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Posts Tagged 'Entitlements'

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The Truth about the 2009 Social Security and Medicare Trustees Report

Here's the bottom line from this year's Trustees Report:

  • Social Security is still fully funded for 28 years
  • No COLA increase planned for retirees
  • Skyrocketing health costs nationwide continue to threaten Medicare
Undoubtedly, these facts truths will probably be buried in coverage of this year's Trustees report as the anti-entitlement crowd revs up its billion dollar engine to convince the media and Americans that this time there really is a crisis.  They're using the recession and new math as the foundation for the same old crisis calls. Michael Lind did a wonderful piece on Salon on the Trustees report and the well-financed crisis campaign against Social Security and Medicare.       Our President Barbara Kennelly says:
"Contrary to alarmists' claims of impending doom for Social Security, this Trustees Report confirms what we already know-Social Security will weather this recession, continuing to provide vital benefits for millions of retirees.  I'm sure this 4 year adjustment will rally the doom and gloom crowd, which has been claiming there's a crisis for years.  But let's not forget, today's report projects Social Security will pay full benefits for nearly 30 years which is almost a decade more than the trustees predicted just twelve years ago."

Fact: The 2009 Trustees report shows Social Security is not facing an immediate threat. 

  • Trustees project Social Security will be able to pay full benefits until the year 2037. After that, Social Security will have sufficient revenue to pay 76% of benefits. 
  • The change in short-term projections is a fiscal problem, not a Social Security problem. Social Security's trust fund surplus is not disappearing as some have claimed. What is happening is the annual cash surpluses collected in payroll taxes are below last year's projections due to the economic downturn. Moreover, Trustees report a healthy $2.6 trillion in accumulated Social Security assets and project that, even after factoring in the effects of the recession, full benefits will be paid for another 38 years. 
  • Low inflation could mean two years of no cost of living increases for beneficiaries.  By statute, zero COLA's would also mean no Medicare Part B premium increase for about three-quarters of all beneficiaries.  However, the remaining beneficiaries, including newly enrolled seniors and higher income seniors, will see larger premium hikes in Part B to cover the difference.  Premiums for Part D, the prescription drug benefit, are not subject to this limitation and are expected to continue increasing by 11% annually through 2018.     
  • Fact: The 2009 Trustees report shows the persistent and rapidly rising cost of health care continues to threaten Medicare
  • Trustees project Medicare's Part A Trust Fund, which covers hospital services, will be exhausted in 2017. The cost of Medicare Part B is projected to increase by 8.5-9% annually, and Medicare Part D by 11% - more than double the projected 4.5% growth in GDP over the next decade. 
  • We must effectively address long-range cost containment across all public and private health care systems. Actuaries project that 67% of the average senior's Social Security benefit check will be consumed by Medicare out-of-pocket costs by 2080.
  • Some of the Medicare cost savings recommended to Congress by the Obama administration should be reinvested into the program to: lower drug prices through government negotiation, close the prescription drug doughnut hole and limit seniors' out-of-pocket costs
  • Barbara told reporters today:
    "Reforming health care is vital to our nation's long-term economic health...system-wide and in the Medicare program. At least some of the savings proposed in Medicare should be reinvested to improve the nation's largest health care provider.  We must seize this historic opportunity to improve the quality of care to all Americans, young and old alike"
    You can see our detailed analysis of this year's Trustees report here.

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    Seniors Ask...Why Social Security Now?

    Majority Leader Steny Hoyer's promise to put Social Security reform on the legislative agenda this fall has many seniors asking...why?  America's retirees understand the need to strengthen Social Security for future generations.  For them, Social Security isn't just a political issue -- it's what pays the bills. But given the long list of critical challenges this nation faces right's hard to imagine why Social Security would share space at the top of the legislative priority list with issues like health care reform, economic recovery and climate change.  After all, Social Security is able to pay full benefits for at least 30 more years. Here's Roll Call's coverage of Hoyer's comments:

