• Advertisement

In NH, Kasich said he wants to Cut and Privatize Social Security

CONCORD, N.H. – Today, John Kasich continues his campaign swing through the Granite State, but last night in Peterborough, he said some things that Granite Staters won’t like. When asked about Social Security, Kasich said that “Baby Boomers are going to give some on it.” But that’s not all. He also said that younger people should be given “the opportunity to earn money through the strength of our American economy.”

“Yet again, Kasich is falling in line with Republicans who want to take away benefits from hard-working Granite Staters that are close to retirement. John Kasich is not only telling Americans he’ll cut their Social Security benefits, but is also talking about putting those benefits on Wall Street… from a guy who made millions on Wall Street,” said New Hampshire Democratic Party Chair Ray Buckley. “That’s pretty rich.”

GOP in Congress: Keeping — or BREAKING? — Promises

Crossed fingers ICan someone please explain to me… how can the GOP be simultaneously

  • planning to cut Social Security and Medicare benefits
    and
  • holding sacrosanct the government’s payments to bondholders?

What, exactly, is the big difference?  For Social Security and Medicare, people have paid money into the system, with the expectation that they would receive an agreed-upon return (benefits) at a later date.  Just the same way that bondholders have loaned money, with the expectation that they would receive an agreed-upon return (principal plus interest) at a later date.

Would bondholders be happy if House Budget Committee Chairman Paul Ryan suggested trimming bond repayments between 15% and 45%?  So why should people who have paid into Social Security accept those kinds of cuts?

Let’s see… if Ryan reduced federal bond payments by 15%, wouldn’t that free up about $54 billion a year?  Wait… wouldn’t that more than cover the $40 billion of cuts to the Supplemental Nutritional Assistance Program that Republicans want to make?

Pediatricians at the Boston Medical Center have studied the interaction between hunger and health, and yesterday announced that SNAP was “one of America’s most cost-effective and successful public health programs in the country” and by improving children’s health, SNAP actually “saves society money.”  Except that Republicans want to cut children’s health insurance, too.  At this point, you halfway expect House leadership to start quoting Jonathan Swift.  But I digress.

Or if Ryan reduced bond payments by 45%, wouldn’t that free up about $162 billion a year?  Which would more than cover the revenue cost of not returning to Clinton-era tax rates.

But the GOP isn’t suggesting that bondholders should absorb those sorts of cuts…oh, no, that would be unthinkable.  So why would they think that Social Security recipients are fair game?

You pay your money in, you expect to get it back as promised.

Here’s what I think will happen, during the next few weeks of government shutdown/debt-limit crisis.  I think the Republicans will stop using Obamacare as their line in the sand/can’t compromise issue.  I think they will switch to insisting on some sort of “Entitlement Reform” in exchange for not driving our economy totally off the cliff.  And “Entitlement Reform” is Tea Party lingo for making cuts to Social Security, Medicare and Medicaid.

At one level, I guess it’s fair to lump Social Security and Medicare into the category of “entitlements” – you pay your money in, you’re entitled to get it back as promised.

Just like the US Treasury’s bondholders are entitled to get their money back as promised.

I’m wondering how the GOP is going to explain the difference between those promises, over the next few weeks.  Can’t imagine what rhetoric they will come up with, to justify holding bondholders harmless while trying to cut Social Security benefits.

 

The Tea Party’s ‘Penny Plan’: is it really to cut $1 trillion from seniors?

Teabaggers Descend on WashingtonRemember the health care Town Halls a few summers ago?  Remember all the Tea Party followers carrying “Keep Government Out of Medicare” picket signs?  Welcome to Round Two of the Craziness.

Tea Party leaders in the Senate are rolling out their “Penny Plan” to reduce the federal budget deficit.

