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USA Today Gets it All Wrong on Social Security

Opinion editors at USA Today wrote an editorial today that, unfortunately, read much like the billion dollar anti-entitlement lobby’s standard news release, loaded with crisis rhetoric and a core misunderstanding about how the Social Security Trust Fund is designed.  All to build the case for cutting already modest benefits in Social Security.

The good news is that, unlike many newspapers, USA Today does have a standard policy of offering rebuttals, as they did to our President/CEO, Max Richtman.  You can read USA Today’s call for benefit cuts in their OpEd here

And this is NCPSSM’s rebuttal.  Please take a moment to comment on these articles and share Max’s rebuttal to help journalists understand why strengthening Social Security benefits is so important to working Americans when they retire.


There’s No Reason for Benefit Cuts: Opposing View

Social Security’s impending doom has been foretold since before the first benefit check was ever delivered. The crisis calls are familiar:

“Social Security is bankrupt!”

“The trust fund isn’t real!”

“We have to cut benefits!”

The truth is very different. Social Security remains strong and will be able to pay full benefits until 2034. After that, there will still be enough income coming into the program to pay 79% of all benefits. But with an average monthly benefit of just $1,300, most beneficiaries cannot afford a 21% benefit cut, and that’s why Congress must pass modest reforms, as it has many times before.

Doing nothing is not an option. However, in this hyper-partisan environment where cutting benefits is worn as a bad

ge of courage with little thought to what those cuts actually mean to working Americans, it’s virtually impossible to engage in a meaningful debate.

Raising the retirement age, cutting the cost-of-living adjustment, privatization and means testing are all benefit cut proposals touted by the billion dollar anti-entitlement lobby and its supporters in Congress as the best ways to close Social Security’s shortfall. The American people support an entirely different approach. Poll after poll, including an important public survey by the National Academy of Social Insurance, show that large bipartisan majorities want to improve benefits and are willing to pay more to stabilize and strengthen the program.

There is no reason for Social Security benefit cuts that would force vulnerable Americans to bear an even greater financial burden than they already do. The fiscal woes of this nation are not due to this worker-funded program, which currently has $2.8 trillion in its trust fund.

Numerous proposals languishing in Congress would extend Social Security’s solvency while also improving benefits by lifting the payroll tax cap, adopting a cost-of-living adjustment for the elderly, expanding the minimum benefit and boosting benefits overall. These are reasonable reforms that deserve consideration.

Max Richtman is president and CEO of the National Committee to Preserve Social Security & Medicare.

USA Today Permalink here

Busting More Media Myths on Social Security

The latest GOP Debate provided a whopper of a media myth for NCPSSM's Equal Time to debunk.  

“Social Security is projected to run out of money within 20 years.”  

Dana Bash, CNN Congressional Correspondent. GOP Debate, March 10, 2016

 

Wrong.  Social Security will pay 79% of benefits in twenty years even if nothing is done to close the actuarial gap.  No one projects Social Security will run out of money; in fact, the only way the Social Security program can “run out of money” is if the American people all lose their jobs or quit contributing payroll taxes. However, the Social Security Trust Fund will be eventually be depleted (as it was designed to do) now that the baby boom generation is retiring. 

This distinction is not nitpicking or inconsequential.  A 21% benefit cut is not the same as “Social Security is projected to run out of money.”  Look at it this way, if CNN cut Dana Bash’s salary by 21% does that mean she has no income at all?  Of course not.  She hasn’t “run out of money” she’s taken a big cut.  No one wants that to happen to America’s seniors so a 21% benefit cut must be avoided.  However, a national correspondent should understand the difference between the Trust Fund, built up to handle the baby boomer bulge and the entire Social Security program, a benefit cut and “running out of money.”

This is an all too common error by journalists and one perpetuated by politicians who know the only way to get support for their plans to cut Social Security is to convince America the program is going down the tubes anyway.  Workers have enough reasons to worry about their fiscal futures. As long as some in the media continue to hawk this type of misinformation, a legitimate conversation about how to address the 21% shortfall will remain virtually impossible.  

 

Social Security & Medicare Finally a Topic of Debate

Ok, not a debate so much as a battle to see who can cut seniors’ benefits faster.  While Trump remains the only GOP Presidential candidate who promises he won’t cut Social Security, even that promise became squishy last night.  More on that, later. 

Here’s just a sampling of some of last night’s comments on what the remaining GOP candidates plan for generations of American families counting on Social Security, Medicare and Medicaid, followed by our comments:


Senator Marco Rubio

Social Security will go bankrupt and it will bankrupt the country with it.”

