Senator Marco Rubio’s proposal to fund paid family leave by cutting participants’ future Social Security benefits is nothing less than a Trojan Horse to undermine Social Security – and lays the groundwork for further damage to the program. Social Security is not a piggy bank or ATM to be used for other programs, no matter how commendable.
“Our Social Security system is a foundation of economic security for workers and their families in the event of a worker’s retirement, disability or death. While we believe that expanding access to paid parental leave is important for all workers, we oppose legislation that would finance it by cutting future Social Security benefits.” – Max Richtman, president and CEO of the National Committee to Preserve Social Security and Medicare.
Senator Rubio’s proposal would weaken Social Security’s long-term financial health. Caregivers taking their retirement benefits in advance as paid family leave may never be able to reimburse Social Security due to premature death or disability. Former Congressional Budget Office Director Douglas Holtz-Eakin estimates that Senator Rubio’s program would cost Social Security $10.5 billion in the first year and $227 billion over ten years.
Social Security already helps millions of younger working-age families (approximately 16 million beneficiaries) through disability, dependents’ and survivors’ benefits. The truth is that this family leave proposal from Senator Rubio, an outspoken advocate of “entitlement reform” (code for cutting earned benefits), is – at its core – a benefit cut for future retirees and their families.
Workers who take time off to care for children and other family members should not have to sacrifice their hard-earned Social Security benefits later in life. Senator Rubio’s proposal is especially harmful to women, who make up the majority of family caregivers in the United States today. Women can ill afford to take a financial hit during retirement when their average Social Security benefits are already lower than men’s.
“Authors Melissa Favreault and Richard Johnson calculate that parents who take leave would have to delay collecting Social Security for twice the period for which they took leave — to repay 12 weeks of leave, they would have to delay their retirement benefits by 20 to 25 weeks. But delaying Social Security translates into a real financial loss; the authors reckon that parents who took a single 12-week leave would lose about 3% of their future retirement benefits, and those who took four leaves would lose 10%.” – Michael Hiltzik, Los Angeles Times
Author Richard Johnson told Hiltzik, “If we let people borrow against Social Security, that adds to the precariousness of the retirement system.” Johnson warned that the proposed change to Social Security could lead to Americans viewing the program as a savings account rather than income insurance, opening the door to GOP attempts to privatize it.
In a July 10th letter to the Senate Finance Social Security subcommittee, National Committee president Max Richtman implored Senators to reject Rubio’s proposal:
“Since the inception of the program, Americans have regarded their contributions to Social Security as sacrosanct and available only for Social Security. The National Committee believes it should stay that way, and therefore urges you to oppose any legislation that relies on Social Security as a means for financing a program of paid family leave.” – Max Richtman’s letter to the Senate Social Security subcommittee
Read the full letter to the Senate committee here.
The political right has predictably pounced on the recently-released Social Security Trustees report to call for “entitlement reform” – code for cutting the program. Once again, they are using projections about Social Security’s long-term finances to justify raising the retirement age, reducing COLAs, and cutting benefits. This should not come as a surprise. In the wake of the Trump/GOP tax giveaway to billionaires and big corporations, prominent Republicans all but said that future retirees would be asked to pay the price.
“We need to generate economic growth which generates revenue while reducing spending. That will mean instituting structural changes to Social Security and Medicare for the future.” – Senator Marco Rubio (R-FL)
“We’re going to have to get back … at entitlement reform, which is how you tackle the debt and the deficit.” – Speaker Paul Ryan (R-WI)
“If we’re going to do something about spending and debt, we have to get faster growth in the economy, which I hope tax reform will achieve. I think there is support… here for entitlement reform.” – Senator John Thune (R-SD)
These statements imply two blatant falsehoods: 1) that the tax scam will benefit working Americans and unleash unprecedented economic growth; 2) that Social Security and other “entitlements” do not produce economic stimulus and must be cut to reduce deficits and debt.
First, there already is overwhelming evidence that the Trump/GOP tax cuts for fat cats are not cascading (or even trickling) down to most American workers. Instead of significantly raising wages or hiring more workers, America’s largest corporations are spending the lion’s share of their tax windfalls on stock buybacks and dividend increases. This further enriches corporations and their shareholders, but doesn’t do much for working families.
While the tax cuts clearly fail to ‘lift all boats,’ Social Security provides significant stimulus to the nation’s economy, accruing to the benefit of all Americans. In 2014 (the most recent year for which these statistics are available) Social Security contributed $1.6 trillion in economic stimulus nationally – and the program generates billions in additional economic activity in all 50 states. This includes each of the states which some of the program’s most ardent “reformers” represent.
