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2014 Social Security & Medicare Trustees Report

Hold the Rhetoric, Pass the Truth on the 2014 Trustees Report

This year’s projections come as no surprise to anyone who understands how Social Security and Medicare work. In fact, historically, the solvency date for the Social Security Trust Fund has fluctuated from a depletion date as distant as 2048 in the 1988 report to as soon as 2029 predicted in 1994 and 1997. On Medicare, each year since passage of the Affordable Care Act, the Trustees have reported the program’s improving solvency, this year adding an additional four years until 2030.  We should build on that success and continue reducing the high cost of health care system-wide, not just in Medicare.

This year’s Trustees reports prove, once again, how successful and stable Social Security and Medicare continue to be for the American people and the federal government.”... Max Richtman, NCPSSM President/CEO

Here are some of the key points in the 2014 Trustees Report:

·         Trustees project Social Security will be able to pay full benefits until the year 2033.  After that, Social Security will still have sufficient revenue to pay 77% of benefits if no changes are made to the program.

·         Social Security remains well-funded. In 2014, as the economy continues to improve, Social Security’s total income is projected to exceed its expenses. In fact, the Trustees estimate that total annual income will exceed program obligations until 2019. 

·         Trustees project a Cost of Living Adjustment increase of about 1.5% in 2015.

·         The Trustees report there is now nearly $2.76 trillion in the Social Security Trust Fund, which is $32 billion more than last year and that it will continue to grow by payroll contributions and interest on the Trust Fund's assets.

With so little bad news to report in this 2014 Trustees report, critics have now shifted their attention to Social Security Disability Insurance (SSDI), which faces a more immediate challenge and requires Congress’ action for a reallocation.

·         Trustees project the Disability Trust fund will be depleted in 2016, the same year projected in last year’s report. This projected shortfall is not a surprise and Congress should reallocate income across the Social Security Trust Funds, as it has done 11 times before, to cover the anticipated shortfall.  Disability expenditures have increased primarily due to demographic trends.  When Congress took action in 1994 to address a shortfall in SSDI, it knew that it would have to take action again in 2015 or 2016. Unfortunately, some in Congress have politicized this anticipated shortfall and threatened to delay action in order to force cuts throughout the entire Social Security program.

On Medicare, the 2014 Trustees report shows slowing the growth of health care costs has improved Medicare’s Trust Fund.

·         Medicare solvency remains greatly improved thanks to passage of healthcare reform, with the program paying full benefits until 2030, four years later than the 2013 report. Health care spending has also grown much more slowly.

·         Medicare Part B premiums are not projected to increase in 2015. 

Cutting Social Security & Medicare = Economic Patriotism?

If you had any doubt about just how stark the differences are between the Republican and Democratic approach to fixing our economy, these dueling letters between Treasury Secretary Jack Lew and GOP Senator Orrin Hatch should clear that up for you quickly.  At issue is the idea of “economic patriotism.”

First, some background...

There’s currently a loophole in our tax code that allows American companies to dodge paying taxes by renouncing their corporate citizenship, leaving operations here but claiming an overseas address. This legal tax dodge costs our nation billions of dollars each year.  

“The practice has become known as “inversion.” But what it really amounts to is desertion. And it could cost Americans tens of billions of dollars. There are 47 firms in the last decade that have exploited this loophole, according to new data compiled by the nonpartisan Congressional Research Service. But it’s a hot topic again because at least a dozen U.S. firms are currently considering taking advantage of it.”...Center for American Progress

The President’s 2015 budget would make it harder for firms to reap the benefits of being an American company while simultaneously dodging their tax obligations by requiring a minimum 50% foreign ownership to avoid U.S. taxes (it’s currently only 20%). This week, Lew sent a letter to Congress urging quick action (okay, try not to laugh...) to pass inversion legislation.

“Congress should enact legislation immediately...to shut down this abuse of our tax system. What we need as a nation is a new sense of economic patriotism, where we all rise and fall together.  We know that the American economy grows best when the middle class participates fully and when the economy grows from the middle out.  We should not be providing support for corporations that seek to shift their profits overseas to avoid paying their fair share of taxes.”

