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From the monthly archives: January, 2009

We are pleased to present below all posts archived in 'January, 2009'. If you still can't find what you are looking for, try using the search box.

Reforming Medicare for Seniors

New legislation introduced this week in Congress may finally end years of Congressional efforts to privatize Medicare that for too long have put industry profits ahead of seniors' needs.  The Medicare Prescription Drug Savings and Choice Act, (HR 684),sponsored by Senator Dick Durbin and Representatives Marion Berry and Jan Schakowsky, creates a prescription drug program managed by Medicare while also  requiring the government to negotiate for lower drug prices.  Our President, Barbara Kennelly, has testified numerous times before Congress urging these changes to the flawed Part D program.  Today she says:
"Part D has provided a greater benefit to the drug companies than the millions of seniors who need help with the costs of their prescription drugs. Since the passage of the MMA in 2003, drug company profits have risen while at the same time seniors have been forced to pay escalating costs for many of the most popular medicines. It's time for Congress to reverse this mistake and give seniors what they really want; a government operated Part D plan that harnesses the buying power of millions of seniors to obtain the best pricing for medicines they truly need but often cannot afford to buy." ...Barbara B. Kennelly, President/CEO
 Sponsors of the bill say Medicare could save as much as $20 billion a year for the next 10 years if just half of the current beneficiaries switched to the government-run plan.   Numerous studies have also shown government-negotiated drug prices, such as seen in the Veteran's Affairs program, are significantly lower than those currently paid by Medicare.    These are sensible, common-sense reforms to Medicare which can create real savings for the program.  We also support President Obama's call for the elimination of billions of dollars of outrageous subsidies to insurers providing private Medicare Advantage plans.  While these corporate giveaways have certainly been good for industry, they have weakened Medicare by draining $169 billion over the next ten years from the program and stealing more than a year of solvency.  This legislation is a good first start to swing the pendulum back to where beneficiaries needs are the priority not privatization politics.  A copy of the National Committee's endorsement letter of this legislation is on our website.

"The Grand Bargain" -- Political Opportunism or Fiscal Responsibility?

       "This is what I call a target rich environment."            Senate Budget Committee Chairman,  Kent Conrad,                        January 21, 2009

 

It's hard to imagine that at the same time millions of Americans are watching their home values plummet, their savings disappear and healthcare costs skyrocket, so-called "fiscal hawks" in Congress are pushing to cut the very lifelines keeping so many seniors and their families afloat.  Social Security and Medicare are providing a stable and reliable source of security during a time of severe insecurity yet they are among the key "targets" Chairman Conrad sees in this "target rich environment".   The Senate Budget Committee's hearing this week on "Short and Long-term Fiscal Challenges" focused on the so-called "grand bargain" which says if Congress is going to pass desperately needed stimulus then there must also be "entitlement reform" (meaning cuts) to Social Security and Medicare.    You don't have to be an economist to understand that eight years of borrow and spend policies, underfunded wars, tax cuts for the wealthiest Americans and unchecked healthcare costs have burgeoned our deficits and debt long before the economy collapsed. Now that we're spend $700 billion to bail out Wall Street and are finally considering help for Main Street, our fiscal picture is even bleaker.  But let's not forget, Social Security and Medicare did not cause these deficits.  Slashing these programs to the bone still won't balance our budget. In fact, according to the Congressional Budget Office if every entitlement in the federal budget were repealed outright - eliminating Social Security, Medicare, Medicaid and other critical programs - but nothing were done to slow the growth in health care costs overall, we would still find ourselves spending almost 70 percent of the nation's wealth on health care by 2082.  It is clear America does not face an entitlement crisis; it faces a health care financing problem.  One that needs to be addressed with national healthcare reform before making any "grand bargain" which ignores the true challenges facing our economy.

Seniors Skipped in Economic Recovery Plan?

