Saturday, August 22, 2015

The GOP will only screw young Republicans on Social Security

...and anyone else under the age of 55 years old. So don't vote against your own economic best interests. Older Republicans don't give a crap about you, because: They already got theirs!

In a recent town hall meeting Ohio's Republican John Kasich referenced his 1999 Social Security plan that would base future Social Security payments on the Consumer Price Index, which reflects increases in prices, rather than the current formula that reflects increases in wages. The result would be that the average worker beginning to collect Social Security in 2020 would receive almost $4,000 less in their first year of retirement than he/she would have expected to receive under the current formula. The difference also increases with time. By 2070, newly retired workers would receive almost half as much as they would receive under the current program.

And almost all the career GOP politicians are STILL pushing for this (including some ambitious newbies who are towing the old GOP line, just to advance their own careers to get ahead within the GOP party machine).

John Kasich had claimed those workers could make up the difference by investing (gambling) part of their payroll taxes in the stock market. Could you imagine retiring during the last recession when the first Baby Boomer retired — after the DOW had dropped from a high of 14,164 points in October 2007 before bottoming out at 6,547 in March 2009? All those old folks (Republicans and Democrats alike) would have been so screwed!

Kasich's plan (then and now) would have allowed workers under age 55 to voluntarily divert some of their Social Security taxes into private accounts. The lowest-wage workers would be allowed to divert the largest portion of payroll taxes (up to 3.5 percent of their wages) into private accounts. Workers earning more than the maximum income taxed by Social Security (capped at $72,600 in 1999) would have been allowed to divert only 1 percent. His proposal would not affect current retirees, nor those workers 55 and older — or as he currently says: "At or near retirement."

In other words: He and the GOP would just screw younger Republicans (and everybody else under 55) — and that older workers would have nothing to fear but fear itself.

In the video below is the Republican Ohio Governor (now as a 2016 Presidential contender) at a recent town hall meeting in Salem, New Hampshire. Jane Lang, a vice president of the Alliance for Retired Americans, asked whether he would look at expanding Social Security and scrapping the "cap" on earnings that are subjected to Social Security payroll taxes (currently capped at $118,500 a year — the income subjected to this tax).

As John Kasich sought to wrap up her question, reaching for the microphone, she said she wasn't done. Kasich: "How about a handshake and a little hug?" he condescendingly asked her as he leaned in for a brief embrace. Then he said, "Listen, she's steamed up, and I don't blame her." Then he launched into a long-winded and meaningless response to her original question — a political tactic that Hillary Clinton and most other politicians often use when they don't want to honestly answer someone's question. Or as W.C. Fields was quoted:

“If you can't dazzle them with brilliance, baffle them with bullshit.”

John Kasich never really gave Jane Lang a direct answer. Later she said, "I thought the whole meeting, the whole thing was danced around." And the same thing happens whenever someone specifically asks for a "yes" or "no" question. The politician always feels the need to bloviate, pontificate and elaborate on a litany of issues that isn't even related to the one simple question that was initially asked by someone (also known as "Clinton Speak").

(* The full unedited video of Kasich's town hall meeting is here at C-SPAN)

John Kasich's views on Social Security are similar to almost ALL Republicans — with the exception of Donald Trump. Via ThinkProgress:

Trump has strongly criticized the rest of the Republican field for advocating deep cuts to programs relied upon by the elderly, the disabled, and the poor. In April at the New Hampshire Republican Leadership Summit Trump said that he was “disappointed with a lot of the Republican politicians.”

“Every Republican wants to do a big number on Social Security, they want to do it on Medicare, they want to do it on Medicaid. And we can’t do that. And it’s not fair to the people that have been paying in for years and now all of the sudden they want to be cut,” Trump said.

Jeb Bush, a favorite of the Republican establishment, quietly proposed [last month] that Medicare — a program relied upon by millions of people — be “phased out.” Virtually the entire Republican field supports reducing entitlement programs through cuts, privatization, or both.

Here's the Democrat's different opinions on Social Security

The pro-Hillary Clinton Huffington Post (which is part of the 6 corporations that controls 90% of the media) recently headlined this in their daily email newsletter:

O'MALLEY RESORTS TO BRIBING OLD PEOPLE. Non-Bernie-Sanders Democratic presidential "hopeful" Martin O'Malley (who was governor of Maryland or something) wants to fatten Social Security checks, which the actual Bernie Sanders has already said. The plan would boost monthly Social Security benefits for retirees, though O’Malley’s campaign did not say precisely by how much.

Former Gov. Martin O’Malley of Maryland announced a proposal to expand Social Security, enhancing its benefits while holding the retirement age steady (not raising it to 70 as the GOP would like to do).

Senator Bernie Sanders of Vermont [who caucuses with progressive Democrats] has expressed a similar view — but Hillary Clinton has yet to weigh in on the issue, and progressive groups that are closely aligned with Senator Elizabeth Warren’s wing of the party have been pressuring her for more details on her plan.

