Washington Should Pursue New Middle-Class Stimulus Plan in the New Year
So, it's been another wild week in Washington as passage of a stimulus plan that once seemed a foregone conclusion faced unexpected defeat in the House.
You don't have to look far to see the hundreds of millions of reasons why this nation needs a stimulus package. For the unemployed now scheduled to lose their unemployment insurance benefits to America's seniors on Medicare this legislation also included critical provisions necessary for their survival.
However, this failure in Washington could have a happy ending. We say, let's use this opportunity to craft a new stimulus approach--one that doesn't use general revenue to replace diverted Social Security payroll contributions. Here's reaction from our President/CEO, Max Richtman:
“Providing a middle class tax cut to help spur the economy is the right policy but cutting the contributions that fund Social Security is the wrong strategy. The House’s refusal to pass the Senate’s compromise stimulus plan now provides Washington an opportunity to craft a stimulus package that benefits average Americans without diverting funds from Social Security.
We urge the White House and Congress to welcome the New Year with a new initiative promoting the most effective economic stimulus plan possible regardless of the partisan politics involved. There are more effective forms of stimulus which Congress should pass, such as the ‘Making Work Pay’ tax credit. Now’s the time to reframe the stimulus debate.
Allowing millions of unemployed Americans, low-income seniors on Medicare, and Medicare doctors to face massive cuts or loss of benefits through Congressional inaction is simply unacceptable. Congress should act this year to pass these measures which have bipartisan support. Rather than beginning the New Year rehashing an old debate, we urge Washington’s leaders to throw out the political playbook and fight for the strongest possible stimulus package for America’s middle-class that doesn’t divert funds from Social Security.”… Max Richtman, NCPSSM President/CEO
CATEGORY: [Budget], [Max Richtman], [Medicare], [Social Security], [stimulus]
New political wrapping can’t hide privatization scheme in Wyden/Ryan
Senator Wyden and Congressman Ryan’s newly proposed voucher plan
offers a slight twist on the same failed approach to Medicare reform that was originally offered by the Ryan legislation and rejected by the majority of Americans – coupon care for seniors. The Ryan/Wyden
voucher plan would shift a growing share of Medicare costs to beneficiaries without reducing overall costs in the program while undermining traditional Medicare.
“While some in Washington remain convinced private insurers can provide more cost-effective coverage for seniors than Medicare, the facts prove otherwise. Private Medicare Advantage plans have already shown this to be a false promise. What this Ryan/Wyden plan would do is drive younger and healthier seniors out of traditional Medicare, leaving the government with a pool of increasingly costly beneficiaries. Medicare spending will increase and seniors who remain in traditional Medicare will see their costs go up as well.
The only winner in this privatization plan would be private insurers who would be given the ability to cherry-pick the nation’s healthiest seniors from the traditional Medicare program, allowing it to whither on the vine. America’s seniors understand how vital Medicare is to the health of our nation and want to find ways to strengthen the program for future generations. But this proposal increases costs for everyone while ignoring the core issue of rising health care costs. That’s not reform—that’s the end of Medicare as we know it.” Max Richtman, NCPSSM President/CEO
- Beneficiaries would be forced to pay more for Medicare benefits because premiums would be indexed to the gross domestic product, plus 1 percent, which historically has risen far more slowly than health care costs.
- The Ryan-Wyden plan could actually increase Medicare costs because it expands private Medicare plans that cost an average of 10 percent more than what the same coverage would cost in traditional Medicare.
- If younger retirees enter the new program and the oldest and sickest remain in traditional Medicare, the program will be faced with a pool of increasingly costly beneficiaries. Medicare spending would go up and seniors who remain in traditional Medicare would see their costs go up as well.
CATEGORY: [Budget], [healthcare], [Max Richtman], [Medicare], [privatization]
Let’s be really clear about one thing…the GOP plan to hike Medicare premiums for “upper income” retirees rather than raising taxes on millionaires may sound like a an effort to deal with our nation’s massive economic inequity…but it isn’t even close. The truth is this means-testing plan
will hit middle class beneficiaries.
So, once again the GOP has proposed middle class benefit cuts (these wrapped in flimsy “upper income” wrapping) to preserve tax cuts for the wealthy.
The Associated Press
has a great description of what the GOP’s plan really means. The House is expected to vote
on the GOP bill today.
Plan to raise Medicare premiums for upper-income retirees would affect middle class as well
WASHINGTON — Raising taxes on millionaires may be a non-starter for Republicans, but they seem to have no problem hiking Medicare premiums for retirees making a lot less.
The House is expected to vote Tuesday on a year-end economic package that includes increasing premiums for “high-income” Medicare beneficiaries, currently those making $85,000 and above for individuals, or $170,000 for families.
