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Balanced Budget Amendment Would Devastate Social Security, Medicare

The Balanced Budget Amendment (BBA) under consideration in the U.S. House is a colossally dangerous idea.  The BBA would mandate that government expenditures not exceed revenues in any given year.  Among other disastrous effects, it would result in devastating cuts to Social Security and Medicare.  The House Republican leadership intends to schedule a vote on the amendment to the U.S. Constitution sometime this Spring – perhaps as early as mid-April.  All current and future retirees should oppose it.

In order to balance the budget every year, Congress would be forced to make draconian cuts to Medicare Part B, Medicaid and other programs that seniors depend upon. Medicare and Medicaid cannot sustain cuts (other than common sense cost-saving measures) without hurting beneficiaries.  Period.  At a time when seniors’ out of pocket health care costs are rising, the BBA puts the health and financial security of Medicare’s 58.5 million beneficiaries and Medicaid’s 72.3 million at risk.

Equally serious is the BBA’s potential impact on Social Security.  Under the BBA, if federal expenditures exceed revenues, the government would be forbidden from paying benefits from the Social Security trust fund reserves – even though the trust fund is self-financed by workers’ payroll contributions and unrelated to general revenues. Ditto for reserves in the Medicare Part A trust fund.   Benefits would then have to be slashed in order to keep the federal budget in balance, something seniors on fixed incomes could ill afford.

Under the BBA, it would also be difficult to reverse tax cuts (including Trump and the Republicans’ $1.5 giveaway to the wealthy and big corporations) to close any revenue gaps.  This could cripple the government’s ability to respond to crises like recessions, natural disasters, and war. Without the ability to leverage taxes and deficit spending, the government cannot stimulate the economy when necessary. The BBA would also increase the chances of the United States defaulting on its debts, which would have dangerous consequences for everyone.

The last time Republicans tried to push through a Balanced Budget Amendment was in 2011. It failed by less than 40 votes in the House.  Had it passed, the overall economic consequences of the BBA would hurt all Americans – retired or not.  According to the Center for Budget and Policy Priorities (CBPP):

“If such an amendment had been ratified… the effect on the economy would have been catastrophic.  It would have caused the unemployment rate to double from 9 percent to 18 percent by throwing an additional 15 million people out of work.” – CBPP quoting a report from Macroeconomic Advisors, 3/16/18

Proponents of the BBA – mainly conservative House Republicans but also some Blue Dog Democrats – are hauling out tattered, old arguments to bolster their case.  States balance their budgets, they say.  Why can’t the federal government?  Families balance their budgets? Why not Congress?  While it’s true that some states have balanced budget amendments, many of those apply only to operating budgets, not capital expenditures for long-term projects.  Regardless, states do not have the sweeping responsibilities of the federal government, including national defense, federal disaster response, and Social Security or Medicare. As for families, many do strive to balance their household budgets, but still carry mortgages on their homes, auto loans, and sometimes, lines of credit.  In other words, like the federal government, states and families are leveraged to meet their vital needs.

The National Committee supports responsible government budgeting; however, we oppose a balanced budget amendment to the U.S. Constitution because the measure would significantly harm the economy, result in a government default, and force severe cuts in Social Security, Medicare, Medicaid, and other vital federal programs. - National Committee" Viewpoint," 3/29/18

In sum, the BBA is a bumper sticker masquerading as sound public policy.  We expect that the BBA will fail this time around as it has in the past, since passage would require 2/3 majorities in the House and Senate – and ratification by at least 38 states.  But even bringing the amendment up for a vote in the House is playing with fire.  It's important that Americans – especially retirees or anyone hoping to retire sometime in the future – recognize the incredibly high stakes of this irresponsible scheme. 

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Bipartisan Budget Bill a Pretty Good Deal for Seniors

The bipartisan budget bill passed by Congress early this morning is, on balance, good news for seniors and the federal programs that provide them with financial and health security. 