    "Of our entitlement programs, I believe we would have the easiest challenge in reforming Social Security," Hoyer said. "Frankly, I believe Social Security is not very difficult mathematically. It may be difficult politically, but not mathematically."
    But again, why now? Some worry Social Security will be used as a bargaining chip  in the healthcare debate, others see this as part of ongoing efforts to  balance the budget through entitlement program cuts. Thankfully the House leadership understands that fast tracking such important legislation through Congress is not the way to go.  Congress Daily reports: 
    While some lawmakers have proposed forming a commission to reform entitlements and the tax code, Hoyer said he preferred to go through regular legislative order, adding that he wants the public to be engaged in the entitlement reform process. "If the incentives are going to change, the voters have to be the ones to change them," Hoyer said.
    Legislation creating an entitlement commission was also introduced yesterday.   The SAFE Commission would fast-track Social Security and tax reforms through just six town hall meetings before creating a report.  Then within 60 days of this report, the commission would submit a legislative proposal that would be subject to an up-or-down vote within another 60 days.   Leaving seniors to ask not only, "Why now? but also "Why the rush?" 

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    Social Security & Retirement Questions for Obama Online Town Hall

    Hundreds of questions on Social Security, Medicare and Retirement security have been submitted for today's Presidential online Town Hall meeting which starts at 11:30am.  In all, 91,666 people submitted 103,096 questions on issues ranging from education to jobs to energy policy.  Americans were allowed to vote for their favorite questions with 3,569,419 votes cast. Here are some of our favorite retirement security questions: 

    "I'm 19 years old and just beginning to see my earnings deducted for Social Security. Though retirement is a long while away, how can you guarantee that this program remains solvent?" Nick Troiano, Washington, DC   "Since the "baby boomers" are coming of age and starting to collect benefits, how do you propose stabilizing Social Security?" Peggy, Middletown, PA   "Medicare does not pay for long-term care, and an ongoing problem for the states is making Medicaid payments for nursing home care for people who don't want to be there but for whatever reason can't avoid it. How can we end this ongoing tragedy?"  Grant M, Providence, RI  
    President Obama will answer some of the most popular questions live today online at 11:30.

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    Don't Buy the Lie about Social Security

    A new survey by Sun Life Financial claims that nearly half of all workers questioned would like to stop paying into Social Security, even if that means they don't get any benefits when they retire.  They report more workers in their 30's share this view (59 percent) than those facing retirement soon, 60 and older (33% percent).

    On the one hand, you might be surprised to see such results at the same time millions of Americans who did save for retirement, are watching their nest eggs disappear  during this current market meltdown. Without Social Security, even retirees who "did the right thing", only to see their savings evaporate, would now face poverty.  So why would they give up one of the few guaranteed and secure retirement income sources American workers currently have?  Philip Moeller at US News and World Report  speculates this negativity about Social Security, although misplaced, could be blamed on the general negativity we all feel about our economic futures right now.  He could be right.  However, we offer an additional explanation.  Americans who've grown up hearing Social Security won't be there for them, may be starting to believe it.  The well-worn argument against Social Security goes something like this:    
    The promise of secure benefits is a "hoax", the taxes paid into the trust fund are "wasted" by the government rather than prudently invested and "the so-called reserve no reserve at all". 
    Sounds like President George Bush, right?  In this case, the comments come from GOP Presidential candidate Alf Landon and his party's 1936 platform, a year before the first Social Security check was even delivered. Now let's fast forward a few decades when Senator and 1964 Presidential candidate Barry Goldwater said: 
    "The first thing wrong with Social Security is the fact that it is compulsory. Secondly, it is not actuarially sound: It promises more benefits to more people than the incomes collected will provide."    According to historian MichaelBeschloss, Goldwater also said, "perhaps Social Security should be abolished." 
    After generations of trying unsuccessfully to convince the American people to turn against one of the nation's most successful government programs, Social Security opponents took a new tack.  In 1983, they called their new plan "guerrilla warfare against both the current Social Security system and the coalition that supports it".   Their primary goal described in the Cato Journal was to convince the American people Social Security wouldn't be there for them in retirement.  This strategy was designed using privatization to dismantle Social Security all together. 
    "The aim is to weaken political support for the present system when the next financial crisis appears."  and "The retired population might then come to realize that they have not purchased an earned annuity but instead are receiving a tremendous welfare subsidy.  Younger workers, on the other hand, would see just how much of a loss they are taking by participating in the program.  This mechanism for demonstrating the individual gains and losses that occur under Social Security is a key step in weakening public support for the present system."
    Of course, this is exactly the path President George Bush followed in his failed attempts to privatize Social Security.  The American people rejected his private accounts plan and given the current fiscal meltdown...they're glad they did.  But as you can see, regardless of the decade or the specific approach, the underlying message is and continues to be the same.  "Social Security won't be there for you"..."Social Security is flawed" and the newest incarnation..."we can't afford Social Security".  This, in spite of the overwhelming facts to the contrary.   Today, David Walker and the Peterson Foundation are picking up the anti-Social Security clarion call.  Wealthy financier and former Nixon Commerce Secretary, Pete Peterson has invested $1 billion dollars of his personal fortune to continue the campaign against programs serving America's seniors.  This time the same-tried and true "Social Security won't be there for you" message is wrapped in a cloak of fiscal responsibility.  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.   So when someone tells you "Social Security won't be there for me" remember the countless Washington think-tankers, Social Security foes and their allies in Congress who have spent their careers and millions (eventually billions) of dollars selling us that exact message. Ultimately, American workers and their families must sort the facts from the fiction and in the end we must not Buy the Lie we're being sold on Social Security.