The lawmakers are pitching the plan in the simplest terms — cutting a penny from every dollar the government spends so that spending will soon equal revenue.  “Everybody should be able to live with one percent less in order to help bring this country back from the brink of catastrophic failure,” bill sponsor and Wyoming Republican Sen. Mike Enzi said in submitting the legislation just before August recess.

And gosh, doesn’t that just sound totally reasonable?  Families all across America have been “making do” with a little less (sometimes a LOT less) lately.  So why can’t the federal government do the same?

Well, for starters, because the federal government already IS.  Remember the Sequester? That wasn’t just a one-time thing – it’s a 10-year schedule of increasingly tough budget cuts.  So, as the government plans for the next decade:

Already built into Congressional Budget Office assumptions is essentially a freeze in all government programs other than Social Security, Medicare, Medicaid, and the other entitlements. That means that the 15 major executive departments and all of the independent agencies will be spending about 20 percent less after adjusting for inflation and population growth than they are spending now. As a result, we are already facing significant cutbacks in government services, ranging from food safety to law enforcement, air traffic control and national defense.

And now Tea Party legislators want to add their “Penny Plan” on top of the Sequester cuts.  That’s another trillion out of the federal budget.  Where do you suppose it’s going to come from?

If the FBI, the federal judiciary, the Federal Aviation Administration, NASA, the veterans medical program, the State Department, Customs and Border Patrol, the National Parks, cancer research, aid to local schools, and every other activity of every other department and independent agency of the government outside of defense was eliminated

… that would only account for about 60% of the cuts that would be required by the Penny Plan.

Don’t know about you, but I’m not going to hold my breath waiting for Tea Party legislators to cut defense spending.  [See 70 years of US defense spending, in one chart, here.]  Which leaves – yes, that’s right – “entitlements”.

Shiny Penny 2001 D Macro April 30, 20101The folks pitching the plan just talk about pennies.  But the bill itself singles out three programs that help senior citizens:  Social Security, Medicare and Medicaid.  (Remember that more than two-thirds of all nursing home/long-term care costs are paid by Medicaid, not Medicare or private insurance.)

I wonder what a trillion dollar cut to senior citizens would look like.  (Would it maybe look like all those “death panels” everyone was so worried about, a few years back?)

Here’s another reality check: the Penny Plan already has strong support among Republican legislators.  According to one count, 16 Senators and 65 Representatives support the Plan.  The list of Senators includes at least a couple of guys who want to run for President…

… and Senate Republicans have – at least so far – blocked efforts to appoint conference committee members to negotiate with the House regarding the FY14 budget.   The FY13 budget expires in five weeks.

And the Senate still has the filibuster.

It’s going to be an interesting next few months.  I hope that, this time around, the Tea Party’s followers are able to see beyond the “just a penny” rhetoric, to all the very real damage that this Plan would cause.

———

My phrase of the day is “ginning up”.  It means

  1. To create or arouse strong feelings in (someone); move or excite.
  2. To fabricate, invent or concoct (something), typically with deceitful intent.
  3. To quickly create something where time, not careful attention to detail, is of the essence.

Synonyms include: stir up, goad, whip up, fan the flames of, provoke, incite, and ignite.

Did you attend any of those health care Town Halls?  If so, you probably already know what this term means.

 

 

Political Extremism in Congress is Stifling Efforts to Improve Social Security and Medicare

2013-08-15_shaheen_social_securityYesterday, about 60 people gathered in the Dover Public Library to celebrate the 78th anniversary of Social Security.

Special guests included NH Senator Jeanne Shaheen and Max Richtman, President of the National Committee to Preserve Social Security and Medicare.

Both speakers emphasized the need to take Social Security out of the federal budget debate.  “Social Security has a $2.7 trillion surplus,” Richtman observed.  “It is not contributing to the federal deficit.”