“Seniors will feel these changes in their pocketbooks and even in the way they feel physically. We have been fighting for these measures for quite some time and are happy to see Congress take action on a bipartisan basis.” - Max Richtman, National Committee president 

On the positive side, the budget bill:

*Closes Medicare Part D “donut hole” in 2019.  The prescription drug coverage gap embedded in the original law, which the Affordable Care Act has been gradually closing, will be altogether eliminated one year early. This will save seniors thousands of dollars in out-of-pocket prescription drug costs.

*Repeals Medicare therapy caps.  The bill scraps arbitrary caps on physical, speech, language and occupational therapies that have cost seniors money – or delayed care at crucial times.  Beneficiaries will now find it easier – and more affordable – to get the therapies they need without undue interruption. 

*Lifts non-defense domestic spending caps, allowing Congress to appropriate more adequate funding for the Social Security Administration’s operating budget. The SSA has suffered from draconian budget cuts since 2011 which have impinged on customer service, even as 10,000 Baby Boomers retire every day.  This badly-needed (but yet unspecified) higher level of funding should allow SSA to improve customer service for the program’s 67 million beneficiaries.

On the negative side, the bill increases Medicare premiums for some individuals by further expanding Medicare means-testing. 

“Congress continues to expand Medicare means-testing, and they will not stop until middle-class seniors are burdened with higher Medicare premiums.” - Max Richtman.

Here is a more detailed summary of the budget bill’s implications for seniors. 

For more on this story, view our Behind the Headlines broadcast live from Capitol Hill here


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National Committee President Warns Senators About GOP Tax & Budget Scheme

Seniors and other vulnerable Americans will be hurt if the just-released GOP tax scheme is enacted.  National Committee president Max Richtman told a hearing room full of Senators - including Sen. Ron Wyden (D-WA), Sen. Elizabeth Warren (D-MA), Sen. Debbie Stabenow (D-MI), Sen. Mazie Hirono (D-HI), Sen. Amy Klobuchar (D-MN), Sen. Bill Nelson (D-FL), and Sen. Chris Van Hollen (D-MD) - that the Republicans' budget and tax legislation must be defeated.

“The Republican budget and tax plans allow [Congress] to slash programs critical to older Americans and people with disabilities – all to pay for massive tax cuts for the very wealthy and profitable corporations.” – Max Richtman, 11/1/17

We analyzed the harm that the GOP proposals would wreak on older Americans in a post last week, entitled GOP Budget Resolution a "Lump of Coal" for Seniors, Middle Class.  Among the more heinous measures, Republicans seek to cut nearly $500 billion from Medicare, $1.3 trillion from Medicaid, more than $600 billion from Social Security Disability Insurance (SSDI), and will likely slash billions from other programs that seniors rely on for financial and health security.  

Richtman told the Senators that Medicare beneficiaries “cannot afford to pay more for less coverage” – particularly when half of them have incomes of less than $26,200 a year and spend 25 percent of their Social Security check to pay for Medicare premiums and cost-sharing. “And they cannot afford cuts to Medicare such as those assumed in the House budget – turning Medicare into a voucher program and raising the eligibility age from 65 to 67,” he explained.

What’s more, the tax plan will increase the national debt and compel Republicans to cut seniors’ earned benefits more aggressively in the future – even though Social Security and Medicare Part A are self-financed and do not contribute to federal budget deficits.

 “By increasing the federal budget deficit by at least $1.5 trillion, this measure would leave Social Security, Medicare and Medicaid vulnerable to benefit cuts to make up the difference.” – Max Richtman, 11/1/17

Under the tax bill supported by President Trump and congressional Republicans, the nonpartisan Tax Policy Center estimates the top one percent of Americans would receive 80 percent of the tax cuts. For the top one percent, the average annual tax cut would be over $200,000 by 2027. 

The bottom 80 percent of Americans would receive 13 percent of the tax cuts. In fact, 115 million households earning less than $75,000 a year would receive a tax cut of just $190 on average. But ultimately, most Americans would lose much more in program cuts than they would gain from tax cuts. 

