They say that a White House budget is merely a messaging document – especially in an era of divided government. In that case, the Trump administration has sent a grim message to America’s seniors in its 2020 spending proposal. It goes something like this: older Americans living on fixed incomes – especially the elderly poor – must get by with less.
“President Trump’s 2020 budget proposal shortchanges seniors, plain and simple. In combination with 2017’s tax cuts for the wealthy and the administration’s failure to allow Medicare to negotiate with Big Pharma, the Trump budget shows that this administration is not plugged-in to the realities of being elderly in America.” – Max Richtman, National Committee president
Among other things, the White House budget cuts $25 billion from Social Security Disability Insurance, $845 billion from Medicare – and $1.5 trillion from Medicaid. This is from a President who promised “not to touch” older Americans’ earned benefits. The administration proposes to cut the Social Security Administration’s operating budget by about 1%, at a time when the agency is just beginning to recover from past spending cuts that hobbled customer service. In addition, the Trump budget flat-lines or eliminates federal grants for several programs that help lower-income seniors – including Meals on Wheels and home heating assistance:
Federal Block Grant Programs that Help Fund Older Americans Act Programs
Community Services Block Grant (CSBG) (HHS) Eliminated
Social Service Block Grant (SSBG) (HHS) Eliminated
Community Development Block Grant (CDBG) (HUD) Eliminated
Low Income Home Energy Assistance Program (HHS) Eliminated
The White House offers up these cold-hearted cuts while proposing to hike the Pentagon budget by 4% and demanding $8.6 billion for Trump’s border wall. Democratic leaders in Congress proclaimed the Trump budget dead on arrival, with good reason.
“President Trump’s budget once again lays out an irresponsible and cynical vision for our country, without any regard for its human cost. It lacks foresight and would leave our nation unable to meet our obligations to the American people.” – Rep. John Yarmuth, (D) House Budget Committee chairman
“Donald Trump promised the American people that he would be a different type of Republican, that he would be a champion of the working American and that he would not cut Social Security, Medicare and Medicaid. But his budget does the exact opposite of what he promised the American people.” – Sen. Bernie Sanders, (I-VT)
Fortunately, momentum is building on Capitol Hill to boost – rather than cut – earned benefits. Senator Sanders and Rep. John Larson have introduced bills to expand Social Security. Rep. Debbie Dingell and Rep. Lucille Roybal-Allard put forth legislation that would improve Medicare benefits, including dental, vision and hearing coverage. The Democratic majority in the House will work to protect Medicaid from cuts threatened by the White House and GOP, including the program’s expansion under the Affordable Care Act (ACA). (The Trump budget would repeal the ACA and eliminate Medicaid expansion.)
If the prevailing political winds are blowing in the direction of expanded benefits and away from cruel cuts, why worry about a White House budget that has no chance of enactment? The 2020 Trump spending proposal serves as a warning of what the administration would do if it were not for the firewall known as the Democratic-led House of Representatives. These draconian ideas – though rejected by voters in the 2018 mid-terms – remain in the conservative political bloodstream, requiring continued advocacy on the part of seniors and their champions in Congress.
The Washington Post editorial board is still drinking the conservative Kool-Aid when it comes to Social Security. In an editorial on Friday, the Post came out against Congressman John Larson’s Social Security 2100 Act, an eminently reasonable bill to boost retirees’ benefits and keep the system solvent for the next 75 years – co-sponsored by more than 200 House Democrats.
The Post argues that the nation essentially cannot afford to give seniors – two thirds of whom rely on Social Security for at least half of their income – a modest pay raise. The editorial board goes on to argue that providing retirees a modest financial boost would divert revenue from programs for children, who are more likely to be poor than seniors. This is a standard conservative ploy to pit the generations against each other, even though Social Security is a contract between the generations that has provided financial security for millions of Americans of all ages. In fact, 4 million children received Social Security benefits in 2018.
The Post editorial is so wrong-headed that we thought it worth breaking it down piece-by-piece.
“Social Security is not broken — and does not require a radical overhaul.”
We agree. But Congressman Larson’s bill does not represent a “radical overhaul.” It provides for a modest expansion of benefits and strengthens Social Security’s finances. A radical overhaul would entail slashing benefits, raising the retirement age to 70, and privatizing Social Security – all of which have been proposed by conservative ‘entitlement reformers.’
“The poverty rate for elderly Americans in 2017 was 9.2 percent.”