Older Americans living on a fixed income feel the pressure of the current recession as acutely as anyone does, yet they are often overlooked in economic stimulus packages.  That's because retired seniors who are living primarily on their Social Security and don't file tax returns aren't impacted by changes in the withholding rules.  Millions of seniors are also ineligible for food stamps, SSI, or other low-income programs being considered for increases.   Yet at the same time, seniors are the demographic most likely to spend any economic stimulus they receive.  The Bureau of Labor Statistics says Americans over 65 spend 92% of their income, more than another other demographic except those under 25.  We've urged Congress to consider seniors when crafting this Economic Recovery legislation.  Here is the letter we've sent to Capitol Hill:
January 14, 2009                                                                                              The United States Senate Washington, DC 20510 Dear Senator: On behalf of the millions of members and supporters of the National Committee to Preserve Social Security and Medicare, I urge you to remember America's seniors as you develop legislation to implement President-elect Obama's American Recovery and Reinvestment Plan.  The National Committee is a grassroots advocacy organization dedicated to preserving and promoting the financial security and health of maturing Americans.  Our primary means to achieve this end is through the preservation and strengthening of Social Security and Medicare, but our support for these programs is rooted, in part, in a broader concern for the economic vitality of seniors. As Congress and the new Administration take up legislation to help pull our economy out of recession, much attention has rightly been paid to stimulating the economy through job creation and to helping America's families weather the economic downturn.  Most proposals affecting individuals appear to be focused on delivering benefits to workers through changes in payroll withholding rules, to the poor through programs such as food stamps and SSI, and to the unemployed.  Limiting assistance in this manner would leave out a significant group of Americans who are also suffering in these hard economic times - non-working seniors of modest means who are living primarily on their Social Security benefits. Although this group of America's seniors may not be employed, they face many of the same economic strains that working families do every day.  In fact, they frequently confront increased prices for goods and services with little ability to increase their existing incomes.  In addition, a higher portion of older consumers' income is spent on health care than that of other demographic groups.  As these costs rise faster than Social Security's Cost-of-Living-Adjustments, seniors are left with reduced amounts of disposable income to spend on other life necessities.   Seniors are high on the list of demographic groups most likely to spend any benefit they receive.  According to the Bureau of Labor Statistics, in 2006 the average household headed by someone over age 65 spent 92 percent of its income in the year it was received.  That spend-out rate is higher than any other demographic group with the exception of those under age 25.  In fact, households headed by an individual over age 75, who are least likely to be working and therefore unable to benefit from changes in withholding rules, spent 98 percent of their incomes in 2006.   In total, households headed by those over age 65 purchased over $800 billion worth of goods and services in 2006, even though they only earned $863 billion in income.  Clearly this is a segment of the economy that must not be neglected when designing a stimulus measure, yet non-working seniors are the group least likely to receive assistance from any of the traditional methods under discussion.  Those who are solely or primarily living on their Social Security benefits and not filing tax returns will not be affected by changes in withholding rules, and millions are ineligible for foods stamps, SSI or other low-income assistance programs under consideration for increases.  At the same time, seniors represent a group that should be easily reachable by the government as they receive Social Security checks every month.  Providing additional checks or increasing their existing benefit amounts would be no more challenging for the government than changing millions of workers' withholding amounts and would provide needed assistance to a vulnerable group of Americans.   Non-working seniors are important contributors to economic growth and should not be forgotten in the debate on how to pull our economy out of recession.  We urge you to ensure they are included in the American Recovery and Reinvestment Plan.   Cordially, Barbara B. Kennelly President and CEO 

