From the monthly archives: January 2012
We are pleased to present below all posts archived in 'January 2012'. If you still can't find what you are looking for, try using the search box.
Talking about Social Security financing in a way that the average person can truly understand is a challenge. Yet given the constant--and often purposeful-- misinformation provided by those who hope to undermine the program, it's a challenge we all must undertake because as FDR said "Repetition does not
transform a lie
into a truth."
blog is one of the web's best when it comes to the issue of Social Security. This weekend's post "Social Security: The Elevator Pitch" does a terrific job of breaking down the issue to its core. Print this one--stick it on the refrigerator--email it to your friends
...It's a keeper and this month's Networthy Award winner.
Social Security: The Elevator Pitch
Posted by Steve Roth | 1/29/2012 10:34:00 AM
• Since Social Security started it has always brought in more money than was spent. It contributes a surplus to the total federal budget. That’s true today and will continue for quite some time.
• The extra revenue needed to make SS solid far beyond the foreseeable future (75 years) is tiny: 0.6% of GDP.
• A 0.6% revenue increase would not be a big burden. The U.S. has been taxing about 28% of GDP for decades, compared to 30-50% in other rich countries (average: 40%).
• Coincidentally, Scrapping the Cap on SS contributions — so high earners paid payroll tax above $110K — would deliver … 0.6% of GDP
Worried about our fiscal future? It’s the health care costs, stupid. What providers charge.
U.S. providers charge two to five times what they charge in other countries, and it’s rising faster — and faster than wages, GDP, inflation.
If you’re not talking about that, you have nothing useful to say about our fiscal future:
Only time will tell whether the "reforms" President Obama offered up again in last night's State of the Union are the standard Washington formulation of reforms = benefit cuts for seniors or something more meaningful. And on the payroll tax, we've repeatedly said the White House stimulus strategy is just plain wrong. Here's what he said about Social Security, Medicare & Medicaid in last night's speech followed by our reaction:
Right now, our most immediate priority is stopping a tax hike on 160 million working Americans while the recovery is still fragile. People cannot afford losing $40 out of each paycheck this year. There are plenty of ways to get this done. So lets agree right here, right now: No side issues. No drama. Pass the payroll tax cut without delay.
When it comes to the deficit, weve already agreed to more than $2 trillion in cuts and savings. But we need to do more, and that means making choices. Right now, were poised to spend nearly $1 trillion more on what was supposed to be a temporary tax break for the wealthiest 2 percent of Americans. Right now, because of loopholes and shelters in the tax code, a quarter of all millionaires pay lower tax rates than millions of middle-class households. Right now, Warren Buffett pays a lower tax rate than his secretary.
Do we want to keep these tax cuts for the wealthiest Americans? Or do we want to keep our investments in everything else like education and medical research; a strong military and care for our veterans? Because if were serious about paying down our debt, we cant do both.
The American people know what the right choice is. So do I. As I told the Speaker this summer, Im prepared to make more reforms that rein in the long term costs of Medicare and Medicaid, and strengthen Social Security, so long as those programs remain a guarantee of security for seniors.
But in return, we need to change our tax code so that people like me, and an awful lot of Members of Congress, pay our fair share of taxes. Tax reform should follow the Buffett rule: If you make more than $1 million a year, you should not pay less than 30 percent in taxes. And my Republican friend Tom Coburn is right: Washington should stop subsidizing millionaires. In fact, if youre earning a million dollars a year, you shouldnt get special tax subsidies or deductions. On the other hand, if you make under $250,000 a year, like 98 percent of American families, your taxes shouldnt go up. Youre the ones struggling with rising costs and stagnant wages. Youre the ones who need relief.
Our President/CEO, Max Richtman responded:
“We share President Obama’s belief that we must rebuild our economy in a way that rewards Americans’ hard work and re-instills fairness into an economic system that too often rewards the rich and punishes everyone else. Ironically, these core American values of hard work, fairness and compassion are also the tenets of the programs most often targeted by Washington for cuts—Medicare, Medicaid and Social Security. If offering more reforms leads to benefit cuts for seniors in these vital programs then seniors program will once again become a bargaining chip traded in exchange for tax breaks millionaires don’t need in the first place.
The President’s support for providing a middle class tax cut to help spur the economy is the right policy, but reducing Social Security payroll taxes is the wrong way to do it. Extending the payroll tax cut further endangers Social Security's financial integrity and could undermine our efforts to defend the program from benefit cuts or privatization. If seniors are required to pay for the payroll tax holiday -- which most would not benefit from – through Medicare cuts as some lawmakers have suggested, that would also be contrary to the President’s stated goals of fairness.