That’s true, but without Social Security, some 40% of seniors would slip into poverty. Beneficiaries living above the poverty line are not exactly flush with cash. The average retirement benefit is $1,461 per month – or slightly less than $18,000 a year. Millions of seniors are struggling to make ends meet, forced to choose between paying for groceries, prescription drugs, or utility bills. Retirees on fixed incomes cannot afford the kind of benefit cuts that the Post embraces.
“Consumers’ confidence in the adequacy of future retirement income is at a 20-year high.”
That confidence may be misplaced. Americans’ retirement savings are at historic lows. Pensions – a foundation of the 20th century middle class – are disappearing. Less than half of workers have an employer-provided retirement plan, and 401Ks are subject to the volatility of the stock market (see the 2008 financial crash). If anything, future retirees will have a harder time saving for old age than today’s seniors.
“Social Security spending is a major factor in the United States’ structural budget problem.”
Actually, it’s not. Social Security is – and always has been – self-funded by workers’ payroll contributions, with the surplus in a trust fund invested in treasury bonds. The program is a separate from general revenue and does not contribute a penny to the debt.
“Laudably, [Congressman Larson’s] plan tackles two important goals: long-term solvency and the lingering problem of old-age poverty. Less laudably, it does so while diverting scarce resources toward a vast majority of Social Security recipients who are not only not poor but, in many cases, perfectly comfortable.
Well, sorry, but that’s how social insurance works. Everyone pays in and everyone gets a benefit. However, the benefit structure is progressive, so that the poorest beneficiaries get the highest percentage benefit and the wealthier get less.
We are all for making the overall tax system more progressive than it already is, including by taxing high earners, as the Social Security 2100 Act would do. You can tap “the rich” only so many times, however.
Really? Asking the wealthy to pay into Social Security at the same rate as everyone else is not “tapping the rich.” It’s simply fair. If the wealthy contribute, they receive their earned benefits like everyone else. But high earners stop contributing to Social Security on all wages above $132,900 per year. In fact, millionaires stopped paying into Social Security for the entire year last Monday – President’s Day. President Trump, if he actually pays taxes and earns as much as he claims, would have finished contributing on January 1st. Congressman Larson’s bill would reimpose payroll taxes after $400,000 in income, gradually eliminating the wage cap altogether.
“[Instead of increasing Social Security revenue], the priority should be to use the money for children, who are almost twice as likely to be poor as senior citizens.”
With this argument, the Post employs a time-honored trick by conservatives to divide the generations. Can’t a just and equitable nation – the wealthiest on earth – provide a safety net for children and seniors? It’s telling that the Post editorial does not even mention the Trump/GOP tax cuts, which gave away more than $2 trillion in federal revenues to billionaires and big corporations. That’s $2 trillion in lost revenue, some of which could have been used to expand help for the poor and vulnerable, including children. (Incidentally, the Post’s parent company, Amazon, paid zero dollars in federal taxes last year.) If we have our priorities straight, we can afford to fund children’s programs and preserve seniors’ retirement security.
“The [Progressive Price Indexing] plan would retain Social Security’s current benefit formula for the 30 percent of workers with the lowest lifetime earnings, while reducing the growth rate of initial benefits for the top 70 percent.”
Here, the Post endorses a conservative proposal known as Progressive Price Indexing – hatched more than fifteen years ago by a member of George W. Bush’s Social Security advisory commission. (Note: President Bush tried – and failed – to privatize Social Security in 2005.) Even the libertarian CATO Institute found fault with Progressive Price Indexing:
“[The proposal would] slow the growth in future Social Security benefits for middle and upper-income retirees by changing the benefit formula from wage indexing to price indexing. Critics charge that such a change will weaken Social Security’s foundations while hitting the middle class hardest.” – CATO Institute, 5/23/05
Indeed. Why cut benefits for the top 70% of wage earners? That’s more than two-thirds of all beneficiaries! Many members of this 70% cannot afford a benefit cut. Some are already struggling to get by. As retirees, they are susceptible to the vagaries of old age – chronic illness, disability, and the loss of the ability to live independently. If their benefits are cut, they may not be able to afford prescription drugs, groceries, transportation and elder care – including assisted living and home- and-community-based care.
What’s more, these 70% worked hard and paid into Social Security for most of their lives. The scheme the Post embraces would break the link between lifetime earnings and benefits. That bond defines Social Security as a social insurance program that is fair across the generations.