This is conservatives’ favorite lie.  Social Security isn’t going bankrupt.  According to SSA actuaries, the nearly $3 Trillion Trust Fund will be depleted in 2034 (as planned) to cover the baby boomer generation.  After that, there will still be enough income coming into the program to pay 79 percent of all benefits owed. If Congress does nothing seniors will face a 21% benefit cut.  A 21% benefit cut is not bankruptcy and certainly could not cause America’s bankruptcy.

“Medicare could very well become the option of using my Medicare benefit to buy a private plan that I like better”

The Republican dream of giving seniors a coupon to go out and buy private health insurance is a favorite of Speaker Paul Ryan and those in Congress who hope to destroy Medicare once and for all.  The program is too popular to kill outright, so they’ve chosen a privatization route for Medicare that is a political kissing-cousin to President Bush’s failed effort to privatize Social Security.  If they can’t kill these programs, conservatives want to (at least) turn America’s most successful retirement and health security programs over to industry so Wall Street, insurance companies and drug makers can profit. 


Senator Ted Cruz

“Social Security right now is careening towards insolvency... We need to see political courage to take this on and save and strengthen Social Security.”

In the classic case of “save” meaning “slash” and “strengthen” meaning privatize, Senator Cruz offers the well-worn conservative trope that cutting benefits to millions of American families while at the same time cutting taxes for the wealthy shows political courage and leadership.  See our comments above on the “careening towards insolvency” nonsense.

“We need to change the rate of growth of benefits so it matches inflation instead of exceeding inflation...we need to have for younger workers, that a portion of your tax payments are in personal accounts.” 

If hard to imagine how anyone can seriously argue that a zero cost of living increase for 3 out of the past 7 years, somehow exceeds inflation.  Seniors, veterans and people with disabilities have seen their costs increase in the same years their COLA was flat.  Social Security beneficiaries need a new COLA formula, one that actually measures seniors’ cost of living.  However, Ted Cruz wants the Chained CPI to cut benefits not to accurately measure inflation.


John Kasich

“I also had a plan in 1999 to save Social Security and take the $5 trillion projected surplus and not only have Social Security for our young people, but also to give them private accounts.”

John Kasich’s plan to “save” Social Security is standard GOP “we-must-slash-it-to-save-it” boilerplate with a little seniors just need to "get over it" thrown in.   Kasich would cut benefits to pay down the debt and privatize Social Security so seniors can watch their contributions ride the Wall Street roller coaster.  Then he’d cut billions more with lower COLA’s through the Chained CPI (again, what’s lower than zero?) and turning Social Security into a welfare program by means testing.


Donald Trump

Since we just wrote about Trump’s Social Security promises (there’s not really a plan) in detail we’ll focus only on last night’s twists.  For the first time ever, Trump’s promises to not cut Social Security benefits were offered with important qualifiers.  For a candidate who has no problem making big promises, last night’s about Social Security have taken on a downright passive tone – as if Trump, as President with potentially with a GOP House and Senate, wouldn’t have the power to leave Social Security benefits alone:

“I will do everything within my power not to touch Social Security”

“...it's my absolute intention to leave Social Security the way it is.”

This speech Trump gave to conservatives at the 2013 Conservative Political Action Conference provides one suggestion as to why he remains the only GOP candidate to promise he won’t cut Social Security & Medicare benefits (hint, it’s not because he loves the programs):   

"As Republicans, if you think you are going to change very substantially for the worse Medicare, Medicaid and Social Security in any substantial way, and at the same time you think you are going to win elections, it just really is not going to happen," Mr. Trump said, adding that polls show that tea partyers are among those who don't want their entitlements changed."  Donald Trump, 2013 CPAC speech, Washington Times

If you missed last night’s debate, you can read excerpts on what the candidates had to say specifically about Social Security, Medicare and Medicaid on our SeniorVote2016 website. 

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CMS Caves to Political Pressure from the Insurance Industry, Again

The Centers for Medicare & Medicaid Services (CMS) has quietly scrapped a policy that required private Medicare Advantage insurance companies facing sanctions to face a reduction in the star ratings consumers use when picking their private health insurance plans.  Unbelievably, CMS (caving to political pressure from the insurance lobby) will allow sanctioned companies to keep their violations hidden from consumers by protecting their star ratings.  Modern Healthcare reports:

The move, which was quietly released by the CMS in a memo (PDF) and shocked many in the industry, will immediately protect hundreds of millions of dollars at Cigna Corp., which had its Medicare Advantage plans sanctioned in January.

“It does seem pretty unusual to make this kind of dramatic change in a memo,” said Tom Kornfield, a vice president at consulting firm Avalere Health and former CMS official. “It sort of comes out of nowhere.”

Richard Lieberman, a Medicare Advantage data consultant at Mile High Healthcare Analytics, said the CMS' decision could be characterized as “a huge gift or even corporate welfare” even though it could help insurers that quickly resolve problems.

“CMS' actions definitely send a mixed message to plans,” he said.