We urge President Obama to safeguard the middle-class by drawing a clear line in the sand, promising the American people that this so-called ‘holiday’ will end this year. Restoring Social Security’s successful self-funding model is the only way to preserve its independence for future generations.” Max Richtman, NCPSSM President/CEO
Meanwhile Republicans are poised and ready to make a "deal" that demands benefit cuts and privatization, coupon care and work til you die. Here's the GOP response
to the President's State of the Union, replete with dire warnings and fear-mongering the facts, claiming there are only two options for Social Security and Medicare--do nothing (which NO ONE supports) or radical reforms that destroy the programs in their current forms. False options and the same song---102nd verse, taken from the Cato playbook
written more than 25 years ago:
"We can preserve them unchanged and untouched for those now in or near retirement, but we must fashion a new, affordable safety net so future Americans are protected, too. [...]
“The mortal enemies of Social Security and Medicare are those who, in contempt of the plain arithmetic, continue to mislead Americans that we should change nothing Listening to them much longer will mean that these proud programs implode, and take the American economy with them. It will mean that coming generations are denied the jobs they need in their youth and the protection they deserve in their later years."
Just a reminder: according to the Social Security Trustees
the Social Security Trust fund currently has a surplus of $2.6 trillion. This surplus is projected to grow until 2022. At that time the balance in the trust funds are projected to be $3.7 trillion. The skyrocketing costs of healthcare system wide have posed a greater threat to Medicare; however, healthcare reform
added years of solvency to the program. While there's more work to be done conservatives are now working to undo the progress already made by repealing the Affordable Care Act and reversing the savings already seen in Medicare.
There are many reasons primary voters cast the ballots they do…unfortunately, a deep understanding of the candidates’ positions on important (and sometimes complex) policy issues isn’t always at the top of the list. This often leads to “buyers remorse”
once voters actually get a good look at the nominees’ positions on issues that truly impact the average American. Issues like Social Security for example.
We weren’t in South Carolina doing exit polling but are still willing to bet most voters have virtually no idea what the former Speaker plans for Social Security
. Not only does he support privatization
, he doubles down on the failed Bush plan
, by promising the private investment companies who might someday control your Social Security contributions that the government will back them up if/when they lose your money. Sounds like a sweet deal for investors that would also cost taxpayers big time. Think Progress
describes the plan this way:
“As we pointed out when Sen. Rob Portman (R-OH) suggested a similar idea, promising to make investors whole again sets up a huge moral hazard problem. If investors know full well that the government is going to provide them with a minimum benefit, no matter what they do, then the incentive is to make risky investments and hope for a big payoff. After all, why not take the risk if the government has guaranteed that you can’t lose money? Investors have every incentive to bet big in the hopes of a large payout, because if they go bust, the government will bail them out. Add to this the fact that the privatized systems in Chile and Galveston aren’t as wonderful as Gingrich makes out. In fact, while they work quite well for the wealthy, middle- and lower-income participants wind up worse off.”
“Gingrich’s plan would also cause the deficit to explode, as money meant for Social Security would have to be diverted into the creation and administration of private accounts. Social Security kept 14 million seniors out of poverty last year, but Gingrich would enact a scheme to privatize the system, while hoisting the costs of failure onto the federal government.”
So, Newt Gingrich’s plan means more for private investment firms who will get to play with your money, in a system that benefits the wealthy, and explodes the deficit.
Chances are, voters in South Carolina—where there’s a growing senior population facing 13% poverty
-- didn’t know much about Gingrich’s Social Security plan, and as with President Bush’s privatization plan, the more Americans find out about it the less they’ll like it.
Talk about buyer’s remorse! Wait until you hear what he’s got planned for Medicare...we'll have more on that later.
We couldn’t help but scratch our heads a bit at all the attention generated by the latest CBO report on raising the eligibility age for Medicare and retirement age for Social Security. You really don’t have to be an economist to know that cutting benefits to millions of Americans saves the government money.
Of course, it also shifts costs to seniors and employers, forces millions more into Medicaid or into private insurance exchanges (which will go away if conservatives have their way and repeal healthcare reform) and cuts benefits for those who can’t stay on the job until they're 70 years old. However, those real-life consequences are never fully discussed by Washington’s fiscal hawks. Never.