Sounds reasonable, right?  Not according to the ranking GOP member of the Senate Finance Committee who penned a testy letter in reply.  Not only does Senator Hatch reject the legislative fix offered by Senate Democrats to recoup the billions lost to corporate scofflaws he also redefines the idea of “economic patriotism” by shifting the target from known corporate tax dodgers to American families who depend on Social Security, Medicare, Medicaid and the Children’s Health Insurance Program:

“I must disagree with the administration's position that we should, in the short term, enact punitive, retroactive policies designed to force companies to remain domiciled in the United States.”

“My hope is that your definition of "economic patriotism" is not so narrow as to only include a particular business practice ... I hope that you share my view that "economic patriotism" includes a desire to fix the problems that are truly ailing our country and threatening the livelihoods of future generations. Non-partisan watchdogs and rating agencies have been issuing warnings about our ballooning national debt and runaway entitlements for years now. These issues represent the greatest threat to our fiscal and economic security...”

Welcome to Washington, where you’re an “economic patriot” if you turn a blind eye to corporate tax dodgers who owe this nation billions of dollars and instead take it from middle-class benefits paid for by average Americans , the truest patriots of all, who worked a lifetime building the economy that fuels those corporate profits to begin with. 

Disabled Americans are Conservatives’ New “Welfare Queens”

“There is a quiet, covert war being waged on Social Security. The tactic? Divide and conquer. Today, detractors try to use Social Security Disability Insurance as a back door to cut the program as a whole. And, we will organize and fight back against today’s attacks aimed at some of the most vulnerable Americans: the disabled.”  Sen. Sherrod Brown (D-OH)

Divide and conquer politics is certainly nothing new in Washington.  From Ronald Reagan’s mythological nation of “welfare queens” to Alan Simpson’s “greedy geezer” myth of hordes of seniors driving Lexus’ to their gated communities – politicians love to create villains, even if the facts simply don’t back up the political spin.

"It hangs together as a good story because it's consistent with people's perception of the real world," says Craig R. Smith, who was a speechwriter for former President Gerald Ford and a consulting writer with President George H.W. Bush.  "Like in any good mythology, you need heroes and villains and in the Welfare Queen, you had a villain who was taking advantage of the system."

And so it goes with conservatives’ latest target – disabled Americans receiving Social Security benefits. No doubt, you’ve already heard the messaging: Social Security disability fraud is rampant because it’s so easy to receive benefits and people would rather collect a hefty check from the government than work.  It’s the 2014 incarnation of “our nation is full of ‘welfare queens’ and ‘greedy geezers.’” It also suffers from the same basic problem...it’s simply not true.

So let’s break down a few of these Disability Myths.

MYTH: “Disability has become a form of permanent welfare for a lot of folks. It's not that hard to prove a mental illness, or mental issues, or pain issues.” Nina Easton, Fox News commentator

Not that hard?  So, why are the vast majority of claims denied?

FACT: “Nearly 80 percent of applicants are denied at the initial level, and fewer than 4 in 10 are approved after all levels of appeal. Underscoring the strictness of the disability standard, thousands of applicants die each year while waiting for benefits. And one in five male and nearly one in six female beneficiaries die within five years of being approved for benefits. Disability Insurance beneficiaries have death rates three to six times higher than other people their age.” Center for American Progress

It’s seems pretty ridiculous to claim the system’s being widely-abused when so many die just years after receiving benefits or while they’re still waiting for an answer.

MYTH:  Growth in disability claims is “astonishing”, an “epidemic” and “startling.” 

Actually, it’s called demographics.  Ever heard of the baby boomers? Former SSA Commissioners from both Republican and Democratic administrations have taken issue with this fact-free, hysteria-laden portrayal of the disability program’s growth.

FACT:  “It is true that DI has grown significantly in the past 30 years. The growth that we’ve seen was predicted by actuaries as early as 1994 and is mostly the result of two factors: baby boomers entering their high -disability years, and women entering the workforce in large numbers in the 1970s and 1980s so that more are now "insured" for DI based on their own prior contributions.” Open Letter from former SSA Commissioners

 “...four-fifths of the program’s total enrollment in 2013 — and over two-thirds of the growth in enrollment since 1980 — stems from five easily quantifiable factors:  growth in the overall working-age population, the aging of that population, growth in women’s labor force participation, the rise in Social Security’s full retirement age, and the growth in DI receipt among women eligible for benefits to match men’s rate of receipt. In short, the factors driving DI’s growth are reasonably well understood, were long anticipated, and do not depict a program that is ‘out of control.’” Center on Budget and Policy Priorities

“As Baby Boomers retire, the program’s growth has already leveled off and is projected to decline further in the coming years.”  Center for American Progress

MYTH:  The entire system is “broken,” rife with “fraud” and “rubber-stamping judges” bankrupting the entire Social Security program.