Clearly, there are huge financial rewards for the insurance industry if companies are allowed to violate CMS’ rules and seniors are left in the dark about a company’s sanctions.  CMS is allowing companies like Cigna which has been found guilty of “egregious instances of noncompliance,” including blocking the appeals process for its customers, to continue to reap the rewards of government subsidized bonuses and over payments.

“Star ratings carry clinical and financial impact. The CMS ties bonus payments to Medicare Advantage plans that have at least four stars. Highly rated plans that get sanctioned and thereby lose their high ratings stand to lose millions of dollars in extra payments. But the goal is motivate more insurers to improve their Medicare Advantage operations.” Modern Healthcare

It’s impossible to imagine how -- in this political environment where cutting Medicare benefits has become the “go-to” solution for Members of Congress who claim we can’t afford the program – allowing the nation’s multi-billion dollar insurance industry to keep taxpayer funded bonuses while they are violating federal standards is acceptable policy. 

This decision didn’t happen in a vacuum.  If follows another political cave by CMS last month when it bowed to industry lobbying pressure and decided to raise reimbursement rates for insurance companies rather than trimming back the billions of federal overpayments as required in the Affordable Care Act.  Wall Street and the insurance industry loved the news that taxpayers will continue to overpay Medicare Advantage plans.  They’ll surely love it now that these massive companies will keep their taxpayer-funded overpayments while not being held accountable to serving the seniors who’ve signed up for medical coverage, blissfully unaware that anything is amiss. 

The Wolves of Wall Street, Hillary Clinton and Social Security

The Democratic primary campaign is not over and already there are media rumblings about who is working the inside track to become Hillary Clinton’s Treasury Secretary, if she’s elected President.  Normally, this is the kind of story we read and then move on to the next one (it is only March, after all).  However, David Dayen’s story in The Intercept suggesting that Wall Streeter, privatization supporter and Pete Peterson-connected, Larry Fink, is positioning himself for the Treasury job stopped us dead in our tracks.  Dayen reports:

“Larry Fink, BlackRock’s CEO, has assembled a veritable shadow government full of former Treasury Department officials at his company. Fink has made clear his desire to become Treasury Secretary someday. The Obama administration had him on the short list to replace Timothy Geithner. When that didn’t materialize, he pulled several members of prior Treasury Departments into high-level positions at the firm, which may improve the prospects of realizing his dream in a future Clinton administration.”

Now, considering someone from Wall Street to serve as Treasury Secretary is hardly shocking.  However, what is alarming is Fink’s views on Social Security including raising the retirement age and shifting Social Security funding to private accounts:

“Fink has also promoted the privatization of Social Security, while mocking the idea of retiring at 65, which is easy for a business executive who sits at a desk all day to say, rather than working on an assembly line or as a waiter. Fink owes his initial backing at BlackRock to Pete Peterson, the former commerce secretary who has been at the forefront of the campaign to cut or privatize Social Security. He sat on the steering committee of the Campaign to Fix the Debt, a stalking horse for Peterson’s ideas.

Fink’s claims that all Americans are living longer and thus should work longer is classic boilerplate language offered by the GOP and the billion dollar anti-Social Security lobby (funded by Pete Peterson) to justify cutting benefits for average Americans by raising the retirement age.  It ignores that fact that it’s wealthy white men who’ve benefited most from any longevity increases, while communities of color, women and low income workers do not see the same benefits.

“Men at the top of the economic ladder saw an eight-year increase in life expectancy, while men at the bottom saw virtually no change.” National Academy of Science 

For perspective, let’s remember that there will be a lot of political tea leaves to read between now and November. It has been welcome news to the National Committee to Preserve Social Security and Medicare that Hillary Clinton’s positions on Social Security have already seen some shifting during this campaign...in the correct direction.  She has restated her long-held opposition to privatization.  Raising the retirement age, cutting the COLA and benefit cuts are non-starters for her.  She recently gave her support for boosting benefits in a more limited way than Senator Bernie Sanders, with her focus on elderly women and caregivers.  Clinton also has softened her position on lifting the payroll tax cap while proposing raising revenue by taxing unearned income for Social Security. 

There’s a lot for retirees, people with disabilities, survivors and their families to like in both Democrats’ campaign approach to Social Security.  However, seniors expect more than just campaign promises.  Appointing a Treasury Secretary who believes Americans must work longer with some of their payroll taxes diverted into private accounts would deliver a very different message about what a Clinton administration could mean for Social Security. 

“While Clinton has adamantly pledged not to cut or privatize Social Security benefits, Fink’s track record would cause concern among advocates, were he to obtain a cabinet post. And having a ready-made team of trusted advisers who know their way around the Treasury building and the players in a potential Clinton West Wing can only help Fink in that campaign.”...David Dayen, The Intercept




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