Sunday, February 22, 2015

The Good Fight for Social Security

People such as Senators Elizabeth Warren (as evidenced here and here) and Bernie Sanders (as evidenced here and here) are also very strong advocates for Social Security, as well as progressives who caucus with the Democrats. President Dwight D. Eisenhower was the last Republican to advocate for (and expand) Social Security. Currently, no Republican politician supports Social Security or Medicare as a government program (at least, not in its current form.)

Last week members of the Alliance for Retired Americans (the Alliance) met with over 120 members of Congress and staffers in their home districts to take a stand on Social Security, Medicare and the Trans-Pacific Partnership. Organizations such as the Alliance and Social Security Works are by far, two of the best advocates for older Americans, those on disability, retirees and seniors (as opposed to those who mostly front for insurance companies).

The White House recently kicked off the 2015 White House Conference on Aging in Tampa, Florida with a panel on retirement security. Three Alliance members attended the conference sessions, while others gathered offsite in Tampa and South Carolina to discuss the importance of strengthening Social Security, Medicare and pensions — the three essential components of a secure retirement.

As Richard Fiesta (Executive Director of the Alliance for Retired Americans) notes in a recent article at the Huffington Post:

"In 1958, Congress established the White House Conference on Aging, calling on the executive branch to bring together the public and experts to discuss the state of seniors in this country. The gathering now takes place every ten years, and this week the 2015 White House Conference on Aging kicks off a set of regional fact finding events in Tampa. The timing is auspicious because just one month into the new Congress 20 bills have already been introduced in the House and Senate that would threaten the stability and viability of Social Security and Medicare and reduce retirement security for current and future retirees.

Social Security, which is the primary source of retirement income for most seniors is also under attack. It is worth remembering that [according to the SSA] nearly 2 out of 3 seniors depend on Social Security for most of their income, and in fact Social Security provides 90% or more of income for 1 in 3 seniors. While the average benefit amounts are modest — averaging $15,640 a year, it is enough to keep 22.2 million Americans out of poverty. Legislation is expected soon to create a Social Security Commission, which would come up with recommendations to extract cuts to the program. Instead, we should expand benefits.

The Alliance plans to present a petition in support of preserving, strengthening and expanding Social Security, Medicare and Medicaid — as well as protecting defined benefit pensions at the final White House Conference on Aging event in July of this year. (Please show your support by signing their petition, where you can also leave a comment).

Here are some fact sheets (PDF) from the Alliance for Retired Americans on the issues they'll discuss:

  • Fact Sheet: Medicare Drug Discounts - As Congress debates reducing the deficit and demanding health savings, one area where Congress can find significant savings is drug costs.
  • Medicare Drug Discounts Chart - Proposed Changes to Medicare and Preferred Alternatives
  • Fact Sheet: Doctor Fix Legislation - The Alliance for Retired Americans believes the “Doc Fix” should be paid for by requiring pharmaceutical companies to pay rebates for low-income beneficiaries under the Medicare program.
  • Fact Sheet: MedPAC Redesign - A proposal put forward by MedPAC would shift more costs on to beneficiaries by instituting a combined deductible for Medicare Part A and B of $550 and create a limit of up to $5500 for out-of-pocket costs (the “cost-sharing limit”).
  • Fact Sheet: SSDI - Beginning in 2016, the Social Security Disability Insurance program will begin experiencing a shortfall. A modest and temporary reallocation of funds from OASI to the DI trust fund will allow full payment of scheduled benefits.
  • Fact Sheet: Trans Pacific Partnership (TPP) - The Korea-US agreement and the leaked US proposal for the Trans Pacific Partnership (TPP) Agreement establish rules for pricing and listing procedures used for reimbursing prescription drug and medical device manufacturers under health coverage programs operated by central governments. Read about the risks this puts on Medicaid and Medicare.
  • Toolkit Letter for State President Recess Visits - Learn what is at stake for Social Security and Medicare. This year is the 50th Anniversary of the Medicare program, so it is an opportunity to remind members of Congress of the importance of the program.
  • Lobby Week 2015 Talking Points - The most important questions/talking points to ask your Members of Congress when you urge them to support protecting our Social Security and Medicare benefits.

In an article at Talking Points Memo titled The 80-Year Conservative War on Social Security Is Back for More, they note that conservatives have virulently opposed Social Security since its inception. President Reagan had signed a bill that slowly increased the retirement age, while also boosting payroll tax rates, and opening the door for failed privatization efforts by President George W. Bush. (This recent article at CBS suggests letting people have access to their Social Security benefits early — at age 62 — so they can invest in bonds or the stock market.)

Now, with a Republican majority in Congress, Social Security is facing further attacks. A week after the House voted on a rule that could force a manufactured crisis in the disability program in late 2016, Rep. Tom Price (R-GA) told a conservative audience at the Heritage Foundation that he wanted his committee to tackle Social Security. As new House Budget Committee chair, Price mentioned means-testing and increasing the eligibility age as possibilities. He also suggested that privatizing Social Security was another possibility. (Price also pressed the case for a full replacement bill for Obamacare.)

Plain and simple — ever since Social Security was first passed (with the exception of Eisenhower), the Republicans have wanted to destroy it (as with Medicare). They hate any government program that doesn't also (or mostly, or only) benefit the very rich. (More here...)

