Will Lame Duck Congress Pass COLA Relief?
Legislation in the House and Senate to provide one-time emergency COLA relief for seniors is expected to beconsidered in the lame duck session of Congress before it wraps up its work next month. House Speaker Nancy Pelosi has includedCOLA reliefon her list of must-pass items and Majority Leader Harry Reid has promised to take it up in the Senate.Let?s be clear about what this bill would do. The legislation would not provide an actual COLA increase, since under current law the COLA formula mandated no increase in 2010 and 2011; however, this legislation would provide a single $250 payment next year. You may remember, a similar provision was included in the 2009 stimulus bill and was successful in providing modest relief to seniors hit hard by the recession and also providing desperately needed economic stimulus.But passage of this COLA bill is anything but certain. Deficit hawks continue their campaign against anything vaguely resembling help for the middle class and, in fact, the chairmen of the Fiscal Commission now suggest that the current formula (which led to zero COLA?s for two years) is actually too generous. They want a new and less ?generous? COLA formula enacted as soon as 2012. Cutting the COLA during the worst economic crisis in decades would be disastrous for millions of Americans but it is exactly what multi-billionaire and anti-entitlement crusader Pete Peterson has advocatedas far back as the 1970?s. We detailed some of that history here:
Peterson is no stranger to the battle against America?s retirement safety net. He?s called the current cost of living increases in Social Security, which provide adjustments of roughly 3% a year, ?one of the greatest fiscal tragedies of American history? because he considers them excessive. At the same time, Peterson steadfastly defends a controversial private equity tax break that benefits America?s wealthiest investors. So much for fiscal responsibility.
With$1 billion dollars invested in his anti-Social Security , oops we mean fiscal responsibility campaign, passage of this COLA relief legislation will be difficult. In fact, members of Congress are being told they?re ?political cowards? if they don?t cut Social Security. Now is the time for you to let Congress know that cutting Social Security while extending tax breaks for the wealthy shows anything but political courage.Send your representatives in the House and Senate an email directly from our Legislative Action center on our website or from our Facebook page. You can use the sample letter we?ve provided or, even better, write your own. The COLA vote could come at any time so please forward the links to your friends and tell Congress to support COLA relief legislation.
When Shared Sacrifice Really Just Means Cut Social Security
Fiscal Committee Chairmen, Alan Simpson and Erskine Bowles, have argued their plan for Social Security is solely about solvency. Really? As the Social Security actuaries have said, beneficiaries would face a potential 22% benefit cut after 2037, if Congress does nothing. Yet under Simpson/Bowles, workers who earned $37,400 annually (that’s about half of Social Security recipients) would actually take a 35-41% cut! While Simpson/Bowles promise these benefit cuts will only impact high income earners, there’s a catch. Anyone who made $38,000 a year during their working years is considered a “high income” earner. Yes, that’s right. When it comes to raising the payroll tax, Simpson/Bowles worries that a .1% payroll hike phased in over decades might be too big a burden for workers making $100,000 a year, yet when it comes to benefit cuts you’re considered “upper income’ if you earn a third of that. In short, a so-called “high income” worker making $38,000 can afford to pay their taxes and take a benefit cut but don’t expect those making six-figures to pay their share of payroll taxes. Angry Bear describes it this way:
Coberly and I (and some others) have been warning for years about the dangers of turning Social Security from an insurance program with mild progressive transfers to a welfare system. Well this is a pure illustration of that, I can’t imagine any scheme designed to more undermine support for Social Security than one that calls for earners in the top 50% taking a cut even from the projected cut. The answer to a ‘crisis’ defined as an ultimate 25% cut in scheduled benefit is for upper income folk to take a 35-41% cut? All in an effort to save them a phased in 0.1% of payroll per year increase over the next 20 years?
