cut. The answer to a ‘crisis’ defined as an ultimate 25% cut in scheduled benefit is for upper income folk to take a 35-41% cut? All in an effort to save them a phased in 0.1% of payroll per year increase over the next 20 years?
National Committee Executive VP, Max Richtman, talked about the lack of balance in this proposal on Pacifica Radio’s Letters to Washington. Shared Sacrifice Another favorite line by fiscal hawks and these Fiscal Committee chairmen is the call for all Americans to sacrifice for the good of our country. We agree. However, as our President/CEO, Barbara Kennelly has said, the sacrifice in this plan is anything but shared:
“America’s retirees, disabled and their families had hoped for a balanced approach to solving our nation’s fiscal crisis. Unfortunately, that is not what we received in today’s report by the Chairmen of the President’s Fiscal Commission. This proposal relies far too heavily on benefit cuts which will hurt millions of Americans. Lowering COLA’s which hit even current retirees, raising the retirement age, and making benefit cuts in Social Security have nothing to do with solving this fiscal crisis and do not offer a balanced solution to debt reduction by any stretch of the imagination.”
How’s this for balance–the way Simpson/Bowles propose we get to long term solvency for Social Security is with 92% of the solution coming from benefit cuts for seniors, the disabled, survivors and their families. Forget the conventional wisdom, inside Washington and out, that the answer to long-term solvency would be a combination of revenue increases and benefit cuts. That type of compromise is tough enough to get these days, but it is also the only way to ensure a fair and balanced result. Is proposing a solution which is 92% benefits cuts truly and example of shared sacrifice?If we really want to preach balance, how about lifting the payroll tax cap entirely? The American people have said repeatedly they’ll pay a little extra to keep the modest benefits provided by Social Security and Medicare. Or, how about a financial transaction tax? Is it really so absurd to think that America?s wealthiest Americans and the industry that helped create this economic collapse in the first place share some of the sacrifice to fix it? By all accounts, neither of these options were seriously considered by Simpson/Bowles. So much for promises of a balanced approach with shared sacrifices. This plan isn’t even close.
Cuts to Social Security and Medicare are Fiscal Commission’s Primary Solution to Nation’s Debt Crisis
Sometimes you’d just rather be wrong…and this is one of those times.The Chairmen of the President’s Fiscal Commission unveiled their solutions for the nation’s debt/deficit mess in a hastily called news conference today and– as predicted– it’s all about cuts to Social Security and Medicare.
?America?s retirees, disabled and their families had hoped for a balanced approach to solving our nation?s fiscal crisis. Unfortunately, that is not what we received in today?s report by the Chairmen of the President?s Fiscal Commission. This proposal relies far too heavily on benefit cuts which will hurt millions of Americans. Lowering COLA?s which hit even current retirees, raising the retirement age, and making benefit cuts in Social Security have nothing to do with solving this fiscal crisis and do not offer a balanced solution to debt reduction by any stretch of the imagination.??Barbara B. Kennelly, President and CEO
Specifically, the proposal released today by the Chairmen of the National Commission on Fiscal Responsibility and Reform, former Senate Alan Simpson and Erskine Bowles would:Raise the Retirement Age to 69 ? this proposals calls for a gradual increase to age 68 by the year 2050 and 69 by 2075. This would result in substantial benefit reductions for the generations of Americans.Reduce Cost of Living Adjustments ? this proposal suggests a different method of calculating the cost-of-living adjustment resulting in smaller COLAs as soon as 2012, impacting even current retirees. Estimates are this would lower benefits by approximately 3 percent after 10 years of retirement and 6 percent after 20 years of retirement.Cut Social Security Benefits – by changing Social Security?s benefit formula this proposal would cut benefits for millions of future retirees.More Medicare cuts ? this time directly to benefitsIncreased Cost Sharing for Seniors – Congress just enacted the Affordable Care Act, which included billions in savings from Medicare yet did not target beneficiaries. However, this Commission proposal includes hundreds of billions of additional Medicare cuts, over $100 billion of which will come directly out of the pockets of seniors in the form of increased cost-sharing. The average senior is already spending 30% of his/her Social Security benefit on Medicare Part B & Part D out-of-pocket costs alone; this proposal would increase that amount.Reduced Provider Reimbursements ? This proposal includes a new round of cuts in Medicare provider reimbursements before reforms in the health care law have even been implemented, which could leave seniors without access to affordable health care.