So…OK…let’s play Washington’s numbers-only game. Even then, as David Dayen at Firedog Lake
reminds us, targeting generations of working Americans with benefit cuts isn’t
the only way to save money:
Yesterday, the Congressional Budget Office estimated that raising the Medicare eligibility age from 65 to 67 would save the government $148 billion from 2012 to 2021. For context, letting the Bush tax cuts expire would save $3.6 trillion over the same ten-year window. So anyone who tells you that we must increase the Medicare age to “save the budget” should be shown those two numbers. Even just letting the tax cuts over $250,000 expire would save $800 billion, over five times as much. The other difference would be that letting the Bush tax cuts expire would mildly inconvenience wealthy people who can afford the hit, while raising the Medicare age would put a massive burden on 65 and 66 year-olds, increase health insurance premiums for everyone by changing the risk pools, and probably increase overall health costs across the system.
at the Center for Economic and Policy Research says:
“The cost of this savings is a much higher health care bill for beneficiaries. As it is now, millions of people in their 60s struggle to hang onto jobs that provide health care insurance or do without, hoping that they can make it until 65 without a major medical problem. This proposal pushes the magic age out two more years.
And there should be no mistake; the cost of insurance for someone in his/her mid-60s is a real burden. The Congressional Budget Office (CBO) projected that the cost (in 2011 dollars) of insuring someone in the private sector at age 65 will be $15,500 a year in 2022.
…the proposal to raise the age of Medicare eligibility to 67 is a proposal to increase health care costs to our children and grandchildren by $2.7 trillion. The idea that this cut is being presented as somehow helping our children is a sick joke that would only be taken seriously in Washington political circles.
On the Social Security side CBO claims GDP will increase 1% if Americans can’t retire until age 70 because they’ll have to remain on the job longer. But we’re wondering…what jobs
? We certainly don’t know of any national effort to encourage companies to hire (or even retain) 67 year olds…do you? And what will that mean for our children and grandchildren
struggling to enter an already depressing job market hoping to build their careers?
These are the questions Washington should really be asking. Let's see a CBO report with more detail on these issues.
For those of you who've been watching the GOP debates
, no doubt you've heard the same consistent theme we have --America's middle class and poor must continue to pay the price
for failed economic policies of the past. Once again, "shared sacrifice"
really just means more of the same. Cut middle-class benefits to pay for tax breaks for the wealthy. The "real pain" and "get tough" strategies these candidates proposal target Americans who are already suffering in this economic nightmare, once again leaving those who've benefited the most untouched:
The Huffington Post
has a nice summary:
Rick Santorum Gets Tough On Food Stamps, Jon Huntsman Promises 'Real Pain'
Moderator David Gregory pivoted to "substance" about 10 minutes after Rep. Ron Paul (R-Texas) suggested he should in Sunday's NBC/Facebook presidential debate. Gregory asked former Utah Gov. Jon Huntsman to suggest three areas in which Americans would feel "real pain" under his budget cutting regime.
Huntsman responded: "I agree with the Ryan plan. I think I'm the only one on the stage who's embraced the Ryan plan."
Most of his fellow candidates have danced around in their support for the plan because it's seen as something akin to electoral poison. Rep. Paul Ryan (R-Wis.) himself is now backing a plan he cooked up with Sen. Ron Wyden (D-Ore.).
Of course, while the original Ryan plan would definitively inflict pain (it would solve the problem of Medicare spending by providing Medicare recipients with a voucher designed to grow less valuable over time), Gregory wasn't satisfied with Huntsman's answer and pressed for "three areas." Huntsman, after prompting, offered Social Security, Medicare and defense.
Former Sen. Rick Santorum agreed with Huntsman on Social Security means testing, but went further, offering a plan to turn food stamps and housing assistance into block grants for states, in which recipients would be required to work and time limits would be imposed. This allowed Santorum to remind everyone of his role in the welfare reform fights of the 1990s.
Santorum wants to do to food stamps, housing assistance and Medicaid what he did for welfare back then. The program was eliminated in 1996 by a Republican Congress and a Democratic president, and replaced with a time-limited program that cuts people off regardless of their family's financial situation.
It failed: Poverty has risen significantly since the program was eliminated and replaced. (It succeeded, however, if the goal was simply to take the issues of welfare and poverty off the political table.)
Today, more than 46 million people live in poverty, the highest since the Bureau of Labor Statistics began counting more than half a century ago.
That model, said Santorum, should be applied to other assistance programs, cutting families off without regard to their current situation but instead based on timelines set by Congress.
"We've gotta block-grant [food stamps] and send it back to the states, just like I did with welfare reform -- do the same thing with Medicaid, including housing programs, block-grant them, send them back to the states, require work, and you put a time limit on it," said Santorum.
"We'll help take these programs, which are now dependencies," he said, "and you help people move out of poverty."
But without a dramatic and unprecedented expansion of jobs that pay middle-class wages, it's unclear where those tens of millions of people would find such work.
Have a Social Security or Medicare question?