Just the top 5 percent of Medicare recipients now pay higher premiums, a policy that went into effect a few years ago. The new GOP proposal would expand that over time to include the highest-earning one-fourth of seniors.
Some would pay as much as several hundred dollars a month more for Medicare outpatient and prescription coverage. Millions who don’t consider themselves wealthy would also end up paying more.
On Monday the White House was mum on the Republican Medicare proposal, while AARP said it’s tantamount to a new tax. In the Democratic-led Senate, there’s not much enthusiasm.
The plan is modeled on a proposal that President Barack Obama submitted earlier this year to congressional debt negotiators, when he was seeking a “big deal” to cut federal deficits. Continuing pressure to curb spending means the proposal eventually could become the law of the land, even if there’s no consensus now.
“This is an idea that seems to have some traction,” said Tricia Neuman, a Medicare expert for the nonpartisan Kaiser Family Foundation.
It’s also creating a lot of confusion about who is wealthy and who is not.
For example, when Obama talks about raising taxes on the rich, he means individuals making more than $200,000 a year and families above $250,000.
But his health care law fixed the level for paying “high-income” Medicare premiums at the current $85,000 and above for an individual, $170,000 for families.
And the new Republican plan would drop the thresholds to $80,000 for an individual and $160,000 for families.
“If we’re considering raising taxes on those with incomes above $250,000, then it seems to me very awkward to raise Medicare premiums on those with much lower incomes,” said John Rother, head of the National Coalition on Health Care, an advocacy group.
Baby boomers just signing up for Medicare are more likely to be affected than long-term retirees, since incomes tend to be higher for the newly retired.
AARP calls the proposed premium increases a tax hike. “Most of the time, when you have a payment due to the government because of your income, we call it a tax,” said lobbyist David Certner. “It’s a form of a tax.” High-earning workers already pay more in Medicare payroll taxes, he pointed out.
No way it’s a tax, say Republicans. Taxpayers subsidize three-quarters of the cost of Medicare’s outpatient and prescription coverage. Reducing a subsidy for those who can afford to pay more is not the same thing as raising taxes, they contend.
“The proposal doesn’t raise taxes,” said Michelle Dimarob, spokeswoman for House Ways and Means Chairman Dave Camp, R-Mich. “The provision simply adjusts the subsidy they receive.”
The premium hikes are to help pay for broader legislation that would prevent the Jan. 1 expiration of payroll tax cuts for workers and extra benefits for the long-term unemployed, while also staving off a steep cut in Medicare payments to doctors. With time running short, lawmakers of both parties are still far apart on key aspects of the package.
Tax or not, higher Medicare premiums mean less money in the pockets of those who have to pay. Currently the high-income premiums start at 35 percent of the cost of Medicare’s outpatient and drug coverage for individuals making $85,000 year, and rise to 80 percent of the cost at the very top income brackets.
Next year, a typical Medicare recipient will pay $131 a month for outpatient and drug coverage combined, according to Kaiser. Those paying the high-income premiums will pay from $183 to $417. That means beneficiaries at the highest income levels would pay nearly $300 a month more.
The House GOP plan would increase the high-income premium by 15 percent in 2017 and lower the thresholds at which the higher fees kick in.
Most significantly, it freezes those income thresholds indefinitely, until one-fourth of Medicare recipients are paying “high-income” premiums. It’s unclear how long that would take, but currently only about 2 million out of 47 million Medicare beneficiaries pay higher premiums. Eventually that number would easily surpass 10 million.
The GOP proposal would reduce taxpayer spending on Medicare by $31 billion over 10 years; Obama’s version saved about $20 billion.
“There’s a lot of interest in asking higher-income people on Medicare to contribute more,” said Neuman.
CATEGORY: [Budget], [Medicare]
The National Committee Urges the White House to Reject Proposals that Target Middle Class Families
We've written to President Obama and Budget Director, Jack Lew, urging the administration to protect programs vital to hard-working Americans and their families as the administration prepares its Fiscal Year 2013 budget. Social Security and Medicare provide lifelines to millions who still suffer in this economy, yet these programs continue to be targeted by those in Washington hoping to balance the budget by cutting benefits to seniors, the disabled, and their families. Our President/CEO, Max Richtman said:
“The vast majority of Americans, of all ages and political stripes, do not support cutting Social Security and Medicare to balance the budget; however, they do support allowing tax cuts for the wealthy to expire. In spite of this, benefit cuts for the middle-class continue to top the budget agenda for many in Washington. The President’s 2013 Budget will provide an opportunity for Washington to reverse the failed fiscal policies of the past and reconnect with an American middle-class still suffering in this economy. We look forward to working with the President to protect and strengthen our vital social insurance safety net. ”
Following are just some of the proposals discussed by the White House and others which the National Committee opposes and are highlighted in our letter:
Raising Medicare's eligibility age from 65 to 67.