    **Late addition:  Bruce Webb at Angry Bear has just posted a wonderful piece on the history of Cato's campaign against Social Security.   It's a must-read!

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    Looking for Any Opportunity to Target Social Security

    It’s hard to imagine how, after sitting through hours of discussion about health care reform at yesterday’s White House summit, Senate Minority leader Mitch McConnell chose Social Security as his very first comment on the event.  For a split second, we thought maybe he forgot which summit he was actually attending (last week’s was Fiscal Responsibility, remember?).   Here’s Ezra Klein’s post  on the event and the full exchange between Senator McConnell and President Obama:


    THE PRESIDENT: Let me -- I want to make sure that we are getting a good cross-section of views on this issue, so why don't I call on our Republican Leader, Mitch McConnell, if you've got any thoughts or comments on the issue.


    SENATOR McCONNELL: First of all, Mr. President, thank you very much for having this session today. I think it's useful and it is significant, as Ted indicated, to have everybody in the room.


    I'm also among those, as you and I have discussed before, interested in seeing us address entitlement reform -- and admittedly, Medicare and Medicaid would be a part of that -- but also Social Security. And particularly concerned about having a mechanism in place that guarantees you get a result. And I wonder where you see yourself and the administration now, for example, in supporting something like the Conrad-Gregg proposal, which would set in place a mechanism that could actually guarantee that we get a result -- if not on Medicare and Medicaid, at least on Social Security.


    THE PRESIDENT: Well, I appreciate the question, Mitch. As you know, we had a fiscal responsibility summit similar to the gathering that we've had here -- although I have to say the attendance here is even greater -- and what I said in that forum was that I was absolutely committed to making sure that we got entitlement reform done.


    The mechanism by which we do it I think is going to have to be determined by you, Harry Reid, Nancy Pelosi and John Boehner and the members of Congress. We've got to make certain that the various committees are comfortable with how we move forward.


    But the important point that I want to emphasize today is that on Medicare and Medicaid, in particular -- which everybody here understands is the 800-pound gorilla -- I don't see us being able to get an effective reform package around those entitlements without fixing the underlying problem of health care inflation. If we've got 6, 7, 8 percent health care inflation we could fix Medicare and Medicaid temporarily for a couple of years, but we would be back in the same fix 10 years from now. And so our most urgent task is to drive down costs both on the private side and on the public side, because Medicare and Medicaid costs have actually gone up fairly comparably to what's been happening in the private sector what businesses and families and others have been doing. That's why I think it's so important for us to focus on costs as part of this overall reform package.

    With respect to Social Security, I actually think it's easier than Medicare and Medicaid, and as a consequence, I'm going to be interested in working with you. And I know that others like Senator Durbin, Lindsay Graham have already begun discussions about what the best mechanisms would be. I remain committed to that task.


    But if we don't tackle health care, then we're going to break the bank. I think that's true at the federal level, I think it's true at the state level. It's certainly true for businesses and it's certainly true for families, okay.

    Clearly, anti-entitlement members of Congress are still hopeful they can make a deal with the Obama administration that trades cuts in Social Security for healthcare reform. David Brooks also talks about this in today’s New York Times. 


    In fact, some in Congress see the Conrad/Gregg entitlement commission as the perfect vehicle to fast-track Social Security and Medicare cuts through Congress with limited debate and no amendments.  It’s starting to look like the makings of a basic quid-pro-quo that trades Social Security cuts for healthcare reform.  That’s just the same old kind of “let’s make a deal politics” the Obama administration must reject. 

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