Richtman implored Congress to resist this reckless legislation:

“The National Committee urges all Senators and Representatives to oppose legislation to enact these ‘Robin Hood-in-Reverse’ budget and tax proposals and instead work together to protect the retirement and health security commitments made to generations of Americans." - Max Richtman, 11/1/17


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House GOP Recklessly Pursues Privatization of Medicare in Budget Process

Congress is targeting the health and financial well-being of America’s seniors by making yet another attempt to privatize Medicare.   Yesterday the House Budget Committee passed the GOP’s FY 2018 budget resolution, which includes Speaker Paul Ryan’s “Medicare premium support” scheme – an innocuous name for turning time-tested senior health care coverage into “Coupon-Care.”  

The House budget blueprint slashes nearly $500 billion from Medicare over ten years and raises the eligibility age from 65 to 67 – along with gutting Medicaid and other social safety net programs for needy seniors.  

The Associated Press had a pithy summary of the painful cuts that the GOP proposes in its new budget:

“The plan, in theory at least, promises to balance the budget through unprecedented and unworkable cuts across the budget. It calls for turning this year's projected $700 billion or so deficit into a tiny $9 billion surplus by 2027. It would do so by slashing $5.4 trillion over the coming decade, including almost $500 billion from Medicare, $1.5 trillion from Medicaid and the Obama health law, along with enormous cuts to benefits such as federal employee pensions, food stamps, and tax credits for the working poor.” – Associated Press, 7/18/17

 National Committee President Max Richtman says that converting Medicare into a voucher program is an existential threat to the program itself. 

 “Over time, giving seniors vouchers to purchase health insurance would dramatically increase their out of pocket costs since the fixed amount of the voucher is unlikely to keep up with the rising costs of health care. And, as healthier seniors choose less costly private plans, the sicker and poorer seniors would remain in traditional Medicare, leading to untenable costs, diminished coverage, and an eventual demise of traditional Medicare, plain and simple.” – Max Richtman, NCPSSM President

Of course, raising the Medicare eligibility age from 65 to 67 as the House spending plan also proposes, is in itself a drastic benefit cut.

Undermining Medicare has been a long-held dream of fiscal conservatives. Their “premium support” proposal is a thinly veiled scheme to allow traditional Medicare to “wither on the vine,” as former House Speaker Newt Gingrich once put it.

Privatization is being sold as “improving customer choice,” but based on the way current Medicare Advantage plans work, private insurance will continue to offer fewer choices of doctors than traditional Medicare does.  If traditional Medicare is allowed to shrink and collapse, choice will disappear, too.

“Weakening Medicare is a politically perilous path for Republicans.  Recent polling indicates that large majorities of Americans across party lines prefer that Medicare be kept the way it is, not to mention that President Trump repeatedly promised to protect the program during the 2016 campaign.” – Max Richtman, NCPSSM President

Meanwhile, the National Committee strongly condemns other priorities of the House Republican budget resolution, as well.  The GOP budget resolution will mean: 

*Hundreds of billions in painful cuts to Medicaid, which seniors depend on for long-term care services and supports.

*Reaffirmation of a House rule that puts 11 million Social Security Disability Insurance (SSDI) beneficiaries at risk of a 7% benefit cut in 2028.

*Reductions to SSI (Supplemental Security Insurance), which provides cash assistance to low-income seniors and people with disabilities.

 *Caps on non-defense spending that will likely lead to devastating cuts to Older Americans Act programs and the Social Security Administration (SSA) operating budget.

 *Slashing of programs that benefit our nation’s veterans and deep cuts to spending on medical research (including cancer, diabetes, heart disease, and other conditions afflicting the elderly).

The savings from these devastating cuts will likely go to tax breaks for the wealthy.  Last year’s House Republican tax plan gave 99.6% of its benefits to the top one-percent of earners, with virtually nothing for middle and low income Americans.