The New York Times did a recent post on this, noting that progressive Democratic groups want to hear more from Hillary Clinton on Social Security:

The Progressive Change Campaign Committee, Democracy for America and all pressed her to join her rivals for the Democratic presidential nomination in promising to, not just protect Social Security, but expand the program. “Any candidate who wants to secure the Democratic nomination must commit — clearly — to not only defending but expanding the social safety net,” said Nick Berning, a spokesman for MoveOn.

Jim Dean, of Democracy for America, also asked Mrs. Clinton to show solidarity on the issue: “With Martin O’Malley and Bernie Sanders proudly campaigning on the popular idea of Social Security expansion, the only question is whether the other major candidate in the 2016 race is going to join them.”

The centrist Third Way group (who Hillary Clinton is very much a part of) panned O’Malley’s plan as "political pandering". [Third Way also attacked Senator Elizabeth Warren's plan for expanding Social Security.]

TIME writes: "O’Malley will set himself apart from frontrunner Hillary Clinton by calling for increasing the number of Americans with access to adequate retirement funds by 50 percent over two terms in office" — then the article goes on to say: "The plan would boost monthly Social Security benefits for retirees, though O’Malley’s campaign did not say precisely by how much. For Americans who have been in the workforce for 30 or more years, the plan would increase minimum payouts to 125% of the poverty line, and it would also well increase benefits for minimum wage and lower-income workers. It would tie benefits to the Consumer Price Index for the Elderly, which O’Malley’s campaign sees as a more accurate basis for determining payouts.

A number of Republican presidential contenders have called for reducing Social Security benefits (except Donald Trump), either by raising the retirement age or privatizing the program. Democratic frontrunner Hillary Clinton has promised to “protect” and “enhance” Social Security, while Vermont Senator Bernie Sanders has promised to expand it with a more detail plan than O’Malley’s. (Sanders’ plan would increase Social Security by a modest $65 a month for most recipients.)

In an op-ed published in the Quad-City Times in Iowa (first, you have to answer an annoying survey question to read the post) O’Malley makes his case with an implicit jab at Clinton, whose call to “enhance” Social Security is seen by some progressives/liberals as intentionally ambiguous. Just like Bernie Sanders, O’Malley writes that Democrats should expand Social Security benefits, “not cutting or merely ‘enhancing’ them.”

As a nation, we must do far more to ensure the retirement security of American families. And we should start by expanding Social Security benefits — not cutting them or merely “enhancing them” — to provide a foundation for a more secure retirement to all those who have worked hard to achieve it ... Social Security is not in crisis. It is not bankrupt, and it would not be better off if it were privatized and run by Wall Street ... We collect the payroll taxes that fund Social Security. Right now those taxes are capped, so that they only apply to the first $118,500 of a worker’s income. This essentially means that millionaires stop paying into Social Security in mid-February, while middle class workers contribute a portion of their wages all year. I am proposing to lift the payroll cap for the highest earners, starting at income above $250,000*. In this way, only wealthier Americans would be asked to pay additional payroll taxes, and we could still raise enough revenue to shore up Social Security’s finances for generations to come ... I would also reform Social Security to support, rather than penalize, caregiving. Women who take extended time off to care for their families should not receive lower Social Security benefits when they retire ... It is especially important that we raise wages for all workers, because when 70 percent of us are making the same or less than we were 12 years ago, fewer and fewer of us will be able to save enough for a secure retirement."

In a post at the Economic Populist, I noted how stagnant wages has affected the funding of the Social Security trust fund, and why raising or eliminating the cap should be implemented to make up for the shortfall (something the GOP won't do because it only taxes the rich) — and where I also point out via the economist Dean Baker at the Center for Economic Policy Research (per the 2015 Social Security trustees report) where he wrote:

Wage growth is the key to the program's solvency for two reasons. The first is that the upward redistribution of wage income over the last three decades has played a large role in the projected shortfall. As income has been transferred from ordinary workers to those at the top of the wage distribution, a larger share of wage income has escaped taxation. When the Greenspan Commission set the cap for taxable wages in 1983, it covered 90 percent of wage income. Currently the cap only covers around 82 percent of wage income. If the cap had continued to cover 90 percent of wage income, the projected shortfall would be roughly 40 percent less than it is now.

The other reason why broadly based wage growth is key to the program's continuing solvency is that the burden of possible future tax increases would be much less consequential if most workers will share in the gains of economic growth. The Social Security trustees have projected that real wages will rise by more than 34 percent over the next two decades. (They are projected to rise by another 30 percent over the following two decades.) Even if the payroll tax is increased by three percentage points, it would take back less than one-tenth of the projected rise in before-tax wages if wage growth is evenly shared. On the other hand, if most of the gains from growth continue to go to those at the top end of the distribution, any tax increase will be a major burden.