Getting it Right on Social Security

There are a number of great articles and opinion pieces today on Social Security "reform" and the so-called "grand bargain" anti-entitlement crusaders are hoping to elicit from the Obama administration as they consider short-term stimulus legislation.  First, economist Dean Baker with the Center for Economic and Policy Research puts the whole issue in perspective wonderfully in this piece in the Guardian: 
"The classic definition of ‘chutzpah' is the kid who kills both of his parents and then begs for mercy because he is an orphan. The Wall Street crew are out to top this. After wrecking the economy with their convoluted finances, and tapping the US Treasury for trillions in bail-out bucks, they now want to cut Social Security and Medicare because we don't have the money." "The attacks are made even worse by the fact that the attackers, people like Robert Rubin and Peter Peterson, promoted policies that led to this collapse and personally profited to the tune of tens or even hundreds of millions of dollars. In other words, after pushing the economy into a severe recession and destroying the life's savings of tens of millions of working families, the Wall Street crew now wants to take away their Social Security and Medicare. This can almost make killing your parents look like a petty offence."
At Angry Bear, Bruce Webb says he's not worried the Obama administration will take the anti-entitlement bait:
"I don't think we have much to worry about to begin with. But even if the Obama team takes a look at Social Security and even if they end up tinkering with it, we still don't need to worry. Because there is a big difference between Social Security 'Transformers' and Social Security 'Fixers'. Obama is a Fixer."
The Washington Post also provides a very interesting analysis of retirement savings during this economic meltdown and what privatization would have meant for Social Security beneficiaries.  Allan Sloan describes, "How it Could Have Been Worse":   
"It's fine for you to take market and timing risks if your basic retirement needs are already being met with your own sources of income. It's another thing to have to take those risks with your eating money, which is what Social Security represents for perhaps two-thirds of retirement beneficiaries."
 "Someday, Social Security privatization will come back into vogue. When that happens, I've got two words that will remind you why it's a bad idea: Remember 2008."
Unfortunately, many retirees won't have any choice but to remember 2008.

"Let's Make a Deal" Politics Trades Social Security for Stimulus

Anti-entitlement members of Congress want President-elect Obama to make a deal to gain their support for a desperately needed stimulus package. It's a political quid-pro-quo that would trade away long-term benefits for generations of seniors, survivors, the disabled and their families for a short-term economic recovery package desperately needed to reverse the damage of eight years of flawed economic policies.   The trade-off goes something like this...Congress' so-called "fiscal-hawks" will consider supporting the economic stimulus package if the Obama administration agrees to "entitlement reform" (translation: cuts to Social Security and Medicare).  Of course, Social Security and Medicare didn't create this economic crisis but some view this as a unique political opportunity to sell their entitlement hysteria to the public. The problem is we can't balance the budget on the backs of Social Security and Medicare.    According to analysis by the Congressional Budget Office (CBO), if every so-called "entitlement" in the federal budget were repealed outright - eliminating Social Security, Medicare, Medicaid and other critical programs - but nothing were done to slow the growth in health care costs overall, we would still find ourselves spending almost 70 percent of the nation's wealth on health care by 2082. It is clear America does not face an entitlement crisis; it faces a health care financing problem.   Contrary to the "fiscal hawks'" claims that Social Security is bankrupt or unsustainable, Social Security is running a surplus today and will be entirely self-funded until the youngest of the baby boomers are nearly 80 years old. The long-term challenges facing Social Security decades from now can be addressed with modest and manageable changes. The solutions are apparent. They won't be easy politically but they are not complicated. Healthcare reform, however, is much more complicated and urgent. Under projections by Medicare's actuaries, by 2025 over one-half of the average senior's Social Security benefit check would be consumed on Medicare out-of-pocket costs. However, we cannot address Medicare's fiscal challenges without system wide healthcare reform.  Thankfully, Obama's Budget Director Peter Orszag understands this, even if the anti-entitlement crowd does not.  He told Congress:
 "The rate at which health care costs grow relative to income is the most important determinant of the long-term fiscal balance; it exerts a significantly larger influence on the budget over the long term than other commonly cited factors, such as the aging of the population."
For many, Social Security and Medicare have provided their only economic stability during this very scary time.  Millions of Americans have seen their savings depleted, home equity disappear, and healthcare costs skyrocket beyond their means. We should be looking at strengthening these programs for the long-term not cutting them in Washington's version of "Let's Make a Deal".  President-elect Obama suggests we should not ask, "What's good for me?" but "What's good for the country my children will inherit?"  Surely, this economic crisis is proof positive that we desperately need Social Security and Medicare now and for our children and grandchildren.
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