Saturday, April 18, 2015

Would Hillary Clinton Expand Social Security?

So far, as Talking Points Memo points out, Hillary Clinton is noncommittal on expanding Social Security. On the other hand, two other potential Democratic primary contenders — former Maryland Governor Martin O'Malley and Senator Bernie Sanders (I-VT) — have championed Social Security expansion, which primarily involves providing more generous benefits and paying for them by lifting the income cap on payroll taxes. The cap is currently $118,500 — which is less than congressional salaries ($174,000).

A non-binding budget amendment to expand Social Security last month offered by Senators Elizabeth Warren (D-MA) and Joe Manchin (D-WV) won the votes of 42 out of 46 Democratic senators. The amendment lost on a vote of 56 to 42. Senators Dianne Feinstein (D-CA) and Barbara Mikulski (D-MD) didn't vote (although their votes wouldn't have mattered). Just two Democrats (pictured below) voted against it: Senators Tom Carper (D-DE) and Heidi Heitkamp (D-ND).

Tom Carper and Heidi Heitkamp

Progressive advocates, with the blessing of Senate Minority Leader Harry Reid (D-NV), are pushing Democratic 2016 candidates to embrace the expansion of Social Security (as opposed to Republican cuts.) But if they can't get Elizabeth Warren to run for the White House, the progressive Democrats want to shape Hillary Clinton's candidacy in Senator Warren's image — and expanding Social Security will be one metric to measure that endeavor. It won't be enough for Clinton to attack Republicans and just run against cutting benefits (or privatizing Social Security).

Senator Bernie Sanders introduced a bill this year to increase Social Security benefits by about $65 a month. Former Maryland Governor Martin O'Malley also endorsed the idea in an interview with The Washington Post. Polling last year from Lake Research Partners found that 79 percent of Americans support the idea.

Senator Sherrod Brown (D-Ohio), one of Social Security expansion's leading advocates in the Democratic Party, who co-sponsored a bill in the last Congress to increase benefits by about $70 a month, said "Republicans want to talk about Social Security as a budget issue. It's not about that. It's about retirement security. People's savings are declining. People's wages are stagnant."

Senator Bob Casey (D-PA) said he was open to expanding benefits, but that the priority should be protecting the program from Republican attacks. "I think it should be part of what we do," Casey said, "but the biggest challenge we have frankly around here is preventing people from dismantling or undermining Social Security."

Hillary Clinton's campaign has yet to specify her stance on Social Security expansion. "As the campaign ramps up, she will have a lot to say about strengthening retirement security," Clinton spokesman Jesse Ferguson said in a statement. "Hillary has a record of fighting against privatizing Social Security and opposing cuts to seniors benefits and dealing with challenges facing older Americans is a top priority for her."

In 2008 Clinton opposed a proposal from then-Senator Obama to lift the cap on the payroll tax (currently $118,500) that pays for Social Security. Regular wages and salaries over that amount, as well as capital gains income (i.e. investment income — e.g. net gains from the sale of stocks, gold, fine art, precious jewels, wine collections, or real estate) are not subjected to Social Security taxes.

The Center for American Progress released a report this year citing "income inequality" as a leading cause of Social Security's long-term insolvency. The program is projected to be unable to pay full benefits starting in 2033. Part of the problem is that more income has accumulated above the payroll-tax threshold as income inequality has increased (because wages have remained stagnant or declined for the the bottom 92% of wage earners, and so therefore, not enough payroll tax is being paid to the trust fund.

One of the implied remedies, then, would be taxing some income above the current cap — and Senator Bernie Sanders's bill would tax income above $250,000 to fund the program. Social Security's chief actuary estimated that the bill would prolong the program's solvency until 2065 — while at the same time, also increase monthly benefits. But the Republican are adamantly opposed to raising taxes on higher income earners, while saying lower earners need to "put more skin in the game" (even though, studies show that, as a percentage of their income, the poor already pay more than the rich in taxes).

New Trade Agreement will Hurt Social Security Recipients

Senior lawmakers reached agreement on on a trade promotion authority bill to negotiate the Trans-Pacific Partnership (TPP). Two Republicans — Senate Finance Committee Chairman Orrin Hatch (R-UT) and House Ways and Means Committee Chairman Paul Ryan (R-WI) — negotiated for months on the “fast track” trade legislation with Senator Ron Wyden (D-OR), who has faced intense pressure from labor and progressive groups to walk away from the talks. Under fast-track legislation, the final deal cannot be amended by the Senate and would be subject only to an up or down vote.

Labor and retiree organizations have been lining up to oppose this “fast-track” bill and broader portions of the coming TPP. The deal would place barriers on the government’s ability to regulate drug prices and impede access to generic drugs. If passed, this deal could significantly increase the price of many medications for seniors.

U.S. spending on prescription drugs has already reached an all-time high, jumping over 12% in 2014 and reaching $347 billion. This large increase was chiefly due to the increasing demand for the new, expensive hepatitis C and multiple sclerosis treatments, as well as price increases for cancer and diabetes drugs. Increases in drug spending have been relatively low since 2001, but many of these new “super drugs” can cost between $50,000 and $100,000 annually per patient, driving up average prices. These high prices caused Medicare’s spending on specialty medications to rise by 38% over this past year.

In a press statement, Richard Fiesta, Executive Director for the Alliance of Retired Americans, said, “Retirees are deeply concerned about the TPP and the Trade Promotion Authority (TPA) legislation. Unfortunately, the fast track procedures of TPA would enable changes to prescription drug prices to occur without open and full debate.”