Let’s look at Social Security’s economic impact on Florida (Marco Rubio), Wisconsin (Paul Ryan), and South Dakota (John Thune):
Benefits Paid (2014) Economic Stimulus
$62,291,340,000 $122.5 billion
Benefits Paid (2014) Economic Stimulus
$17,454,792,000 $31.3 billion
Benefits Paid (2014) Economic Stimulus
$2,306,880,000 $3.8 billion
Even in a less populous state like South Dakota, Social Security is a significant economic catalyst, with nearly $4 billion in impact per year. But “entitlement reformers” conveniently ignore Social Security’s well-documented stimulus to the economy because they’d rather lavish tax cuts on their wealthy and powerful donors – and undermine retirees’ earned benefits instead. In fact, tax expenditures (the amount of tax revenue the federal government forgoes) are the number one contributor to the deficit and debt, while Social Security is self-funded by workers’ payroll contributions and does not add a drop of red ink to the federal budget.
The wisest, most fiscally responsible course for the Congress and the President to take would be to roll back the massive tax breaks for the wealthy and profitable corporations, and instead strengthen and expand Social Security for future generations of retirees. Legislation has already been introduced in Congress to do just that, but has been ignored by the Republican leadership.
As with so many other crucial issues of our time, the future of the program hinges on voters’ determination to elect representatives who will strengthen, not scapegoat Social Security – and appreciate its impressive impact on the economy.
The ironically titled 2019 House Republican budget, “A Brighter American Future,” may brighten the spirits of the GOP’s rich and powerful donors, but serves as a gloomy portent for millions of less affluent Americans. The budget resolution released Tuesday would cut $537 billion from Medicare and $1.5 trillion from Medicaid and other health programs. It would slash $4 billion from Social Security Disability Insurance and repeal the Affordable Care Act, robbing 23 million Americans of health coverage.
“Speaker Ryan is obviously making good on his promise to come after safety net programs to pay for the reckless Trump/GOP tax reform. In so doing, he and his party are sending a clear message: older, poorer, and disabled Americans are not as important as the billionaires and big corporations who are the main beneficiaries of a tax scheme that is blowing up our nation’s debt.” – Max Richtman, president and CEO of the National Committee to Preserve Social Security and Medicare
As the Center for Budget and Policy Priorities reports, the GOP proposal would “balance the budget in nine years — but only by making large cuts to [programs] that President Trump vowed not to touch, including Medicare and Social Security.”
House Republicans apparently want to have it both ways: swelling the debt by $1.5 trillion with the reckless Trump/GOP tax scheme, then crying that deficits are too large – and insisting that crucial social programs must be cut to close the gap.
“The time is now for our Congress to step up and confront the biggest challenge to our society. There is not a bigger enemy on the domestic side than the debt and deficits.” – House Budget Committee Chairman Steve Womack (R-AR)
This is like opening the city’s fire hydrants and declaring that we must ‘confront’ the massive depletion of water reserves by asking the poor and elderly to go thirsty.
Democrats rightly decried the House GOP budget proposal as not only hypocritical, but needlessly cruel.
“Its repeal of the Affordable Care Act and extreme cuts to health care, retirement security, anti-poverty programs, education, infrastructure, and other critical investments are real and will inflict serious harm on American families.” – Rep. John Yarmouth (D-KY)
Adding insult to injury, the Republican budget reprises the conservative scheme to privatize Medicare. This flies in the face of fiscal common sense, as traditional Medicare is by far more efficient than the private sector in delivering health care. Public polling indicates that the American people, by margins of more than two to one, do not want to see traditional Medicare privatized.
Fortunately, Capitol Hill-watchers say the 2019 House GOP Budget proposal is unlikely to pass this year.
[The] proposal faces long odds in the House, let alone the Senate, where moderates have balked at previous calls to rein in so-called ‘entitlement programs.’ Republican leaders in either chamber have shown little interest in pursuing a ‘reform’ agenda in an already tough election year. – Politico, 6/19/18
But if the GOP budget is merely a ‘messaging bill’ intended for symbolic value rather than passage during the 115th Congress, the message it sends could not be clearer – neither are the stakes for anyone who is not a billionaire or a big corporation when voting this November.
Reading the headlines from earlier this week, one would think that Social Security and Medicare were on their deathbeds. The latest flurry of misleading headlines came in response to the release of the 2018 Social Security and Medicare Trustees reports:
Entitlements are in crisis. Trump refuses to act – Washington Post
Medicare To Go Broke Three Years Earlier Than Expected, Trustees Say – Politico
Social Security and Medicare head toward the skids – New York Daily News
Medicare Will be Dead in Eight Years – Salon
Trustees Predict That Social Security Will Be Insolvent In 16 Years – Forbes
The truth is that Social Security and Medicare are not in crisis, going broke, heading toward the skids, or facing insolvency. The Trustees reports indicated none of these things. They simply said that the combined Social Security retirement and disability trust fund will become depleted in 2034, after which the system can still pay 79% of benefits – if Congress takes no corrective action before then. That’s because Social Security is funded through workers’ payroll contributions, which still will be flowing in 16 years from now and beyond.