But a growing chorus of prominent voices in Congress and elsewhere are calling for the expansion of our Social Security system (not cuts) — people who know that Social Security will not “go broke” and does not add a penny to the national debt (as even Ronald Reagan will tell you). Nancy Altman and Eric Kingson have written a book called Social Security Works! — which explains why NOW is the time to expand Social Security. The eBook offers a powerful antidote to the three-decades-long, billionaire-funded campaigns to make us believe that this vital institution is destined to collapse. It isn’t.

From a new report from the Social Security Administration -- Social Security Trust Fund Cash Flows and Reserves: "Although some observers view the trust fund reserves and interest income as accounting fictions, a careful tracing of the cash flows reveals that the reserves and their interest earnings are, for all practical purposes, as real as those of any bank account ... In the 2014 edition of the Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds (henceforth, the Trustees Report), reserves are projected to peak around 2020 and to be depleted around 2033 if no changes are made to the tax or benefit provisions before then".

But the more immediate concern is for the disability trust fund, which the SSA says will have to cut recipients' benefits 19% by the end of 2016 — because the GOP made a rule change to prevent the transferring funds (like it has done 11 times in the past) from the old-age fund to the disability fund. The GOP claims there's too much fraud in disability, when two different reports show only 0.04% fraud in the program — far less than any other government program — and probably far less than employee theft in the private sector — and much less fraud, waste and abuse found in the defense industry.

Senator Bernie Sanders (and others) have proposed lifting the $118,500 "income cap" for Social Security taxes, but most other members of Congress (making $174,000 a year) don't want to raise their own taxes. Not to mention, half of Congress are already millionaires — and they have their political campaigns funded by billionaires — and that's why we can't tax billionaires on their capital gains for Social Security. (More here...)

From the L.A. Times:

The concentration of wage income at the top of the income scale also has contributed to the projected erosion of the fiscal balance of Social Security. That long-understood fact is newly documented by Rebecca Vallas and her colleagues at the Center for American Progress. "Recent trends in workers’ wages have eroded the finances of our Social Security system," they write, "and put American families at risk."

Their analysis lends credibility to the best and fairest proposed fiscal change for Social Security: eliminate the cap on wage income subject to the payroll tax, which this year is set at $118,500. Wages over that level are assessed no payroll tax at all. Eliminating the tax cap will eliminate almost the entire actuarial shortfall projected for the program over the next 75 years, depending on how much of a benefit increase one wishes to give to the highest earners now paying the lowest share of their incomes in payroll tax ...

Scrapping the cap entirely would obviously have a more powerful effect. As Congress is dithering over how to close a more modest shortfall in the disability insurance reserve and threatening to cut Social Security benefits across the board, there's no reason why the option of raising the tax should be off the table.

The payroll tax cap was set in 1983 by President Ronald Reagan, which at the time captured 90 percent of wages. "Reagan essentially said, let's go for 90 percent, and we will let 10 percent go," says Vallas. But since 1983, that cap hasn't been adjusted for wage growth to keep up with the 90 percent goal. Now the tax cap only captures 83 percent of wages, instead of 90. The missing 7 percent is part of the Social Security shortfall.

"When you do the math, you’re just not capturing as much in taxes as before. Seven percentage points doesn’t seem like a lot — but it’s a whole lot," says Philip Moeller, author of "Get What’s Yours: The Secrets to Maxing Out Your Social Security", who notes that the gap adds up to billions quickly.

The Center for American Progress' study examines what would have happened if the taxable wage base had remained at 90 percent between 1983 and 2013, and found that there would be $1 trillion more in the fund, reducing its projected 75-year shortfall by 10 percent. (Freezing the taxable wage at 90 percent today alone would close one-quarter of the projected shortfall.) But at a recent Senate hearing on Social Security, Republican Senator Lindsey Graham made it well known that he wants Social Security funded for the next 75 years, but without raising taxes. (More here...)

It's very surprising that we haven't heard more on this subject from the major cable TV news stations. (Why might that be? How will Republican voters learn from Fox News?)

Below are excepts from the FORWARD of the book Social Security Works!, written by David Cay Johnston:

David Cay Johnston: Social Security

As an aside: The National Journal reported on the trends showing that America is growing older and more diverse, particularly in many important swing states. While these demographic shifts will surely have an impact on the 2016 election, the extent of that impact is still unclear. The growing number of older voters could help Republicans, especially in the North and Midwest — though those are states where Hillary Clinton’s message is the strongest, should she become the Democratic nominee. There are a growing number of voters over 50 in eleven crucial battleground states.

Why can't America be #1? The Washington Post reported that the United States ranked 19th in a recent international assessment of retirement security worldwide. This places the U.S. just behind France and just ahead of Slovenia in the rankings, while Switzerland, Norway, and Australia took the top three positions. Nations were ranked by Natixis Global Asset Management in four categories: finances in retirement, health, quality of life, and well-being. The United States’ comparatively low level of retirement benefits, in addition to a lack of workplace retirement plans for many employees, likely contributed to its comparatively poor ranking among developed nations.

1 comment:

  1. Better Advice for Retirement Accounts Would Help a Little: Expanding Social Security Would Help a Lot (by James Kwak, associate professor at the University of Connecticut School of Law)

    "The only defined benefit pension plan that is immune from the risk of bankruptcy is Social Security. Don’t try to tell me that Social Security will go bankrupt: if Social Security ever stops paying full benefits, that will be a political choice, not a necessity, given the practically unlimited borrowing capacity of the federal government. If we want to be serious about ensuring retirement security for the “middle class” — or, more importantly, for the lower class — we need to expand Social Security."