 FACT:  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. Government Accountability Office

 An investigation by the Social Security Administration’s Office of the Inspector General looked at the 10 states with the highest increase in disability applications from 2007-2011.  That report found that while the number of applications increased...approvals declined. Social Security Administration OIG

Rep. Darrell Issa (R-CA) is a leading promoter of the Disability Myths. .  His committee has zeroed in on the casework of just four out of 1,400 disability judges to bolster his claims of widespread fraud in the program. 

“Issa's report twists all these facts and figures to create a fantasy of a program running amuck. He says "an extraordinary number" of administrative judges "were allowing the vast majority of their decisions"; in fact the overall approval rate of cases that come before the judges is 58%.”  Michael Hiltzik, Los Angeles Times

“First, these judges were deliberately selected by the House Oversight Committee because they were outliers who approve a high percentage of the cases brought to them. The Social Security Administration has almost 1400 administrative judges. Undoubtedly many are also outliers on the other side, denying most of the cases brought to them.” Dean Baker, Center for Economic and Policy Research

“...not all judges are "rubber-stamping" disability claims, and the overall allowance rate fell from 72 percent in 2005 to 56 percent last year.” Andrew Biggs, American Enterprise Institute   

The timing of this attack on Social Security’s disability program is not an accident. It’s the cornerstone of Congressional Republicans’ campaign to oppose both President Obama’s nomination of a new Social Security Administration Commissioner and (what in the past has been) the routine reallocation of the Trust Fund to prevent a 20% disability benefit cut in 2016.

Rather than address the disability shortfall head-on, as so many Congresses have before, conservatives hope to hold the disability program hostage in return for cuts throughout the entire Social Security program.

“Playing chicken with the trust fund would be devastating, Ruffing said. “If Congress allows the disability trust fund to run dry, then what will happen is benefits to all recipients will be cut by approximately 20 percent, which is obviously an unacceptable outcome,” she said. “It’s a completely unnecessary form of brinkmanship.” Kathy Ruffing, Center on Budget and Policy Priorities on NBC News

 “Since Social Security was enacted, Congress has "reallocated" payroll tax revenues across the OASI and DI trust funds – about equally in both directions – some 11 times to account for demographic shifts. In 1994, the last time such reallocation occurred, SSA actuaries projected that similar action would next be required in 2016. They were right on target.” Open Letter from former SSA Commissioners

“Reallocation is a straightforward process and the need for it does not come as a surprise,” Virginia P. Reno, NASI Vice President for Income Security Policy

Just as with Ronald Reagan’s “welfare queen” story, there is no doubt that fraud exists. But it’s clearly not what Disability Mythologists claim.  As Social Security advocates, we’ve long supported efforts to crack down on fraud and abuse because strong Social Security and Medicare programs depend on the efficient and appropriate payment of benefits only to those who qualify.  The American people expect the contributions they’ve made throughout their working lives will be spent appropriately.  So, if it is possible to further rid Social Security’s disability program of it’s tiny percentage of fraudulent claims then we whole-heartedly support those efforts. 

However, let’s be very clear about one thing -- that’s not what the Disability Myth is all about.  This isn’t a debate between one side that supports Social Security fraud and those who oppose it.  This is a debate between those who refuse to allow Americans with disabilities to be held as political hostages with threats of a 20% benefit cut by those whose true goal is to cut the entire Social Security program, through privatization or countless other means. That’s the ultimate goal of this divide and conquer strategy which portrays America’s disabled workers, the same people who have paid for their earned benefits, as villains.

We’ll end just as we began, with this warning from Senator Sherrod Brown (D-OH):

“Opponents of Social Security realize that when they attack the program head on, they lose. So, their strategy is two-fold: First, convince the public that the disability insurance program is bankrupt. Second, separate Social Security from disability insurance in the eyes of voters. We need to recognize these attacks for what they are – backdoor attempts to weaken Social Security by dismantling disability insurance.”