National Committee Executive VP, Max Richtman, talked about the lack of balance in this proposal on Pacifica Radio’s Letters to Washington. Shared Sacrifice Another favorite line by fiscal hawks and these Fiscal Committee chairmen is the call for all Americans to sacrifice for the good of our country. We agree. However, as our President/CEO, Barbara Kennelly has said, the sacrifice in this plan is anything but shared:
“America’s retirees, disabled and their families had hoped for a balanced approach to solving our nation’s fiscal crisis. Unfortunately, that is not what we received in today’s report by the Chairmen of the President’s Fiscal Commission. This proposal relies far too heavily on benefit cuts which will hurt millions of Americans. Lowering COLA’s which hit even current retirees, raising the retirement age, and making benefit cuts in Social Security have nothing to do with solving this fiscal crisis and do not offer a balanced solution to debt reduction by any stretch of the imagination.”
How’s this for balance–the way Simpson/Bowles propose we get to long term solvency for Social Security is with 92% of the solution coming from benefit cuts for seniors, the disabled, survivors and their families. Forget the conventional wisdom, inside Washington and out, that the answer to long-term solvency would be a combination of revenue increases and benefit cuts. That type of compromise is tough enough to get these days, but it is also the only way to ensure a fair and balanced result. Is proposing a solution which is 92% benefits cuts truly and example of shared sacrifice?If we really want to preach balance, how about lifting the payroll tax cap entirely? The American people have said repeatedly they’ll pay a little extra to keep the modest benefits provided by Social Security and Medicare. Or, how about a financial transaction tax? Is it really so absurd to think that America?s wealthiest Americans and the industry that helped create this economic collapse in the first place share some of the sacrifice to fix it? By all accounts, neither of these options were seriously considered by Simpson/Bowles. So much for promises of a balanced approach with shared sacrifices. This plan isn’t even close.
Cuts to Social Security and Medicare are Fiscal Commission’s Primary Solution to Nation’s Debt Crisis
Sometimes you’d just rather be wrong…and this is one of those times.The Chairmen of the President’s Fiscal Commission unveiled their solutions for the nation’s debt/deficit mess in a hastily called news conference today and– as predicted– it’s all about cuts to Social Security and Medicare.
?America?s retirees, disabled and their families had hoped for a balanced approach to solving our nation?s fiscal crisis. Unfortunately, that is not what we received in today?s report by the Chairmen of the President?s Fiscal Commission. This proposal relies far too heavily on benefit cuts which will hurt millions of Americans. Lowering COLA?s which hit even current retirees, raising the retirement age, and making benefit cuts in Social Security have nothing to do with solving this fiscal crisis and do not offer a balanced solution to debt reduction by any stretch of the imagination.??Barbara B. Kennelly, President and CEO
Specifically, the proposal released today by the Chairmen of the National Commission on Fiscal Responsibility and Reform, former Senate Alan Simpson and Erskine Bowles would:Raise the Retirement Age to 69 ? this proposals calls for a gradual increase to age 68 by the year 2050 and 69 by 2075. This would result in substantial benefit reductions for the generations of Americans.Reduce Cost of Living Adjustments ? this proposal suggests a different method of calculating the cost-of-living adjustment resulting in smaller COLAs as soon as 2012, impacting even current retirees. Estimates are this would lower benefits by approximately 3 percent after 10 years of retirement and 6 percent after 20 years of retirement.Cut Social Security Benefits – by changing Social Security?s benefit formula this proposal would cut benefits for millions of future retirees.More Medicare cuts ? this time directly to benefitsIncreased Cost Sharing for Seniors – Congress just enacted the Affordable Care Act, which included billions in savings from Medicare yet did not target beneficiaries. However, this Commission proposal includes hundreds of billions of additional Medicare cuts, over $100 billion of which will come directly out of the pockets of seniors in the form of increased cost-sharing. The average senior is already spending 30% of his/her Social Security benefit on Medicare Part B & Part D out-of-pocket costs alone; this proposal would increase that amount.Reduced Provider Reimbursements ? This proposal includes a new round of cuts in Medicare provider reimbursements before reforms in the health care law have even been implemented, which could leave seniors without access to affordable health care.