?America?s seniors and their families want Washington to get its fiscal house in order; however, they also know Social Securitydid not create this economic mess and should not foot the bill for failed economic policies of the past. The American people are serious about deficit reduction and have said in poll after poll that they?ll support a balanced proposal. This isn?t it.??Barbara B. Kennelly, President and CEO
The only good news here is no one takes this proposal seriously beyond those who’ve pushed this anti-Social Security and Medicare agenda from the beginning, such as the Peterson Foundation and all ofthe other anti-entitlement groups it funds. According to CBS:
The document, from co-chairs Erskine Bowles and Alan Simpson, is not the bipartisan commission’s final proposal, which is due at the end of the month. It likely could not win support from 14 of the commission’s 18 members, which is necessary to advance it to Congress for consideration.
Wall Street Bailouts? No problem: Keeping Social Security’s Promise, well.
Deficit-hawks: Same Song, Umpteenth Verse
Yet another in a long line of deficit hawk fiscal reports has been released today, this one by Fiscal Commission member Alice Rivlin and former GOP Senator Pete Domenici. Once again, cutting Social Security and Medicare benefits play a prominent role while largely ignoring the fact that our deficit crisis is really a healthcare crisis. The proposal, also ignores the fact that Social Security is not responsible for our deficits and without the $2.6 trillion dollar trust fund built up by American workers over decades, it would actually be much worse. Like the Simpson/Bowles proposal, this plan would cut benefits, reduce theCOLA and even though it doesn?t explicitly raise the retirement age it achieves basically the same end result :
This plan would “index the benefit formula for increases in life expectancy” starting in 2023. In both cases, the net result would be lower monthly benefits. It would also dramatically reduce benefits by changing the calculation of cost-of-living adjustments, and by chopping checks for top quarter of beneficiaries.
One approach unique to the Rivlin/Domenici plan is a one-year tax ?holiday? that suspends payment of $650 billion in Social Security payroll taxes for employers and employees. This tax holiday isn’t expected to affect the solvency of the trust funds because the authors claim the funds will be reimbursed in full from general revenues. Hmmmm. Let?s think about the current debate over extending the Bush tax cuts which have been scheduled, since their passage, to expire this year. The American people are now being told by deficit hawks that allowing the tax law to expire as promised is a ?tax hike?. Why wouldn?t they make the same argument about this payroll tax cut when it expires one year after its passage? Thereby positioning Social Security to lose $650 billion each year in lost payroll tax revenue, forcing it to be funded by general revenues (which we don?t have by the way). In short, future Social Security funding is thrown into the deficit/debt debate in an unprecedented way.Social Security has no place in a conversation about solving our deficit problem. Commission member Rep. Jan Schakowsky understands that. She?s proposed a deficit plan that doesn?t force the middle class to foot the bill. She?s proven it can be done, if there?s the political will to do it.Schakowsky proposes cutting $427.7 billion from the federal budget deficit by 2015, along with $200 billion in new stimulus spending to create jobs, $144.6 billion in tax increases, $110.7 billion in defense cuts and $17.2 billion in healthcare savings through a public option. The Huffington Post reported on her plan this way:
Schakowsky’s recommendations stand in stark contrast to the Bowles-Simpson recommendations which would reduce the rate of increase of Social Security benefits and gradually raise the retirement age, among other things.“Social Security has nothing to do with the deficit,” Schakowsky told reporters. “Addressing the Social Security issue as part of the deficit question is like attacking Iraq to retaliate for the September 11 attacks,” said Schakowsky.