Shaheen was frank about the situation in Washington right now, describing the political polarization and its effects.  She explained how a minority of extremists has kept the Senate from appointing members to a conference committee on the federal budget – essentially blocking Congress from passing a bill that would fund the federal government during the fiscal year that starts in six weeks.  She said Florida Sen. Marco Rubio, who is expected to run for President in 2016, had single-handedly blocked the appointment of conference committee members on the last day before the Senate left for its August recess.

2013-08-15_shaheen_social_security3Shaheen said she understands that many seniors have a hard time making ends meet on their Social Security benefits, and said she supports raising benefits “in principle”.  “We need to have that conversation in Washington,” she said.  “But that’s not going to happen unless the partisan environment changes.”

Both speakers supported the idea of a special commission to look at the long-term future of the Social Security program, similar to the “Bipartisan Commission” that was appointed by President Ronald Reagan. “Back in the 1980s, there were only four months of solvency left,” Richtman recalled.  “Now, even without any changes, Social Security will remain solvent at least through 2033 – possibly longer, if the economy improves.”

Both speakers also endorsed the idea of raising the cap on earnings that are subject to the Social Security tax.  Right now, only the first $113,700 of an individual’s earnings are subject to Social Security taxes.

Richtman described how increased economic inequality has affected program revenues.  Historically, between 91% and 92% of all wages paid in the United States had been subject to the Social Security tax; but now, only about 81% of wages are covered by the tax.  As the middle class has lost ground, Social Security has lost revenues.

Both speakers also discussed a bill sponsored by Sen. Shaheen, which would allow the Medicare program to negotiate with pharmaceutical companies regarding drug prices.

When Medicare Part D was enacted in 2003, Congress specifically prohibited Medicare from negotiating with drug manufacturers for group discounts.  “I wonder who was in the room when that piece of the bill was drafted?” Richtman asked, and the audience laughed.

Economists have estimated that Medicare could save between $50 billion and $100 billion a year in prescription drug costs by negotiating prices.  The Veterans Administration, which does negotiate drug costs, pays an average of 58% less than Medicare providers for the most-commonly prescribed medications.

In the current partisan environment, GovTrack.us gives the bill a zero percent chance of passage.

Yesterday’s “birthday celebration” was sponsored by the New Hampshire Alliance for Retired Americans, the Granite State Organizing Project, New Hampshire Citizens Alliance and the National Committee to Preserve Social Security and Medicare.

Social Security: 78 years (and counting)

Seventy-eight years ago today, President Franklin Roosevelt signed the Social Security Act with this statement:

“Today a hope of many years’ standing is in large part fulfilled. The civilization of the past hundred years, with its startling industrial changes, has tended more and more to make life insecure. Young people have come to wonder what would be their lot when they came to old age. The man with a job has wondered how long the job would last.”

That was almost eight decades ago. Now, almost 90% of Americans age 65 or older receive Social Security. Almost half of those people would be living in poverty, if they did not receive Social Security benefits.

“This law, too, represents a cornerstone in a structure which is being built but is by no means complete. It is a structure intended to lessen the force of possible future depressions. It will act as a protection to future Administrations against the necessity of going deeply into debt to furnish relief to the needy. The law will flatten out the peaks and valleys of deflation and of inflation. It is, in short, a law that will take care of human needs and at the same time provide for the United States an economic structure of vastly greater soundness.”

Today, the Social Security Trust Fund has $2.7 trillion in assets. The “Old Age and Survivors Insurance” program is expected to have an annual surplus at least through 2020 (and only after 2020 would it need to dip into the Trust Fund to pay benefits).

The irony here is that President Roosevelt expected Social Security to “lessen the force of possible future depressions” and prevent the federal government from having to go “deeply into debt to furnish relief to the needy” during economic crises.

But instead, the program was used to help the federal government absorb the cost of the Bush tax cuts.

Today, we are at the decision-making point that Alan Greenspan predicted 10 years ago: either the Bush tax cuts need to (finally) end, or the government is going to have to “cover the $1 trillion price [of the tax cuts] by trimming future benefits in Social Security and other entitlement programs.”