?America?s seniors and their families want Washington to get its fiscal house in order; however, they also know Social Securitydid not create this economic mess and should not foot the bill for failed economic policies of the past. The American people are serious about deficit reduction and have said in poll after poll that they?ll support a balanced proposal. This isn?t it.??Barbara B. Kennelly, President and CEO
The only good news here is no one takes this proposal seriously beyond those who’ve pushed this anti-Social Security and Medicare agenda from the beginning, such as the Peterson Foundation and all ofthe other anti-entitlement groups it funds. According to CBS:
The document, from co-chairs Erskine Bowles and Alan Simpson, is not the bipartisan commission’s final proposal, which is due at the end of the month. It likely could not win support from 14 of the commission’s 18 members, which is necessary to advance it to Congress for consideration.
Wall Street Bailouts? No problem: Keeping Social Security’s Promise, well.
It’s been awhile since we’ve given a Networthy Award because, in all honesty, so much of the coverage on Social Security and Medicare lately has been either flat out wrong, full of half-truths or propaganda-laden campaign messaging.Today we say thank you to Dean Baker for this postat TPMCafe which provides some desperately neededinsight into the current campaign to convince you to accept cuts in Social Security. Dean gets it just right andthat’s why this is a Networthy Award winner for outstanding web coverage on the issues of Social Security andMedicare. The Wall Street TARP Gang Wants to Take Away Your Social SecurityBy Dean Baker , Center for Economic and Policy Research. Originally posted on TPM CafeJust over two years ago, the Wall Streeters were running around Congress and the media saying that if they don’t immediately get $700 billion the world will end. Since they own large chunks of both, they quickly got their money.Even more important than the hundreds of billions of loans issued through the TARP was the trillions of dollars of loans and guarantees from the Fed and the FDIC. This money came with virtually no strings attached. It kept Goldman Sachs, Citigroup, Morgan Stanley, and Bank of America and many others from collapsing. As a result, folks like Goldman CEO Lloyd Blankfein are again pocketing tens of millions a year in wages and bonuses, instead of walking the unemployment lines. Instead, 15 million ordinary workers are being told to just get used to being unemployed; it’s the “new normal.”But wait, it gets worse. The thing about Wall Streeters is that no matter how much money you give them, they always want more. Now they are using their political power and control over the media to attack Social Security.This effort is being led by billionaire investment banker Peter Peterson. Mr. Peterson has personally profited to the tune of tens of millions of dollars from the “fund managers’ tax subsidy,” an obscure provision of the tax code that allows billionaires to pay a lower tax rate than schoolteachers and firefighters. However, Peterson believes in giving back. He has committed $1 billion to an effort that is intended to take away the Social Security benefits that people have worked and paid for.As part of this effort, Peterson set up a whole new foundation, the Peter G. Peterson Foundation. He and/or his foundation created a “news service,” the Fiscal Times, which is intended to promote the view that we have no choice but to cut Social Security. The Fiscal Times has entered into agreements with the Washington Post and other credible newspapers to provide material.Peterson is also funding the creation of a high school curriculum which is intended to tell our children that the in the future the country will be too poor to finance Social Security. He funded a silly exercise called “America Speaks,” which was supposed to convince an assembly of selected participants that we must cut Social Security after a daylong immersion in Peterson-style propaganda. (The people didn’t buy it.) And now his crew is spending $20 million on an ad campaign to convince people the world will end if we don’t cut Social Security.Attacks on Social Security have been fended off in the past and it is possible that this one will be too. It is an incredibly popular and successful program. It does exactly what it was supposed to do. It provides a modest income to the retired and disabled, and their families, to ensure that people who have spent their lives working will not fall into poverty. It is also extremely efficient, with administrative costs that are less than 1/20th as large as the costs of private insurers.It also has very little fraud. We know this because earlier this year the Washington Post made a big point of hyping mistaken payments to federal employees than involved less than 0.01 percent of Social Security spending. If substantial fraud did exist, the Washington Post wouldn’t have to hype small change to try to discredit the program.The really incredible part of this story is that