Social Security Elevator Pitch
By NCPSSM | January 30, 2012
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.”
Angry Bear 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:
Topics: Budget, Social Security | Comments »
Social Security & Medicare as Bargaining Chips?
By NCPSSM | January 25, 2012
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.
Topics: Budget, Max Richtman, Medicare, Social Security, entitlement reform, privatization | 2 Comments »
Newt Gingrich and Social Security
By NCPSSM | January 23, 2012
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.
Topics: Uncategorized | 3 Comments »
Medicare & Social Security Number Crunching Just Isn’t Enough
By NCPSSM | January 12, 2012
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.
Dean Baker 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.
Topics: Aging Issues, Max Richtman, Medicare, Social Security | 2 Comments »
The Race to See Who Can Slash Social Security & Medicare Most
By NCPSSM | January 9, 2012
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.
Topics: Budget, Medicare, Presidential Politics, Social Security, entitlement reform | 2 Comments »
Aging in America
By NCPSSM | January 3, 2012
James Ridgeway at Unsilent Generation provides some desperately needed perspective on the reality of aging in America. Contrary to Washington’s popular “greedy geezer” mythology, our nation’s older Americans are not living high on the hog and are in fact facing an extremely uncertain future as Congress continues to find ways to balance our federal books with cuts to programs serving middle-class Americans.
Make this among the first articles you share with friends and loved ones this New Year!
The Future of Old Age in America
Unsilent Generation, Commentary, James Ridgeway, Posted: Jan 03, 2012
WASHINGTON, D.C.–In her remarkable book The Coming of Age, Simone de Beauvoir observed that fear of aging and death drives younger people to view their elders as a separate species, rather than as their own future selves: “Until the moment it is upon us,” she wrote, “old age is something that only affects other people. So it is understandable that society should prevent us from seeing our own kind, our fellow men, when we look at the old.”
This disconnect has, no doubt, been helpful to those who favor cutting the so-called old age entitlements, Social Security and Medicare — which, these days, seems to include just about everyone in Washington. Now that the congressional supercommittee, charged with reducing the federal deficit, has gone down in flames, some are calling for a return to the plan proposed by the chairmen who headed Obama’s Simpson-Bowles deficit commission last year. Like the supercommittee, the commission itself couldn’t agree on a plan for Congress to vote on.
Debunked Myths Ignored
Amidst all the bipartisan warring, one thing most of these committee members agree on is that the budget will, in large part, be balanced on the backs of old people, through cuts to Social Security and Medicare. The only differences are over how these cuts should be made, and how large they should be.
In the unlikely event that the rich are made to pay something toward deficit reduction, in the form of increased taxes, their contribution will pale in comparison to the share paid by elders in the form of reduced benefits. In part, that’s because the enemies of entitlements have succeeded in depicting these lifesaving government programs as the cause of our economic woes — a myth that has repeatedly been debunked to little avail.
By extension, they depict our current fiscal crisis as a standoff between the old and the young, rather than the rich and the poor. Former Senator Alan Simpson, the Republican handpicked by Obama to co-chair his bipartisan 2010 deficit commission, was fond of talking about the perfidy of “fat cat geezers,” who dared to oppose entitlement cuts at the expense of his — and everyone’s — grandchildren.
Simpson’s image of old people — “who live in gated communities and drive their Lexus to the Perkins restaurant to get the AARP discount” — seems to have gained traction as the dominant view of elders in this country. This belies the reality of the lives lived by millions of older Americans, for whom a comfortable retirement was never more than a distant dream. For them, old age means work or poverty – or, sometimes, both.
A More Rounded View
Recently, I attended the annual meeting in Boston of the Gerontological Society of America (GSA), a research and education organization whose members study all aspects of aging. With 3,500 people in attendance, hundreds of sessions and a teeming exhibit hall, there was plenty of upbeat talk about the “encore years.”
But there was also a body of research and discussion that presented a more rounded picture of old age in America — a place where “fat cat geezers” are far outnumbered by elders who, like Americans of all ages, are struggling to get by.