 

 

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Tom Price's "Alternate Reality"

In the Orwellian world that Trump’s Washington has become, we are used to hearing language abused and misused to forward a right-wing agenda.  This week was no different.  As Kaiser Health News reported, HHS Secretary Tom Price was on Capitol Hill Thursday reciting a blatantly false Tea Party mantra:  government programs for our society’s most vulnerable members deserve to be cut because they “don’t work.”  This falsehood flies in the face of evidence - of history, really.  But in an attempt to dismantle the New Deal and Great Society programs that boost up the neediest – which includes millions of older Americans – the administration will literally say anything even if the opposite is true.

Price appeared before two congressional committees yesterday to defend President Trump’s 2018 budget, which calls for drastic cuts to programs benefitting seniors - including Medicaid, Meals on Wheels, and medical research by the National Institutes of Health (NIH).  His testimony included the following whopper:

“The problem with many of our federal programs is not that they are too expensive or too underfunded. The real problem is that they do not work—they fail the very people they are meant to help.”  HHS Secretary Tom Price before the Senate Finance Committee, 6/8/17

In spreading these myths, Price is singing from the same hymnal as other administration officials, most notably Budget Director Mick Mulvaney who defended funding cuts for Meals on Wheels thusly:

“Meals on Wheels sounds great… [but] we're not going to spend [money] on programs that cannot show that they actually deliver the promises that we’ve made to people.” – OMB Director Mick Mulvaney, 3/15/17

With an extra-Orwellian touch, Mulvaney added that draconian cuts in safety net programs are “one of the most compassionate things we can do.”

All of this begs the question:  by what imaginary standard do these programs “not work” or “fail the people they are meant to help?”   How does Medicaid – which allows millions of needy seniors to afford long-term care at home or in skilled nursing care facilities – not work?  Or Meals on Wheels, which provides hot, nutritious meals for 2 million hungry and isolated seniors – not work?  These are programs that undeniably do work.

National Committee President Max Richtman takes Secretary Price to task for telling untruths about these vital federal programs:  

“As a former member of Congress and a physician, Secretary Price should know better.  By maligning programs that have been a lifeline for millions of Americans for decades, Secretary Price is denying history and facts.  He is attempting to create an alternative reality that is patently false and misleading.”  - Max Richtman, NCPSSM President & CEO

Price also resorted to the spurious claim that rising costs in programs like Medicaid demand cuts.  He insisted that cutting $610 billion from Medicaid would lead to “innovations and efficiencies.”  No, cutting billions from Medicaid will result in a shortfall for states facing rising costs, forcing them to cut benefits or kick people off the rolls altogether. 

The truth is that these federal safety net programs are incredibly efficient already. Medicaid’s per capita costs are significantly lower than private insurers’.  Meals on Wheels can feed a senior for an entire year at the same cost as a single day in the hospital.  And those are only two of the safety net programs which fall under the Trump budget axe.

Democrats on the Hill pushed back against Price’s pronouncements and Trump’s budget cuts, too:

It’s mean-spirited. It’s not good for America. We can do much better." - Rep. John Lewis (D-GA)

If Republican budget hawks like Price truly cared about seniors, children, the disabled, and other vulnerable segments of society, they would not be slashing safety net programs.  But they cannot pay for trillions in tax cuts for the wealthy and big corporations without cutting domestic spending, so programs that benefit our neediest citizens go on the chopping block.  The rationale that the Trump budget cutters are simply seeking “efficiencies” is a thin veil for denying needy seniors long term care or hot meals. 

President Franklin D. Roosevelt, father of the New Deal and grandfather of the Great Society (which today’s GOP is fighting to undo) put it best when he said:

"The test of our progress is not whether we add more to the abundance of those who have much, it is whether we provide enough for those who have little."  - President Franklin D. Roosevelt

Unlike Trump’s budget hawks, FDR understood the importance of authentic language that shines a light on fundamental truths.  He would never confuse “compassion” for cruelty, “helping people” for hurting them, or success for failure.  Neither should we.

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