we should be talking about increasing Social Security benefits. Benefits are quite low by international standards. The portion of wage income replaced by Social Security is considerably lower than the retirement benefit provided by the systems in Australia, Canada, Germany and most other wealthy countries.As a result, many of the retirees who are dependent almost entirely on Social Security have incomes that are only slightly above the poverty line. A modest increase in benefits could make a big difference in these people’s standard of living.In addition, the near retirees, the people directly in the gun sights of the Wall Street TARPers, have just seen most of their wealth destroyed by the collapse of the housing bubble. The Wall Streeters now want to kick them yet again, by taking away Social Security benefits that they have already paid for.If Congress and the media worked for the public, we would be debating Wall Street speculation taxes right now. Insofar as we need to do something about the deficit in the longer term, taxing Wall Street speculation is a far more economic desirable route than taking away the Social Security benefits that ordinary workers have already paid for. We could easily raise more than $1.5 trillion over the next decade with a broadly based speculation tax than would have almost no impact on anyone except the Wall Street crew.Even the IMF is now pushing higher taxes on the Wall Street types, recognizing the enormous waste and rents in the financial sector. But the media and Congress do not respond to economic reality, they respond to money. And Peter Peterson and the Wall Street crew are not paying for an honest discussion of the country’s fiscal and economic problems. They are financing a rigged debate that is intended to result to even more money flowing to Wall Street and less to those who work for a living.
Voting for Change: But What Kind?
We can?t help but think of the old saying that goes ?be careful what you wish for?you may just get it.?A frustrated American electorate went to the polls and, as historically happens in midterm elections, voted out the party in power in the US House and even shifted the balance in the Senate. So, we?ve spent the morning looking at what this shift potentially means for America?s seniors. Specifically, what do these newly elected members say about Social Security and Medicare? The answer is, to put it mildly, discouraging:
?Social security is a bad investment?you could probably do no worse sticking your money under your mattress?let young working people opt out, the sooner the better, let ?em opt out and get a better investment.? Rand Paul, KY Senator-elect?I have been arguing for many years in favor of Social Security personal retirement accounts.? Pat Toomey, PA Senator-elect. In Toomey’s book, the first subhead under the “Transforming Social Security” chapter is “Personal Accounts Lead to Personal Prosperity.”“Social Security, whether we want it to or not, in its current form cannot survive and will not exist for us?”I do think the retirement age issue is going to have to be confronted?The other is giving people the option of taking some of their Social Security money, at least a potion thereof, and investing it in an alternative to the Social Security system itself.” Marco Rubio, FL Senator-elect
And that?s just in the Senate. In the House, long-time Social Security advocate and chairman of the Social Security subcommittee, Earl Pomeroy, was defeated by conservative Rick Berg. Pomeroy was the House sponsor of legislation to provide COLA relief to seniors and was expected to be considered by the House this month. That legislation is now unlikely to get any attention in this new climate on Capitol Hill. His replacement, Congressman-elect Berg, opposes raising the payroll tax, reducing benefits, increasing the retirement age, or privatizing Social Security but proposes allowing oil and gas drillingin National Parks as a way to raise revenues for Social Security.
?There’s a huge opportunity right now to take those mineral assets that are on the federal government’s balance sheet and shift them to Social Security.? Congressman-elect Rick Berg, R-N.D
It?s unlikely that drilling in National Parks will be seen as a serious option for funding Social Security; however, COLA relief legislation is definitely a serious issue for millions of seniors facing the second year in a row with no cost of living increase.And let?s not forget that the President?s fiscal commission has clearly targeted Social Security for benefit cuts, an increase in the retirement age (which is just another form of benefit cut), indexing or countless other mix-and-match reforms using Social Security funds to balance the federal books. The commission?s proposal, if there is one, will be presented to a lame duck Congress next month. That means many of the pro-Social Security advocates defeated at the polls yesterday–members who are literally packing up their offices–may have to cast one last vote on their way out of town. It?s a vote that could change Social Security forever.