In one exhibit on “The Economics of Aging,” researchers from Wayne State University presented a study published earlier this year called “Invisible Poverty,” which found that one in three elders – including many living in middle-class suburbs – cannot fully cover their basic living expenses, including food, housing, transportation and medical care. It also found that certain shortcomings in the way federal poverty statistics are compiled meant that poverty among older people was more likely to be underestimated.
“This widespread economic struggle faced by Michigan seniors is fairly hidden from public sight, making it an invisible poverty that takes its toll on older individuals, their families and caregivers and the community at large,” says the study.
Among the elderly poor are large and growing numbers of women. Consider the figures: over 40% of black and white women over 65 live alone, and over a quarter of these women are poor. They are likely to be isolated and they, too, are invisible.
2 Million LGBT Elders Below Policy Radar
Also below the public policy radar, according to another study presented at the conference, are lesbian, gay, bisexual and transgender elders — who are now counted at over 2 million and are expected to double in number by 2030. These people are far less likely to have partners or caregivers of any sort, because society banned or discouraged them.
For these elders, and millions of others, Social Security is more than an “entitlement” — it is a lifeline.
According to a recent report by the Center on Budget and Policy Priorities, Social Security alone keeps 20 million Americans above the poverty line. It’s hard to argue that Social Security benefits are too generous, or that retirees enjoy extravagant lifestyles.
The average Social Security benefit for 2012 stands at just over $1,200 a month. As the Center for Economic and Policy Research’s Dean Baker notes, “More than 75 percent of benefits go to individuals with non-Social Security income of less than $20,000 a year and more than 90 percent of benefits go to individuals with non-Social Security income of less than $40,000 a year.”
In addition, Baker points out:
“The private pension system has largely collapsed and the current group of near retirees saw much of their home equity disappear with the collapse of the housing bubble. As a result, the situation of retirees is likely to be worse in the near future, especially after taking into account the growing burden of out-of-pocket healthcare expenses projected in the decades ahead.”
So it is the search for work, not cleaning one’s fingernails or studying French to stave off dementia, that is now a major concern for many older people. Historically they have been fired from long-held jobs because of their costly benefits and diminishing ability to handle the job, but now employers are taking a fresh look at this situation.
Business, as it turns out, may very well embrace the old — because they often come at lower wages, with no benefits and scant legal protection. Given U.S. Supreme Court rulings, the prospect of any of these people filing old age discrimination suits is unlikely. Rather than knocking them out of a job, it may turn out to be less expensive to keep on a skilled, elderly employee, perhaps at reduced salary and reduced hours, than go through the rigamarole of hiring a young, inexperienced person, who must then undergo training.
A Different Society Emerging
As the GSA conference showed, there is no point in cutting entitlements to elders when, in fact, so little is known about their lives and their emerging future. It means there must be a full, open debate — not backdoor political maneuvering — on the issue.
What may be happening here is the emerging outlines of a much different society than the one we now know: a society that, for example, will require a new service sector, a different slant towards medicine, which uses the old to assist the young, as friends and caregivers — instead of pitting generations against one another.
The late Theodore Roszak, who described and named the “counter culture” that took shape in the 1970s, thought old people were anything but a selfish bunch of useless geezers waiting to die. He called them an “audacious generation,” opening a new world of energy and hope. Let us hope, in de Beauvoir’s words, that moment is upon us.
James Ridgeway wrote this article as part of a MetLife Foundation Journalists in Aging Fellowship, a program of the Gerontological Society of America and New America Media. The article first appeared in The Guardian.
Topics: Aging Issues, Medicare, Social Security, baby boomers, entitlement reform, healthcare | Comments »
Payroll Tax “Holiday” Deadlock
By NCPSSM | December 21, 2011
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
Topics: Budget, Max Richtman, Medicare, Social Security, stimulus | 2 Comments »
Repackaged Medicare Voucher Plan is More Bad News for Seniors
By NCPSSM | December 15, 2011
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.
- 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.
“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
Topics: Budget, Max Richtman, Medicare, healthcare, privatization | 3 Comments »
Contrary to Claims -GOP Plan Hits Middle Class Seniors
By NCPSSM | December 13, 2011
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.
Topics: Budget, Medicare | 3 Comments »
Seniors Fire A White House Warning Shot in Advance of 2013 Budget
By NCPSSM | December 9, 2011
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.
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