Happy Independence Day

Supreme Court Decision Bad News for Seniors Who Depend on Home Health Care Providers

While the headlines today will likely focus on the Supreme Court’s Hobby Lobby decision, seniors should also be paying close attention to the first ruling issued by the Court this morning. Today’s Supreme Court ruling in Harris v. Quinn could have devastating effects on America’s home health system by driving down already low wages and reducing the basic rights of workers in one of our nation’s fastest growing job sectors – home health services.

There are nearly 2 million home health care providers in the United States, and as our nation ages it is expected that more than 5 million providers will be needed in the next five years. Even though these workers are vital to our economy, providing services that allow seniors and people with disabilities to live at home and avoid the costs of institutionalization, these workers are usually paid poverty-level wages with no benefits. 

“America needs a stable, qualified home care workforce to meet the growing need for home care in our nation; however, today’s Supreme Court ruling stands in the way of making that goal a reality.  This ruling could drive down wages, which are already less than poverty level for many home care workers, while also keeping them isolated in their jobs with little job security. Ultimately, it’s America’s families which suffer when we compromise the access and quality of home care to seniors, people with disabilities and children.  This ruling takes us backwards rather than making progress toward the goal of building a vibrant and growing home care workforce ensuring that seniors and people with disabilities can live in dignity in their own homes.”...Max Richtman, NCPSSM President/CEO

“Today’s Supreme Court decision does not dampen the resolve of home care workers and child care providers to come together to have a strong voice for good jobs and to give care to millions of seniors, people with disabilities and children,” said AFSCME President Lee Saunders. The ruling places at risk a system of consumer-directed home care that has proved successful in raising wages, providing affordable care and increasing training. The number of elderly Americans will increase dramatically in the coming years. Child care workers make it possible for working parents to support their families without the agony of trying to juggle their jobs and their kids. States need to build a stable, qualified workforce to meet the growing need for home care and child care – and having a strong union for care providers is the approach that has proven most effective."...AFSME Statement

The Center for American Progress provides this background on how this case made to the Court in the first place:

Harris arises from a group of home-based aides for Medicaid patients in Illinois, a majority of whom voted to unionize. When a majority of a workforce, but not every single worker, votes to be represented by a union, the union is still required to represent the interests of the non-union workers. That means all workers must be treated equally at the bargaining table — a union cannot entice workers into joining the union by bargaining for one set of wages for union members and another, lower set of wages for non-members.

By any reasonable objective measure, the union struck a very good deal for Illinois’ home health aides. Before the union negotiated a collective bargaining agreement, the aides’ wages were just $7.00 an hour. Now they are $11.65 an hour, and they are scheduled to increase to $13.00 per hour in December. Nevertheless, the National Right to Work Legal Defense Foundation (NRWLDF), an anti-union litigation shop, found a handful of home health aides who object to this arrangement. Those objectors are now the plaintiffs in Harris.

And the Nation provides this analysis: 

The ruling claws back on the real material gains that collective bargaining won for homecare workers. Outside of Illinois’s state program, workers in the sector typically earn around $20,000 per year and suffer tremendously stressful, often exploitative working conditions. Only last year did they officially become eligible for federal minimum wage and overtime rules, following a hard-fought campaign by domestic workers’ advocates to end the Labor Department’s longstanding exemption for homecare providers.

Illinois health aides, by contrast, made real progress after joining SEIU as direct employees of the state. Part of a national campaign to unionize the sector, the workers collectively bargained for higher wages and labor protections typical of union workers but long denied to other health aides, including health benefits and training.

The AFL-CIO had this reaction:

The extreme views of today’s Supreme Court aimed at home care workers aren’t just bad for unions – they’re bad for all workers and the middle class. But the attacks on the freedom of workers to come together are nothing new. They are part of an onslaught from anti-worker organizations hostile to raising wages or improving benefits for millions of people.  These attacks are a direct cause of an economy in which middle class families can’t get a break because their wages have stagnated and their incomes have declined.

Home care is one of the fastest growing industries. Its workers do backbreaking, thankless work, often for low wages. By forming a union these workers are helping to combat income inequality and the rise of low wage jobs, ensuring that these are good jobs with good benefits.

Make no mistake: the fate of workers cannot and will not be decided by one Supreme Court decision. The Court upheld the right of public employees to have strong unions and workers will vigorously build on that foundation.


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