On MSNBC yesterday – via The Ed Show — it was reported that Hillary Clinton broke her silence on TPP, and said she supports the trade agreement, saying it will be "good for business". At a press conference, President Obama also said it would be good for American businesses, workers and the economy — and said that “all the low-wage jobs have already left the country”. (Low-wage jobs?) Ed Shultz said the president got it wrong, and said the trade agreement will further gut American jobs and raise the trade deficit even more — and why most labor union are against the TPP. Ed said the deal will also force us to buy agricultural products form other countries (not to mention, chickens from China -- as if their FDA is better than ours). Senator Bernie Sanders was on Ed’s show, and he was very displeased as well (and listed a host of reasons why).

Attacks on Social Security

This week two likely Republican presidential contenders, former Florida Governor Jeb Bush and current New Jersey Governor Chris Christie, proposed plans to cut seniors’ earned benefits. Governor Bush proposed raising the retirement age and cited Ronald Reagan’s policies as a model for preserving Social Security. Governor Christie proposed significant cuts to earned Social Security benefits – and to take away Medicare benefits for 65- and 66- year-olds, beginning in 2040, if he is elected President. Christie’s proposal would include raising the Social Security age to 69, means-testing it, and eliminating benefits for some.

The Alliance Director Mr. Fiesta criticized Christie’s plan, saying, “Governor Chris Christie today went after not only seniors’ earned Social Security benefits, but also their health coverage, in an attempt to further his own Presidential ambitions.…. decades of stagnant wages and erosion of employer-sponsored pensions have left Americans unable to save for retirement. The solution is to find ways to expand and strengthen Social Security, not destroy it.”

Cost-of-living for Social Security Recipients

According to a recent Charles Schwab newsletter, they reported that over the past year prices were down 0.1% for the "headline" inflation rate, while the core rate (known as CPI, which strips out food and energy) was 1.8% higher. In January 2015 Social Security beneficiaries received a 1.7 percent cost-of-living adjustment (COLA).

The purpose of the COLA is to ensure that the purchasing power of Social Security and Supplemental Security Income benefits is not eroded by inflation. It is based on the percentage increase in the "Consumer Price Index for Urban Wage Earners and Clerical Workers" (CPI-W) --- and is calculated from the third quarter of the last year a COLA was determined, up until the third quarter of the current year. If there is no increase, there can be no increase in COLA.

The Bureau of Labor Statistics: The “CPI for All Urban Consumers” (CPI-U) represents the spending habits of about 80 percent of the population of the United States. The “CPI for Urban Wage Earners and Clerical Workers” (CPI-W) is a subset of the CPI-U population, and represents about 32 percent of the total U.S. population.

In addition to the official CPI's for the CPI-U and CPI-W populations, the CPI calculates an experimental price index for Americans 62 years of age or older. The Bureau of Labor Statistics also plans the periodic release of updated estimates of the “Experimental Price Index for the Elderly” (CPI-E). Read how the CPI-E compares to other measures of inflation. Also, from the Washington Post: Meet CPI-E, the progressive alternative to chained CPI

"Chained-CPI" is an alternative measurement for the “Consumer Price Index” (CPI) that considers product substitutions made by consumers and other changes in their spending habits. The chain-weighted CPI is therefore considered [by some people] to be a more accurate inflation gauge, rather than the traditional fixed-weighted CPI — because rather than merely measuring periodic changes in the price of a fixed basket of goods, it accounts for the fact that consumers’ purchasing decisions change along with changes in prices.

Even many Democrats were saying that by using chained CPI we are able to reduce the Social Security cost-of-living adjustments (COLAs), which rises more slowly than regular CPI, because it accounts for the way our elderly and poor switches to pet food when the price of "people food" rises --- like switching from steak to chicken — until chicken costs too much, and then switching to "people" tuna, before eventually switching to "cat" tuna.

Medicare Note

This headline says "Bipartisan Senate ends flawed Medicare payment formula" — only it doesn't. The "doc fix" benefits doctors by paying their salaries, but it will also raise the monthly "Part B" premiums for many Medicare recipients (and not just on high earners) to help pay those doctor's salaries — and this "doc fix" may eat up any future cost-of-living increases for poverty-stricken Social Security beneficiaries.

The Number Question for our President and Members of Congress

Poll, after poll, after poll, after poll shows that, the vast majority of Americans oppose TPP (and other trade agreements), and support closing corporate tax loopholes, and support raising taxes on the rich to fund Social Security and fixing our crumbling infrastructure, and support strong Wall Street reform, and support campaign finance reform, and oppose voter suppression laws — but yet, our politicians REFUSE to implement ANY of these changes. So the question is: Why? (The 2nd question might be: What can we do about it?)

1 comment:

  1. Update: Low gas prices kept inflation "flat" over the past year.

    Yearly inflation is now flat, but that's only because gasoline prices gave a big break to consumers. "Core" inflation (with all food and energy items removed from the index) has increased 1.8% for the last year. Core inflation also includes shelter and anything else that is not food or energy. The shelter index is comprised of rent and the equivalent cost of owning a home. Rent increased 3.5% for the year, and the cost for homeowners increased 2.7% for the past year. So any savings from gasoline prices was eaten up by other price increases --- and why yearly inflation is now "flat".

    * Meaning, a senior on Social Security (who doesn't benefit from driving a car) would have seen their cost-of-living go up.