Will Lame Duck Congress Pass COLA Relief?
Legislation in the House and Senate to provide one-time emergency COLA relief for seniors is expected to beconsidered in the lame duck session of Congress before it wraps up its work next month. House Speaker Nancy Pelosi has includedCOLA reliefon her list of must-pass items and Majority Leader Harry Reid has promised to take it up in the Senate.Let?s be clear about what this bill would do. The legislation would not provide an actual COLA increase, since under current law the COLA formula mandated no increase in 2010 and 2011; however, this legislation would provide a single $250 payment next year. You may remember, a similar provision was included in the 2009 stimulus bill and was successful in providing modest relief to seniors hit hard by the recession and also providing desperately needed economic stimulus.But passage of this COLA bill is anything but certain. Deficit hawks continue their campaign against anything vaguely resembling help for the middle class and, in fact, the chairmen of the Fiscal Commission now suggest that the current formula (which led to zero COLA?s for two years) is actually too generous. They want a new and less ?generous? COLA formula enacted as soon as 2012. Cutting the COLA during the worst economic crisis in decades would be disastrous for millions of Americans but it is exactly what multi-billionaire and anti-entitlement crusader Pete Peterson has advocatedas far back as the 1970?s. We detailed some of that history here:
Peterson is no stranger to the battle against America?s retirement safety net. He?s called the current cost of living increases in Social Security, which provide adjustments of roughly 3% a year, ?one of the greatest fiscal tragedies of American history? because he considers them excessive. At the same time, Peterson steadfastly defends a controversial private equity tax break that benefits America?s wealthiest investors. So much for fiscal responsibility.
With$1 billion dollars invested in his anti-Social Security , oops we mean fiscal responsibility campaign, passage of this COLA relief legislation will be difficult. In fact, members of Congress are being told they?re ?political cowards? if they don?t cut Social Security. Now is the time for you to let Congress know that cutting Social Security while extending tax breaks for the wealthy shows anything but political courage.Send your representatives in the House and Senate an email directly from our Legislative Action center on our website or from our Facebook page. You can use the sample letter we?ve provided or, even better, write your own. The COLA vote could come at any time so please forward the links to your friends and tell Congress to support COLA relief legislation.
When Shared Sacrifice Really Just Means Cut Social Security
Fiscal Committee Chairmen, Alan Simpson and Erskine Bowles, have argued their plan for Social Security is solely about solvency. Really? As the Social Security actuaries have said, beneficiaries would face a potential 22% benefit cut after 2037, if Congress does nothing. Yet under Simpson/Bowles, workers who earned $37,400 annually (that’s about half of Social Security recipients) would actually take a 35-41% cut! While Simpson/Bowles promise these benefit cuts will only impact high income earners, there’s a catch. Anyone who made $38,000 a year during their working years is considered a “high income” earner. Yes, that’s right. When it comes to raising the payroll tax, Simpson/Bowles worries that a .1% payroll hike phased in over decades might be too big a burden for workers making $100,000 a year, yet when it comes to benefit cuts you’re considered “upper income’ if you earn a third of that. In short, a so-called “high income” worker making $38,000 can afford to pay their taxes and take a benefit cut but don’t expect those making six-figures to pay their share of payroll taxes. Angry Bear describes it this way:
Coberly and I (and some others) have been warning for years about the dangers of turning Social Security from an insurance program with mild progressive transfers to a welfare system. Well this is a pure illustration of that, I can’t imagine any scheme designed to more undermine support for Social Security than one that calls for earners in the top 50% taking a cut even from the projected cut. The answer to a ‘crisis’ defined as an ultimate 25% cut in scheduled benefit is for upper income folk to take a 35-41% cut? All in an effort to save them a phased in 0.1% of payroll per year increase over the next 20 years?