Currently about 94% of all wage earners pay Social Security tax on 100% of their incomes of $118,500 or less a year. Some Democrats want to raise the cap to $250,000 — almost 99% of all wage earners make $250,000 or less a year — so the top 1% still escapes paying this tax, and the top 0.01% (the multi-millionaires and billionaires) are exempt from paying this tax on ANY of their capital gains — where the majority of their income originates (because they aren't paid a "wage" per se).

Representative Mike Honda (CA) is introducing legislation (CPI-E Act of 2015, or H.R. 3351) that will require Social Security Cost of Living Adjustments (COLAs) to be based on the Consumer Price Index for the Elderly (CPI-E). This index more accurately reflects the actual cost of living for older Americans which can sometimes be higher because seniors spend more on housing and health care than the general population. This is NOT what the GOP or Third Way Democrats want to do (Obama and other Third Way Democrats actually proposed cutting COLAs with chained-CPI — which Bernie Sanders was against.)

The progressive Roosevelt Institute Fellow Mike Konczal wrote a piece at Democracy Journal titled The Voluntarism Fantasy: "Conservatives dream of returning to a world where private charity fulfilled all public needs. But that world never existed—and we’re better for it." In the wake of the Great Recession, charitable donations fell at the moment people needed it the most. Konczal says that a public social insurance state can manage risk better than individual donors. Note the big difference between a privatized program for Social Security vs. a government-backed program. (His podcast is here at Talk Poverty at the 46-minute mark of Episode #015). Maybe he should have also noted that, of the charities we do have, many (such as Bill Gates and the Clinton's foundations) does it's charity on a global scale, and doesn't just concentrate it's efforts on fallen Americans. For example, they wouldn't have paid millions of people unemployment benefits.

Here are the different plans for Social Security proposed by some Democrats to compare to Ohio's Republican John Kasich's plan and the rest of the GOP:

Elizabeth Warren: Protect, expand Social Security (December 2013)

Bernie Sanders Files Bill to Strengthen, Expand Social Security (March 2015)

Hillary Clinton Wants To Improve Social Security Benefits For Women, Low-Income Seniors (August 2015)

Martin O'Malley: Expanding Social Security so ALL Americans can retire with dignity (August 2015)

Friends don't let friends vote for Republicans — or for Third Way Democrats, who are EXACTLY the same as "moderate" Republicans on economic issues. Vote for either Bernie Sanders (as a Democrat) or Donald Trump (as a Republican) to save Social Security, raise wages and to stop outsourcing our jobs. Even Donald Trump thinks the rich should pay their fair share of taxes. We need a political revolution, not more of the same old B.S. that we've been getting for the past 35 years.


  1. I re-edited version of this post is at the Economic Populist:

    The GOP Plan to Stiff Millennials on Social Security

  2. Paul Krugman at the New York Times in a piece titled "Republicans Against Retirement" (I would have included this in my post had I read it first.)

    Excerpts below:

    For some reason, just about all the leading candidates other than The Donald have taken a deeply unpopular position, a known political loser, on a major domestic policy issue. And it’s interesting to ask why. The issue in question is the future of Social Security...

    Voters, it turns out, like Social Security as it is, and don’t want it cut. It’s remarkable, then, that most of the Republicans who would be president seem to be lining up for another round of punishment. In particular, they’ve been declaring that the retirement age — which has already been pushed up from 65 to 66, and is scheduled to rise to 67 — should go up even further. Thus, Jeb Bush says that the retirement age should be pushed back to 68 or 70. Scott Walker has echoed that position. Marco Rubio wants both to raise the retirement age and to cut benefits for higher-income seniors. Rand Paul wants to raise the retirement age to 70 and means-test benefits. Ted Cruz wants to revive the Bush privatization plan ...

    These proposals would be really bad public policy — a harsh blow to Americans in the bottom half of the income distribution, who depend on Social Security, often have jobs that involve manual labor, and have not, in fact, seen a big rise in life expectancy. Meanwhile, the decline of private pensions has left working Americans more reliant on Social Security than ever. And no, Social Security does not face a financial crisis; its long-term funding shortfall could easily be closed with modest increases in revenue ...

    What’s puzzling about the renewed Republican assault on Social Security is that it looks like bad politics, as well as bad policy. Americans love Social Security, so why aren’t the candidates at least pretending to share that sentiment? The answer, I’d suggest, is that it’s all about the big money ...

    By a very wide margin, ordinary Americans want to see Social Security expanded. But by an even wider margin, Americans in the top 1 percent want to see it cut. And guess whose preferences are prevailing among Republican candidates?

    What this means, in turn, is that the eventual Republican nominee — assuming that it’s not Mr. Trump — will be committed not just to a renewed attack on Social Security, but to a broader plutocratic agenda.