Fortunately, the public at large does not support the Post’s conclusions. Poll after poll shows that voters across party lines want to see Social Security expanded, not cut. Large majorities support lifting the payroll wage cap so that the wealthy pay their fair share. Congressman Larson’s bill does both, while maintaining Social Security’ financial stability through the end of the century. Unlike the Washington Post, most Americans have refused to drink the Kool-Aid. Advocates for boosting Social Security are on the move, and the public is solidly behind them.
According to a federal report issued yesterday by the Centers for Medicare and Medicaid Services (CMS), government is expected to cover 47% of the country’s health care costs by 2027. The current figure is 45 percent, according to the Associated Press.
“Rising prices for health care goods and services are expected to account for nearly half the spending growth, said the report, with the rest driven by a mix of factors, including an aging population… ‘The baby boom generation is expected to shift from private health insurance coverage to Medicare coverage during the projection period,’ said an author of the report.” – Associated Press, 2/20/19
However, as today’s Washington Post points out, the rise in government spending on health care should not come as a surprise given the continued aging of America:
“The number of people covered through Medicare — and spending on the federal insurance program for older and disabled Americans — is expected to grow more rapidly than private insurance… eating up a larger chunk of health spending.” – Washington Post, 2/21/19
In fact, argues one health care analyst, only an alien would truly be shocked at the latest projections from CMS:
“To the extent that a Martian landed and saw how much of the American health care system is funded by the government, it’s been about 50 percent for some time,” – Paul Hughes-Cromwick, economist at the nonprofit research organization, Altarum
Others are flat-out skeptical about the CMS projections, including President Obama’s former budget chief, Peter Orszag:
“They have predicted an imminent acceleration of health-care costs repeatedly over the last few years,” he said. “It hasn’t happened, and there’s no reason to expect it’s about to.” – Washington Post, 2/21/19
Even if these projections are on the money, they can be somewhat misleading out of context. While overall government spending on health care may rise in the future due mainly to the nation’s changing demographics, federally-run programs like Medicare remain the most cost-effective means of providing care.
A new report from the Urban Institute found that Medicare spending per beneficiary between 2006-2017 was “equal or less” to the increase in per capita GDP. On the other hand, private insurers spent two percentage points more per capita during the same period. Translation: Medicare spends more efficiently on health care than private insurers do. Even if overall government health care spending rises because of an increasingly aging population, Medicare costs less per person.
In this graph from the Urban Institute report, the brown bars represent spending per enrollee:
“Overall, Medicare and Medicaid are doing a good job of keeping per capita costs under control, and the continuation of recent policies is critical to sustain this control… The authors conclude that [both programs] have successfully moderated growth in spending per enrollee… and do not require major restructuring to lower national health spending.” – Urban Institute Report
The report’s conclusion refutes conservative proposals to cut Medicare, especially when there are more equitable, common sense, and non-Draconian measures available to lower costs. The new Democratic majority in Congress is already examining potential solutions – including allowing Medicare to negotiate drug prices directly with Big Pharma. Meanwhile, Medicare ‘reformers’ should take note of this other nugget in the Urban Institute report: “The larger cost containment problems the nation faces are in the private insurance market.”
It truly has been an encouraging couple of weeks for Social Security. On January 30th, Congressman John Larson (D-CT) re-introduced his sweeping Social Security 2100 Act. Yesterday, Senator Bernie Sanders (I-VT) and Rep. Peter DeFazio (D-OR) officially revived their Social Security Expansion Act. Both bills (which went nowhere in the formerly GOP-dominated Congress) would boost Social Security benefits and keep the system solvent for the foreseeable future.
At a time when millions of seniors are struggling to stay financially afloat – with pensions disappearing and retirement savings dwindling – these bills are welcome news for current and future retirees.
“We are here today to stand with seniors and to say that at a time when so many are hurting we are going to do everything we can to protect and expand Social Security.” – Sen. Bernie Sanders, 2/13/19
“I think the time has come, especially now that people don’t have pensions anymore and their 401K’s are subject to the vicissitudes of the market.” – Rep. Peter DeFazio, 2/13/19
The Social Security Expansion Act, which is endorsed by the National Committee to Preserve Social Security and Medicare, would:
- Increase benefits by about $1,300 a year for seniors now making less than $16,000 annually;
- Boost cost-of-living adjustments (COLAs) by adopting the Consumer Price Index for the Elderly (CPI-E);
- Restore student benefits that help educate children of deceased or disabled parents.