And these deficit hawk proposals are being sold in much the same way?if you don?t support cutting benefits to millions of American retirees, the disabled, survivors and their families then you?re a ?political coward.?
Will Lame Duck Congress Pass COLA Relief?
Peterson is no stranger to the battle against America?s retirement safety net. He?s called the current cost of living increases in Social Security, which provide adjustments of roughly 3% a year, ?one of the greatest fiscal tragedies of American history? because he considers them excessive. At the same time, Peterson steadfastly defends a controversial private equity tax break that benefits America?s wealthiest investors. So much for fiscal responsibility.
With$1 billion dollars invested in his anti-Social Security , oops we mean fiscal responsibility campaign, passage of this COLA relief legislation will be difficult. In fact, members of Congress are being told they?re ?political cowards? if they don?t cut Social Security. Now is the time for you to let Congress know that cutting Social Security while extending tax breaks for the wealthy shows anything but political courage.Send your representatives in the House and Senate an email directly from our Legislative Action center on our website or from our Facebook page. You can use the sample letter we?ve provided or, even better, write your own. The COLA vote could come at any time so please forward the links to your friends and tell Congress to support COLA relief legislation.
When Shared Sacrifice Really Just Means Cut Social Security
Fiscal Committee Chairmen, Alan Simpson and Erskine Bowles, have argued their plan for Social Security is solely about solvency. Really? As the Social Security actuaries have said, beneficiaries would face a potential 22% benefit cut after 2037, if Congress does nothing. Yet under Simpson/Bowles, workers who earned $37,400 annually (that’s about half of Social Security recipients) would actually take a 35-41% cut! While Simpson/Bowles promise these benefit cuts will only impact high income earners, there’s a catch. Anyone who made $38,000 a year during their working years is considered a “high income” earner. Yes, that’s right. When it comes to raising the payroll tax, Simpson/Bowles worries that a .1% payroll hike phased in over decades might be too big a burden for workers making $100,000 a year, yet when it comes to benefit cuts you’re considered “upper income’ if you earn a third of that. In short, a so-called “high income” worker making $38,000 can afford to pay their taxes and take a benefit cut but don’t expect those making six-figures to pay their share of payroll taxes. Angry Bear describes it this way:
Coberly and I (and some others) have been warning for years about the dangers of turning Social Security from an insurance program with mild progressive transfers to a welfare system. Well this is a pure illustration of that, I can’t imagine any scheme designed to more undermine support for Social Security than one that calls for earners in the top 50% taking a cut even from the projected cut. The answer to a ‘crisis’ defined as an ultimate 25% cut in scheduled benefit is for upper income folk to take a 35-41% cut? All in an effort to save them a phased in 0.1% of payroll per year increase over the next 20 years?
National Committee Executive VP, Max Richtman, talked about the lack of balance in this proposal on Pacifica Radio’s Letters to Washington. Shared Sacrifice Another favorite line by fiscal hawks and these Fiscal Committee chairmen is the call for all Americans to sacrifice for the good of our country. We agree. However, as our President/CEO, Barbara Kennelly has said, the sacrifice in this plan is anything but shared:
“America’s retirees, disabled and their families had hoped for a balanced approach to solving our nation’s fiscal crisis. Unfortunately, that is not what we received in today’s report by the Chairmen of the President’s Fiscal Commission. This proposal relies far too heavily on benefit cuts which will hurt millions of Americans. Lowering COLA’s which hit even current retirees, raising the retirement age, and making benefit cuts in Social Security have nothing to do with solving this fiscal crisis and do not offer a balanced solution to debt reduction by any stretch of the imagination.”