Today, the Social Security program is under attack like never before. (Watch for my next post, about the GOP’s revived “Penny Plan”.)

And President Roosevelt’s assumption that the federal government would go “deeply into debt to furnish relief to the needy” during “possible future depressions”?

Looks to me like that’s just history.

————

Really worth reading, if you have a few more minutes: Tax attorney Paula Singer’s column “Social Security is a model, not a failure, for Washington budgetmaking.”

Starting in Detroit… next stop: Social Security

Frederick Bancroft, prince of magicians: the wizard's enchantments, performing arts poster, ca. 1895Buried on the PBS website, there is a blog post that ought to strike fear into the heart of every working-age American.

“Detroit Today, Washington Tomorrow” takes dead aim at the Social Security system, using the same “inflate the numbers” messaging strategy that Kevyn Orr and Gov. Rick Snyder have been using lately in Detroit.

What’s the strategy?

  1. Just pick the biggest number that you can find, and use it to scare the bejeezus out of people.
  2. Once you’ve got folks focused on that huge number, it’s easy to convince them that “oh, we’re so sorry! But Detroit can’t afford to pay the retirement benefits we’ve been promising all these decades.”
  3. Nevermind that all those Detroit workers have been paying into the system, all these decades, and planning their futures based on the promises that were made.
  4. Just keep everyone’s eyes focused on that really huge number – and they won’t even think about questioning your claim that “oh, so sorry! We can’t afford it!”

It’s the rhetorical equivalent of old-fashioned magic tricks.  And just like those old-fashioned magic tricks, it will work so long as people don’t pay attention to what’s really going on.

In Detroit, they’re hiding a $326 million accumulated deficit under the rhetorical handkerchief of $18 billion in total outstanding debt.  They’re basically saying: “don’t look at that smaller deficit number (caused by cutbacks in state revenue-sharing) – look at this huge number over here!  Look at how much Detroit is supposed to pay bondholders back, over the next 30 years!  Look here, Detroit can’t afford to pay back $18 billion right now!  (Nevermind that it’s not supposed to be paid back, for decades yet.)  Look here, if we can’t afford to pay back $18 billion, then we should declare bankruptcy and get rid of the debt (that we owe to our public employees).  We just can’t afford to keep our promises!”

Can’t you just hear the calliope music?   (If not, here’s a YouTube to help get you into a properly gullible mood.)

Now, read that PBS post by Boston University professor (and presidential candidate) Larry Kotlikoff.

  1. All of a sudden, our federal debt isn’t just $12 trillion (the number that outrages Republicans, as long as nobody suggests increasing taxes to pay it back). According to Professor Kotlikoff, “the true measure of our debt – the one suggested by economic theory – is the fiscal gap, which totals $222 trillion.”
  2. Now, keep looking at this number over here – it’s really, really huge.  According to Professor Kotlikoff, “Given the $222 trillion fiscal gap … current policy is clearly not sustainable. Making it sustainable requires either an immediate and permanent 64 percent increase in all federal taxes or an immediate and permanent 38 percent cut in all spending or some combination of tax increases and spending cuts.”
  3. Nevermind all those decades that workers have been paying into the Social Security system. Again, here’s Professor Kotlikoff: “If anything, the Social Security benefits, and not the Treasury bond payments, should be recorded as official debt.”
  4. Keep folks paying attention to that really big number.  Professor Kotlikoff borrows the authoritative voice of former Secretary of State George Shultz to finish his performance: “Our country doesn’t have a lot of elder statesmen to guide us. But this tough ex-marine knows our country is broke, knows our children are threatened, and knows we’ve been hiding the truth.”

Yep, that’s where things are headed.  Detroit today, Washington tomorrow.

They’ve been trying to “reform” Social Security since Barry Goldwater ran for President.

And they’re still trying.

And they’re about to have the biggest Congress-created crisis yet.