We are also deeply concerned about a plan to cut Medicare by raising the eligibility age from 65 to 67. This would not only shift the cost saved by the federal government to 65 and 66 year-olds losing Medicare coverage, but also to employers and employees, the states, and younger people buying health insurance through the new health insurance exchanges.
Expanding Medicare means testing
. Medicare Part B has been means tested since 2007. Additional means testing would undermine the social insurance nature of Medicare, and ultimately raise costs for middle and lower-income seniors who depend on it.
Cutting the COLA by replacing the current the CPI-W with the chained-CPI
. This would have the effect of reducing the cost-of-living adjustment (COLA) that seniors depend on in retirement to protect their Social Security benefits’ purchasing power against the harmful effects of inflation. Recent analysis estimates that, over time, the annual benefit cut stemming from the chained-CPI will accumulate to almost $1,400. Rather than cutting the COLA for seniors we should adopt a more accurate measure of seniors’ costs, by adopting the CPI-E.
In the past few months, hundreds of thousands of concerned citizens have told Washington “Hands Off – No Cuts” during rallies, protests, marches and in email, phone and petition campaigns to Congress. Americans have engaged in the National Committee’s nationwide campaign in a big way and will continue to do so throughout this election cycle. Average Americans understand the value of Social Security, Medicare and Medicaid for the middle-class and they worry that Washington will turn its back on American retirees, workers and their families.
You can see our full letter to the White House on the NCPSSM website
negotiates with itself and the President
takes his case for further cutting the payroll tax on the road, there’s one key point that seems to continually be overlooked in this Washington debate. Cutting the payroll tax isn’t the only way to provide stimulus to middle-class Americans—it’s just seen as the most politically feasible
The Tax Policy Center’s TaxVox blog
provides this great overview of why the payroll tax cut extension is not the best way to provide stimulus to average Americans.
Obama Had It Right the First Time: Bring Back the Making Work Pay Tax Credit
Roberton Williams | Posted on December 5, 2011, 5:09 pm
Last December, Congress replaced the two-year-old Making Work Pay tax credit (MWP) with this year’s payroll tax cut. That change cut taxes for higher-income workers, raised taxes for some low-wage workers, and nearly doubled the amount of lost tax revenue. And it most likely provided less bang-for-the-buck economic stimulus than the credit it replaced.
Since our anemic economy still needs a boost, why not reverse course and bring back the MWP in a bulked-up form? That step would provide more powerful macro medicine for 2012.
A quick review: MWP provided a credit in 2009 and 2010 of 6.2 percent of earnings up to $400 for singles and twice that for couples. It phased out between $75,000 and $95,000 of income (twice that range for couples). That meant that most of the tax savings went to low- and middle-income workers, the group most likely to spend rather than save the extra cash.
In contrast, the 2011 payroll tax cut equals 2 percent of earnings up to a maximum of $2,136 per worker with no income limit. Tax savings for high-income recipients probably went largely into savings accounts and delivered little economic kick. On balance, the payroll tax cut almost certainly had less bang-for-the-buck than MWP but its doubled cost probably resulted in a greater overall boost to the economy.
A Tax Policy Center analysis
showed that replacing MWP with this year’s payroll tax cut raised taxes for about one-third of households (60 percent with income under $20,000) and lowered taxes for about half of households (nearly a third with income over $75,000). Shifting tax savings from low- to high-income households certainly diluted the stimulus.
Congress could revert to the original MWP or go with a beefed up MWP with double the maximum benefits–$800 for singles and $1,600 for couples. TPC analysis
shows that the latter would cost roughly the same as extending the payroll tax cut but would focus tax savings on low- and middle-income families, those most likely spend the extra money—half would go to households with income under $50,000 and 80 percent to those with income under $100,000. In contrast, 60 percent of an extended payroll tax cut would go to households making more than $100,000. Applying MWP’s greater bang-for-the-buck to the larger aggregate revenue loss would give the economy a bigger kick than continuing this year’s policy.
My own tax cut this year—more than $2,000—went straight into savings and I’m not likely to spend it until sometime in the late 2020s when my grandsons head off to college. That certainly did nothing to help the economy now. And I’m sure I wasn’t alone.
So, Congress, raise my taxes in 2012—along with the taxes of people like me—and give the money to lower-income workers who need cash today to make ends meet. They’ll spend every last cent, I’ll hardly notice the change, the economy will grow a little faster, the country will be better off, and we can all celebrate a more promising new year.
CATEGORY: [Social Security], [stimulus]
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