National Committee Executive VP, Max Richtman, talked about the lack of balance in this proposal on Pacifica Radio’s Letters to Washington. Shared Sacrifice Another favorite line by fiscal hawks and these Fiscal Committee chairmen is the call for all Americans to sacrifice for the good of our country. We agree. However, as our President/CEO, Barbara Kennelly has said, the sacrifice in this plan is anything but shared:
“America’s retirees, disabled and their families had hoped for a balanced approach to solving our nation’s fiscal crisis. Unfortunately, that is not what we received in today’s report by the Chairmen of the President’s Fiscal Commission. This proposal relies far too heavily on benefit cuts which will hurt millions of Americans. Lowering COLA’s which hit even current retirees, raising the retirement age, and making benefit cuts in Social Security have nothing to do with solving this fiscal crisis and do not offer a balanced solution to debt reduction by any stretch of the imagination.”
How’s this for balance–the way Simpson/Bowles propose we get to long term solvency for Social Security is with 92% of the solution coming from benefit cuts for seniors, the disabled, survivors and their families. Forget the conventional wisdom, inside Washington and out, that the answer to long-term solvency would be a combination of revenue increases and benefit cuts. That type of compromise is tough enough to get these days, but it is also the only way to ensure a fair and balanced result. Is proposing a solution which is 92% benefits cuts truly and example of shared sacrifice?If we really want to preach balance, how about lifting the payroll tax cap entirely? The American people have said repeatedly they’ll pay a little extra to keep the modest benefits provided by Social Security and Medicare. Or, how about a financial transaction tax? Is it really so absurd to think that America?s wealthiest Americans and the industry that helped create this economic collapse in the first place share some of the sacrifice to fix it? By all accounts, neither of these options were seriously considered by Simpson/Bowles. So much for promises of a balanced approach with shared sacrifices. This plan isn’t even close.
Cuts to Social Security and Medicare are Fiscal Commission’s Primary Solution to Nation’s Debt Crisis
Sometimes you’d just rather be wrong…and this is one of those times.The Chairmen of the President’s Fiscal Commission unveiled their solutions for the nation’s debt/deficit mess in a hastily called news conference today and– as predicted– it’s all about cuts to Social Security and Medicare.
?America?s retirees, disabled and their families had hoped for a balanced approach to solving our nation?s fiscal crisis. Unfortunately, that is not what we received in today?s report by the Chairmen of the President?s Fiscal Commission. This proposal relies far too heavily on benefit cuts which will hurt millions of Americans. Lowering COLA?s which hit even current retirees, raising the retirement age, and making benefit cuts in Social Security have nothing to do with solving this fiscal crisis and do not offer a balanced solution to debt reduction by any stretch of the imagination.??Barbara B. Kennelly, President and CEO
Specifically, the proposal released today by the Chairmen of the National Commission on Fiscal Responsibility and Reform, former Senate Alan Simpson and Erskine Bowles would:Raise the Retirement Age to 69 ? this proposals calls for a gradual increase to age 68 by the year 2050 and 69 by 2075. This would result in substantial benefit reductions for the generations of Americans.Reduce Cost of Living Adjustments ? this proposal suggests a different method of calculating the cost-of-living adjustment resulting in smaller COLAs as soon as 2012, impacting even current retirees. Estimates are this would lower benefits by approximately 3 percent after 10 years of retirement and 6 percent after 20 years of retirement.Cut Social Security Benefits – by changing Social Security?s benefit formula this proposal would cut benefits for millions of future retirees.More Medicare cuts ? this time directly to benefitsIncreased Cost Sharing for Seniors – Congress just enacted the Affordable Care Act, which included billions in savings from Medicare yet did not target beneficiaries. However, this Commission proposal includes hundreds of billions of additional Medicare cuts, over $100 billion of which will come directly out of the pockets of seniors in the form of increased cost-sharing. The average senior is already spending 30% of his/her Social Security benefit on Medicare Part B & Part D out-of-pocket costs alone; this proposal would increase that amount.Reduced Provider Reimbursements ? This proposal includes a new round of cuts in Medicare provider reimbursements before reforms in the health care law have even been implemented, which could leave seniors without access to affordable health care.