  • Read about January’s Fiscal Cliff crisis here and here.
  • Read about the March Sequestration crisis here and here.

There is another “perfect storm” of crises coming up in the next two months: the current federal budget will expire at about the same time that the Treasury runs out of debt limit “headroom” (again, thank our federal and postal service employees, whose retirement contributions provide this reprieve!).

What sorts of magic tricks do you think they’re going to try, then?

Detroit today, Washington tomorrow.

My recommendation?  Remember Professor Kotlikoff’s patter, and keep your eyes on the magicians’ hands.

*********

Read the LTE in response to this post.

Barry Goldwater explains: why Chained-CPI is such a big, hairy deal

Bactrian Camel by Just_Chaos via flikrBack in 1958, Barry Goldwater explained his opposition to a bill this way:   “If the camel once gets his nose in the tent, his body will soon follow.”

In other words: a tremendous – unwanted – change can be started by a little tiny encroachment… and then the rest of the change will come right along behind it.

Those of us in the union movement have seen this strategy in action, too many times to count.

Recognize this scenario?  Workers used to have fully-paid health insurance.  Then management insisted on a small “contribution” toward the cost.  Then premiums were “shared”.  Now, in too many workplaces, there is no health insurance at all.

How about this one?  Workers used to have employer-sponsored pension plans.  Then employers insisted on moving to 401(k) plans.  Now, very few jobs (other than at the CEO level) offer any type of retirement plan at all.

Or this one?  Union workers used to have job security.  Then employers insisted on contract amendments so they could hire part-timers or contractors “in emergencies”.  Now, some worksites are staffed entirely by part-timers or contract employees, and job security is very, very hard to find.

As Barry Goldwater described things: It’s the camel’s nose, creeping in… and the rest of the camel soon follows.

And that’s why union leaders are reacting so strongly to proposals that would change Social Security benefits by tying Cost of Living Adjustments (COLAs) to “chained CPI” (rather than the usual Consumer Price Index).

Union members have had enough experience with this strategy; by now, we recognize a camel’s nose when we see one.

The idea of “privatizing” Social Security has been rattling around the Republican Party since Barry Goldwater ran for President.

But it hasn’t happened yet – despite the recent best efforts of George W. Bush and Paul Ryan.

So during debt limit negotiations in the summer of 2011, the Republicans took a different tack.  Rather than trying to get the camel in through the tent door… they just asked for a little, tiny change to the way that Social Security COLAs are calculated.  Just one little, tiny change.

That debt limit crisis was resolved – with the camel’s nose still outside the tent – by the deal we all know as “sequestration”.  And since that time, the Fiscal Cliff has passed and a possible government shutdown has been avoided.  But that one little tiny change to Social Security has remained a Republican priority.

The White House held a press briefing the day before President Obama’s budget was filed.  One important point from that briefing was never covered by the mainstream press:

[S]enior administration officials characterized the official adoption of Chained CPI as both a recognition that rounding out a grand bargain will require making concessions to the GOP, and as a final gesture of good faith to Republicans in Congress… But the officials also stressed that Chained CPI will never become law unless Republicans respond (in unlikely fashion) by agreeing to limit tax expenditures benefiting high-income earners.  If they don’t, it will mark the end of Obama’s two-year quest to secure trillions of dollars in deficit reduction on a bipartisan basis.

In other words, don’t believe new National Republican Congressional Committee Chairman Greg Walden when he talks about chained CPI as “a shocking attack on seniors.”

How can it possibly be “shocking”, Rep. Walden?

Republicans have been trying to “reform” Social Security since Barry Goldwater ran for President, almost half a century ago.

And Barry Goldwater knew full well how to get a camel into the tent.

 

  • Subscribe to the NH Labor News via Email

    Enter your email address to subscribe to this blog and receive notifications of new posts by email.

    Join 12,542 other subscribers

  • Advertisement

  • Advertisement