These benefit increases would be paid for by eliminating the payroll tax cap after $250,000 in annual income so that wealthier Americans pay their fair share. Currently, taxpayers stop contributing to Social Security after $132,900 in income. In fact, next Monday marks the date when millionaires stop paying into Social Security for the entire year. The Sanders-DeFazio bill (and Larson’s, too) would fix that once and for all.
Altogether, these provisions would provide much-needed financial relief to seniors, disabled Americans, and their families who are having difficulty making ends meet. The average Social Security retirement benefit is a modest $1,461 per month – or just under $18,000 annually. Two-thirds of beneficiaries depend on Social Security for most of their income. One third of recipients rely on their monthly benefits for nearly all of their income.
“Minus Social Security, approximately 40 percent of the recipients would live below the official poverty line. Older Americas, as a rule, aren’t frivolous spenders, buying computers, large-screen televisions, and the like. They spend their money on food, housing, and medical services.” – Helaine Olen, Washington Post columnist
It’s reasonable to assume that Social Security champions like Sanders, DeFazio, Larson, and their hundreds of co-sponsors believe that the political climate is shifting in seniors’ favor. In the wake of the Trump/GOP tax cuts and the $2 trillion they are adding to the debt, leading Republicans demanded that Social Security (and Medicare) be cut. But after winning back the House in 2018, Democrats know that the public overwhelmingly supports expanding – not cutting – earned benefits by demanding the wealthy pay more.
It’s only appropriate that higher income earners make a greater contribution to Social Security, as income inequality has contributed to the program’s financial challenges. A cogent analysis by the Center for American Progress cited three factors that have weakened Social Security during the past few decades, all related to income inequality:
1) Weak wage growth for everyday workers has reduced payroll tax revenues;
2) An increasing share of wealthy Americans’ earnings has escaped payroll taxes because of the widening income gap;
3) Because Social Security benefits are structured progressively, the increasing number of low-wage workers have put a strain on the system.
– Rachel West, Center for American Progress
The good news is that Sanders’ and Larson’s bills would correct these inequities and put Social Security on a sound financial footing for generations to come.
“So many Americans are depending on this rock, this contract between generations, this Social Security foundation, to have a decent retirement.” – Sen. Jeff Merkley (D-OR), co-sponsor of the Social Security Expansion Act
As President Franklin Roosevelt made clear when he signed Social Security into law, the program is a “cornerstone in a structure… which is by no means complete.” He knew that Social Security would have to be expanded over time to meet the nation’s growing needs. Current and future beneficiaries can be gratified that the legislation proposed during the past two weeks can shore up the foundation on which American’s retirement security is built.
Seniors struggling with soaring health care and prescription drug costs deserve re-assurance that the White House is actually on their side. The National Committee to Preserve Social Security and Medicare urges that President Trump use tonight’s State of the Union speech to do just that. In a letter to the White House on behalf of the National Committee’s millions of members and supporters, CEO Max Richtman implored President Trump to reaffirm his campaign promises to defend Medicare — and to bring down prescription drug prices — during his annual address to Congress.
“The President didn’t even mention Medicare during his first two State of the Union addresses, despite his previous pledges to protect Medicare from cuts and to take on Big Pharma to lower prescription drug prices. Meanwhile, his administration has proposed to slash Medicare by $500 billion over ten years while failing to give the program the power to negotiate prescription drug prices with pharmaceutical companies, which would save beneficiaries and the federal government billions of dollars.” – Max Richtman, President and CEO of the National Committee to Preserve social Security and Medicare
During the first two years of the Trump presidency, seniors have endured constant threats by Republicans in Congress to cut and privatize Medicare – and continued to watch prescription drug prices skyrocket. According to a Congressional report released in 2018, prices for the most commonly prescribed brand-name drugs for seniors have risen nearly ten times more than the annual inflation rate over the past five years.
Seniors living on fixed incomes cannot afford to continue down this path. Half of all Medicare beneficiaries in 2016 had annual incomes below $26,200. Yet Medicare households spent over two times more than the average American household on out-of-pocket health care costs.
“Older Americans should not have to choose between paying for health care, food or utilities. This argues for expanding Medicare to fill in coverage gaps, not for cutting benefits. Surely the President will not fail for a third time to defend seniors’ health security when he addresses the nation in the State of the Union.” – Max Richtman