The trustees also reported that the Medicare Part A Trust fund (which covers hospital care) will become depleted in 2026, at which time the system could still cover 91% of Part A costs. But again, this outcome will only come to pass if Congress does nothing to prevent it. Meanwhile, Medicare payroll taxes and premium payments (for Medicare Parts B and D) will continue to provide the program with revenue.
To be clear, the potential depletion of these trust funds does not mean the two programs are ‘insolvent’ or ‘bankrupt.’ The shortfall in the Social Security trust fund is fixable by boosting the system’s revenue stream. Lifting the payroll tax wage cap (currently $128,400) would go a long way toward ensuring the system’s financial health by asking upper income Americans to pay their fair share. So would a modest increase in the payroll tax, spread out over a couple of decades. There is legislation pending on Capitol Hill to enact these solutions, but the GOP leadership in Congress will not consider them. Instead, conservatives favor cutting seniors’ earned benefits through higher retirement ages, stingier cost-of-living adjustments (COLAs), and means testing.
Ditto for Medicare. The political right is itching to raise the eligibility age, privatize the program, and slash benefits. Instead, Congress could enact modest and manageable measures to keep Medicare on a sound financial footing, including smart cost-saving measures and allowing the program to negotiate prescription drug prices with Big Pharma (which President Trump conspicuously omitted from his prescription drug proposals).
In fact, conservatives are creating a self-fulfilling prophecy by undermining Medicare – and are using the trustees report as an excuse to sabotage it further. As Jared Bernstein of the Center for Budget and Policy Priorities points out, the Trump administration and Congress weakened Medicare by repealing the Affordable Care Act’s individual mandate and passing $2 trillion in regressive tax cuts, among other actions.
It’s Speaker Paul Ryan and his allies who talk of Medicare and Social Security going “bankrupt” and “entitlement” programs needing “reform” (which is code for the right-wing trinity of privatizing, raising eligibility ages, and cutting benefits). When the mainstream media reflexively parrot this misleading language in their reporting, it makes benefit cuts seem inevitable. Media headlines and soundbites on the trustees reports rarely include the slightest suggestion that there are common sense revenue measures that legislators like Senator Bernie Sanders and Rep. John Larson propose.
It’s time for the media to re-evaluate the way it covers Social Security and Medicare’s finances. More reflective, responsible headline writing and reporting would certainly make the mainstream media less complicit in the conservative push to cut Americans’ hard-earned benefits.
National Committee president Max Richtman sat down with Senator Jeff Merkley (D-OR) for a Facebook Live interview on Capitol Hill Wednesday. Merkley, a staunch defender and promoter of Social Security and Medicare, weighed-in on two key issues: prescription drug prices and the funding increases needed to improve customer service from the Social Security Administration (SSA).
Decries High Prescription Drug Costs
Sen. Merkley slammed President Trump’s prescription drug pricing proposals as being too soft on Big Pharma, noting that pharmaceutical companies’ stocks shot up after the plan was unveiled. Richtman added that Big Pharma was “popping the champagne corks” in response to the president’s pricing proposals.
The Senator decried high drug prices, especially when the federal government funds research that the industry uses to manufacture its products. “We finance the science, do the research, then pay the highest drug prices in the world,” he said.
The Senator re-affirmed that Medicare should have the authority to negotiate drug prices with pharmaceutical companies, noting that the U.S. is the only Western democracy that does not allow its federal government to do so.
Social Security Administration is Underfunded
Senator Merkley says he does one town hall with constituents in each Oregon county every year. One of the top issues that constituents ask about, he says, is declining customer service from the Social Security Administration (SSA) – which sustained 11% in cuts to its operating budget between 2011-2017.
Adding insult to injury, President Trump’s 2019 budget calls for some $500 million in cuts (over 2018 appropriation levels) to SSA’s operating budget. No doubt such cuts would exacerbate understaffing at field offices, interminable hold times and busy signals on the toll-free phone line, and long waits for disability hearings (now averaging nearly two years).
“I’m not sure what the Trump administration is up to,” says Senator Merkley regarding the president’s proposed cuts, suggesting that it may be part of an effort “to discredit the Social Security program” by creating service problems.
Merkley calls on Congress to “set aside” the president’s budget proposal and restore SSA funding to aSdequate levels. The 2018 Omnibus appropriations act did, in fact, provide a more than $400 million increase to SSA’s operating budget over 2017 levels, but the agency will need additional funding to restore deteriorating customer service.
[View the entire Facebook Live interview here.]