How’s this for balance–the way Simpson/Bowles propose we get to long term solvency for Social Security is with 92% of the solution coming from benefit cuts for seniors, the disabled, survivors and their families. Forget the conventional wisdom, inside Washington and out, that the answer to long-term solvency would be a combination of revenue increases and benefit cuts. That type of compromise is tough enough to get these days, but it is also the only way to ensure a fair and balanced result. Is proposing a solution which is 92% benefits cuts truly and example of shared sacrifice?If we really want to preach balance, how about lifting the payroll tax cap entirely? The American people have said repeatedly they’ll pay a little extra to keep the modest benefits provided by Social Security and Medicare. Or, how about a financial transaction tax? Is it really so absurd to think that America?s wealthiest Americans and the industry that helped create this economic collapse in the first place share some of the sacrifice to fix it? By all accounts, neither of these options were seriously considered by Simpson/Bowles. So much for promises of a balanced approach with shared sacrifices. This plan isn’t even close.
Cuts to Social Security and Medicare are Fiscal Commission’s Primary Solution to Nation’s Debt Crisis
Sometimes you’d just rather be wrong…and this is one of those times.The Chairmen of the President’s Fiscal Commission unveiled their solutions for the nation’s debt/deficit mess in a hastily called news conference today and– as predicted– it’s all about cuts to Social Security and Medicare.
?America?s retirees, disabled and their families had hoped for a balanced approach to solving our nation?s fiscal crisis. Unfortunately, that is not what we received in today?s report by the Chairmen of the President?s Fiscal Commission. This proposal relies far too heavily on benefit cuts which will hurt millions of Americans. Lowering COLA?s which hit even current retirees, raising the retirement age, and making benefit cuts in Social Security have nothing to do with solving this fiscal crisis and do not offer a balanced solution to debt reduction by any stretch of the imagination.??Barbara B. Kennelly, President and CEO
Specifically, the proposal released today by the Chairmen of the National Commission on Fiscal Responsibility and Reform, former Senate Alan Simpson and Erskine Bowles would:Raise the Retirement Age to 69 ? this proposals calls for a gradual increase to age 68 by the year 2050 and 69 by 2075. This would result in substantial benefit reductions for the generations of Americans.Reduce Cost of Living Adjustments ? this proposal suggests a different method of calculating the cost-of-living adjustment resulting in smaller COLAs as soon as 2012, impacting even current retirees. Estimates are this would lower benefits by approximately 3 percent after 10 years of retirement and 6 percent after 20 years of retirement.Cut Social Security Benefits – by changing Social Security?s benefit formula this proposal would cut benefits for millions of future retirees.More Medicare cuts ? this time directly to benefitsIncreased Cost Sharing for Seniors – Congress just enacted the Affordable Care Act, which included billions in savings from Medicare yet did not target beneficiaries. However, this Commission proposal includes hundreds of billions of additional Medicare cuts, over $100 billion of which will come directly out of the pockets of seniors in the form of increased cost-sharing. The average senior is already spending 30% of his/her Social Security benefit on Medicare Part B & Part D out-of-pocket costs alone; this proposal would increase that amount.Reduced Provider Reimbursements ? This proposal includes a new round of cuts in Medicare provider reimbursements before reforms in the health care law have even been implemented, which could leave seniors without access to affordable health care.
?America?s seniors and their families want Washington to get its fiscal house in order; however, they also know Social Securitydid not create this economic mess and should not foot the bill for failed economic policies of the past. The American people are serious about deficit reduction and have said in poll after poll that they?ll support a balanced proposal. This isn?t it.??Barbara B. Kennelly, President and CEO
The only good news here is no one takes this proposal seriously beyond those who’ve pushed this anti-Social Security and Medicare agenda from the beginning, such as the Peterson Foundation and all ofthe other anti-entitlement groups it funds. According to CBS:
The document, from co-chairs Erskine Bowles and Alan Simpson, is not the bipartisan commission’s final proposal, which is due at the end of the month. It likely could not win support from 14 of the commission’s 18 members, which is necessary to advance it to Congress for consideration.