?America?s seniors and their families want Washington to get its fiscal house in order; however, they also know Social Securitydid not create this economic mess and should not foot the bill for failed economic policies of the past. The American people are serious about deficit reduction and have said in poll after poll that they?ll support a balanced proposal. This isn?t it.??Barbara B. Kennelly, President and CEO
The only good news here is no one takes this proposal seriously beyond those who’ve pushed this anti-Social Security and Medicare agenda from the beginning, such as the Peterson Foundation and all ofthe other anti-entitlement groups it funds. According to CBS:
The document, from co-chairs Erskine Bowles and Alan Simpson, is not the bipartisan commission’s final proposal, which is due at the end of the month. It likely could not win support from 14 of the commission’s 18 members, which is necessary to advance it to Congress for consideration.
Wall Street Bailouts? No problem: Keeping Social Security’s Promise, well.
It’s been awhile since we’ve given a Networthy Award because, in all honesty, so much of the coverage on Social Security and Medicare lately has been either flat out wrong, full of half-truths or propaganda-laden campaign messaging.Today we say thank you to Dean Baker for this postat TPMCafe which provides some desperately neededinsight into the current campaign to convince you to accept cuts in Social Security. Dean gets it just right andthat’s why this is a Networthy Award winner for outstanding web coverage on the issues of Social Security andMedicare. The Wall Street TARP Gang Wants to Take Away Your Social SecurityBy Dean Baker , Center for Economic and Policy Research. Originally posted on TPM CafeJust over two years ago, the Wall Streeters were running around Congress and the media saying that if they don’t immediately get $700 billion the world will end. Since they own large chunks of both, they quickly got their money.Even more important than the hundreds of billions of loans issued through the TARP was the trillions of dollars of loans and guarantees from the Fed and the FDIC. This money came with virtually no strings attached. It kept Goldman Sachs, Citigroup, Morgan Stanley, and Bank of America and many others from collapsing. As a result, folks like Goldman CEO Lloyd Blankfein are again pocketing tens of millions a year in wages and bonuses, instead of walking the unemployment lines. Instead, 15 million ordinary workers are being told to just get used to being unemployed; it’s the “new normal.”But wait, it gets worse. The thing about Wall Streeters is that no matter how much money you give them, they always want more. Now they are using their political power and control over the media to attack Social Security.This effort is being led by billionaire investment banker Peter Peterson. Mr. Peterson has personally profited to the tune of tens of millions of dollars from the “fund managers’ tax subsidy,” an obscure provision of the tax code that allows billionaires to pay a lower tax rate than schoolteachers and firefighters. However, Peterson believes in giving back. He has committed $1 billion to an effort that is intended to take away the Social Security benefits that people have worked and paid for.As part of this effort, Peterson set up a whole new foundation, the Peter G. Peterson Foundation. He and/or his foundation created a “news service,” the Fiscal Times, which is intended to promote the view that we have no choice but to cut Social Security. The Fiscal Times has entered into agreements with the Washington Post and other credible newspapers to provide material.Peterson is also funding the creation of a high school curriculum which is intended to tell our children that the in the future the country will be too poor to finance Social Security. He funded a silly exercise called “America Speaks,” which was supposed to convince an assembly of selected participants that we must cut Social Security after a daylong immersion in Peterson-style propaganda. (The people didn’t buy it.) And now his crew is spending $20 million on an ad campaign to convince people the world will end if we don’t cut Social Security.Attacks on Social Security have been fended off in the past and it is possible that this one will be too. It is an incredibly popular and successful program. It does exactly what it was supposed to do. It provides a modest income to the retired and disabled, and their families, to ensure that people who have spent their lives working will not fall into poverty. It is also extremely efficient, with administrative costs that are less than 1/20th as large as the costs of private insurers.It also has very little fraud. We know this because earlier this year the Washington Post made a big point of hyping mistaken payments to federal employees than involved less than 0.01 percent of Social Security spending. If substantial fraud did exist, the Washington Post wouldn’t have to hype small change to try to discredit the program.The really incredible part of this story is that