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The Truth about Social Security’s Math Really Does Matter – Even in Washington

We don’t usually share this is the kind of “inside baseball” Washington story here but today’s a little different...

For months, conservative think-tankers who undermine the value of Social Security, deny the existence of a national retirement crisis and the need to boost benefits have been banging their drum for benefit cuts especially hard.  Why?  Because a scarcely reported CBO report on Social Security replacement rates (now you see why we don’t usually share these kind of stories) claimed Americans received more in benefits than previously believed or reported by Social Security actuaries.

For those who make a living advocating for benefits cuts, like the American Enterprise Institute’s Andrew Biggs, the CBO report was a golden goose.  His columns in the Washington Post, Wall Street Journal, Forbes and more tweets than we can count proclaimed the retirement crisis is phony and not only are Americans receiving enough Social Security benefits, some receive more than they need.

Now, anyone who actually works with beneficiaries knows his claim doesn’t reflect the real-world.  Today apparently, the CBO agrees.  They’ve issued a statement that their December numbers were wrong...significantly so.  

“After questions were raised by outside analysts, we identified some errors in one part of our report, CBO’s 2015 Long-Term Projections for Social Security: Additional Information, which was released on December 16, 2015.

The errors occurred in CBO’s calculations of replacement rates—the ratio of Social Security recipients’ benefits to their past earnings. The estimates reported in December inadvertently included years with earnings below those intended amounts.

The corrected version shows substantially lower mean initial replacement rates for retired and disabled workers. For example, the corrected rate for retired workers born in the 1940s is 43 percent; the value CBO reported in December was 60 percent.”

Los Angeles Times columnist, Michael Hiltzik, has been covering this story including some conversations with 

AEI’s Biggs: 

“Via Twitter, he has now retracted the Forbes piece. He says retractions of the others are coming. [Update: Biggs says by emailthat he has sent a retraction to the Wall Street Journal. His Washington Post piece, however, didn't cite the original CBO figures directly.]

 Biggs told me by email that the CBO's recalculation "doesn't radically alter the way I view the adequacy of Social Security benefits or retirement saving." That's because he had argued for a different formula that he says still shows replacement rates close to the CBO's original figures.”

In other words, the facts won’t alter conservatives’ quest to cut benefits and if the formula being used doesn’t get the results they want, the CBO should just change the formula to fit the anti-Social Security crowd’s political frame. 

Welcome to Washington. 

Voters Say “No Thanks” to Christie’s Plans to Gut Social Security & Medicare


National Committee President/CEO, Max Richtman's reacts to Chris Christie's suspension of his Presidential campaign: 

“New Jersey Governor Chris Christie’s political strategy to portray himself as a tough-talking-truth-teller by promising to destroy America’s retirement safety net if elected President came to a predictable conclusion today.  I say it’s predictable because Americans have worked hard to earn their Social Security and Medicare and this campaign shows they simply don’t support Christie’s slash and burn strategy.  Voters, of all political persuasions, agree Social Security and Medicare must be strengthened not cut.  That’s a powerful lesson for the remaining candidates after today’s Christie campaign suspension announcement.

National Committee members and supporters will continue our engagement with Presidential candidates in town halls and forums nationwide with one clear message -- our nation must honor its commitment to America’s workers who’ve contributed to Social Security and Medicare their entire working lives.  Not only do we oppose plans to privatize, means-test and slash benefits, working and retired Americans want candidates who have ideas on how to boost benefits for millions of seniors, survivors, people with disabilities and their families who are struggling just to get by.”...Max Richtman, NCPSSM President/CEO


President Proposes Allowing Medicare to Negotiate for Lower Rx Drug Prices

“It’s long past time for Congress to acknowledge the hard truth that the sky-rocketing cost of prescription drugs is hurting average Americans and our federal budget. Medicare spends billions providing Part D drug coverage each year while beneficiaries including seniors, the disabled and their families also face rising out-of-pocket costs and higher premiums. All the while, drug makers continue to reap the profits of their price gouging. In his budget, President Obama has again proposed lifting the ban preventing Medicare from negotiating prices with the drug companies. Big Pharma has lobbied hard to keep the ban in place but seniors expect, this time, Congress will do the right thing and finally allow Medicare to negotiate for fair prices.”...Max Richtman, NCPSSM President/CEO

Among the other budget provisions beneficial to seniors include:

  • closing the Part D donut hole two years earlier
  • additional funding for in-home services
  • reforms for overpayments going to private insurers in Medicare Advantage
  • a 7.44% increase in administrative funding for the Social Security Administration

However, the President’s budget was not all good news.  Once again, the budget proposes shifting even more healthcare costs to seniors by extending Medicare means-testing to the middle class and increasing out-of-pocket costs such as the home health care copayment and the Part B deductible. 

“The average Medicare beneficiary already spends nearly $4,800 per year in out-of-pocket health care costs with half of all people on Medicare having incomes of less than $24,150. People in Medicare simply can’t afford increased cost-sharing year-after-year.  What’s especially worrisome are efforts to portray expanding means-testing in Medicare as impacting only ‘high-income seniors.’  While that may be good political rhetoric the truth is, if passed, further means testing will actually target middle-class individuals”...Max Richtman, NCPSSM President/CEO 

African Americans Rely on Social Security for More of Their Retirement Income


As we celebrate Black History Month, it’s the perfect time to highlight how important Social Security is to the African American community.  The National Committee’s policy experts have prepared a new analysis of Social Security and African Americans. Here are some key points:

While Social Security is expected to be only one part of a person's retirement income, many minorities rely on it for more of their income. Because African Americans tend to have lower earnings and less pension coverage than White Americans, Social Security is extremely important for African American retirees.  Based on the most recently available data:

  • Almost three-fourths (72 percent) of African American beneficiaries rely on Social Security for at least half their income, compared to less than two-thirds (65 percent) of all beneficiaries.
  • Almost 50 percent of African American beneficiaries rely on Social Security for 90 percent or more of their income.
  • Approximately 37 percent of African American beneficiaries rely on Social Security for all of their income.

Minorities rely more heavily on Social Security due to a lack of other income in retirement. Few elderly minorities receive income from pensions and assets. The greatest disparity is in the receipt of income from assets.  Again, based on the most recent data,

  • 26 percent of African Americans received income from assets, compared with more than 55 percent of Whites.
  • 21 percent of African Americans 65 years old and over reported receiving income from private pensions or annuities, compared to 28 percent of Whites 65 years old and older.

IMPROVING SOCIAL SECURITY IS ESSENTIAL

As we have shown, Social Security is our nation’s most important and effective income security program for American workers, retirees and their families and is even more central to the economic security of African Americans.  Maintaining the adequacy of Social Security by improving it to better meet the needs of America’s seniors is essential.  Toward that end, the National Committee supports a number of improvements to boost Social Security, including the following:

  • Strengthen the COLA. 
  • Improve the Basic Benefit for all Current and Future Beneficiaries. 
  • Enhance the Special Minimum Benefit. 
  • Restore College/Vocational School Student Benefits.   

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