we should be talking about increasing Social Security benefits. Benefits are quite low by international standards. The portion of wage income replaced by Social Security is considerably lower than the retirement benefit provided by the systems in Australia, Canada, Germany and most other wealthy countries.As a result, many of the retirees who are dependent almost entirely on Social Security have incomes that are only slightly above the poverty line. A modest increase in benefits could make a big difference in these people’s standard of living.In addition, the near retirees, the people directly in the gun sights of the Wall Street TARPers, have just seen most of their wealth destroyed by the collapse of the housing bubble. The Wall Streeters now want to kick them yet again, by taking away Social Security benefits that they have already paid for.If Congress and the media worked for the public, we would be debating Wall Street speculation taxes right now. Insofar as we need to do something about the deficit in the longer term, taxing Wall Street speculation is a far more economic desirable route than taking away the Social Security benefits that ordinary workers have already paid for. We could easily raise more than $1.5 trillion over the next decade with a broadly based speculation tax than would have almost no impact on anyone except the Wall Street crew.Even the IMF is now pushing higher taxes on the Wall Street types, recognizing the enormous waste and rents in the financial sector. But the media and Congress do not respond to economic reality, they respond to money. And Peter Peterson and the Wall Street crew are not paying for an honest discussion of the country’s fiscal and economic problems. They are financing a rigged debate that is intended to result to even more money flowing to Wall Street and less to those who work for a living.
Voting for Change: But What Kind?
We can?t help but think of the old saying that goes ?be careful what you wish for?you may just get it.?A frustrated American electorate went to the polls and, as historically happens in midterm elections, voted out the party in power in the US House and even shifted the balance in the Senate. So, we?ve spent the morning looking at what this shift potentially means for America?s seniors. Specifically, what do these newly elected members say about Social Security and Medicare? The answer is, to put it mildly, discouraging:
?Social security is a bad investment?you could probably do no worse sticking your money under your mattress?let young working people opt out, the sooner the better, let ?em opt out and get a better investment.? Rand Paul, KY Senator-elect?I have been arguing for many years in favor of Social Security personal retirement accounts.? Pat Toomey, PA Senator-elect. In Toomey’s book, the first subhead under the “Transforming Social Security” chapter is “Personal Accounts Lead to Personal Prosperity.”“Social Security, whether we want it to or not, in its current form cannot survive and will not exist for us?”I do think the retirement age issue is going to have to be confronted?The other is giving people the option of taking some of their Social Security money, at least a potion thereof, and investing it in an alternative to the Social Security system itself.” Marco Rubio, FL Senator-elect
And that?s just in the Senate. In the House, long-time Social Security advocate and chairman of the Social Security subcommittee, Earl Pomeroy, was defeated by conservative Rick Berg. Pomeroy was the House sponsor of legislation to provide COLA relief to seniors and was expected to be considered by the House this month. That legislation is now unlikely to get any attention in this new climate on Capitol Hill. His replacement, Congressman-elect Berg, opposes raising the payroll tax, reducing benefits, increasing the retirement age, or privatizing Social Security but proposes allowing oil and gas drillingin National Parks as a way to raise revenues for Social Security.
?There’s a huge opportunity right now to take those mineral assets that are on the federal government’s balance sheet and shift them to Social Security.? Congressman-elect Rick Berg, R-N.D
It?s unlikely that drilling in National Parks will be seen as a serious option for funding Social Security; however, COLA relief legislation is definitely a serious issue for millions of seniors facing the second year in a row with no cost of living increase.And let?s not forget that the President?s fiscal commission has clearly targeted Social Security for benefit cuts, an increase in the retirement age (which is just another form of benefit cut), indexing or countless other mix-and-match reforms using Social Security funds to balance the federal books. The commission?s proposal, if there is one, will be presented to a lame duck Congress next month. That means many of the pro-Social Security advocates defeated at the polls yesterday–members who are literally packing up their offices–may have to cast one last vote on their way out of town. It?s a vote that could change Social Security forever.