Saturday, September 12, 2015

Bernie Sanders would fix Social Security, "moderate" Democrats wouldn't

Senator Bernie Sanders has introduced the Keeping Our Social Security Promises Act (S.500), legislation that would keep the Social Security Trust Fund solvent for at least 75 years by asking the wealthiest Americans to contribute their fair share.

In addition, Bernie Sanders founded and currently chairs the Defending Social Security Caucus in the Senate to ensure that those benefits are protected and strengthened. He also supports the Medicare Prescription Drug Price Negotiation Act (S.117) which would instruct Medicare to negotiate drug prices on behalf of beneficiaries.

Senator Sanders is also the champion for the Older Americans Act, the landmark law that provides meals, supportive services, jobs, and protections from abuse for more than 11 million American seniors — and he introduced bipartisan legislation (S.1562) to extend and modernize the Older Americans Act.

Even though he's very busy campaigning to be the next President of the United States, somehow Senator Bernie Sanders still manages to find the time to do THE PEOPLE'S work.

Last week Senator Bernie Sanders and Representative Elijah Cummings (both who are progressives in Congress) introduced a comprehensive piece of legislation to reduce the price that Americans pay for prescription drugs. The measure would allow the Secretary of Health and Human Services to negotiate drug prices with pharmaceutical companies, which would bring down costs for Medicare drug benefits. In addition, it would impose stiffer penalties on drug companies that commit fraud and make it easier for consumers to purchase lower-cost generic drugs.

Meanwhile, this week the National Journal reported that House Republicans continue to work on a proposal to “reform” the Social Security disability program to increase the incentive to go back to work, a long-time goal of Congressman Paul Ryan. If Congress fails to enact an administrative fix by late 2016, benefits to 9 million disabled workers and their families will be cut by 20 percent.

New York Times (September 2015) Busting the Myths About Disability Fraud. The Center on Budget and Policy Priorities explains the disability system in an excellent policy brief. Some fast facts:

  • It is not easy to go on disability.
  • It is very hard to qualify for disability.
  • It is not easy to fake a disability.
  • Disability claims are not skyrocketing (Actually, the number of people in payment status for disability has been declining.)

The $1.5 trillion F-35 is the real disability fraud, yet it continues to qualify for more "disability funding". A growing portion of our older population deserves at least as much.

Dean Baker (July 2015) Center for Economic Policy and Research: "The reason that the program is projected to face a shortfall next year, rather than a decade from now, is due to the fact that ... if we had stayed on the pre-recession growth path, the program would be fully funded through 2025."

As Dean Baker had earlier pointed out, wage growth has been stagnant for decades, and that has contributed to the shortfall in funding the disability trust fund. And many better paying jobs were lost during the Great Recession and replaced with lower-paying and part-time jobs, which also contributes to the shortfall (because lower wages mean lower Social Security tax revenues.)

And the disability program is NOT too generous. The United States ranks near the bottom among wealthy countries in the share of GDP that goes to disability insurance.

Dean Baker (August 2015) "The problem with DI is the economy, not the structure of the program. If folks want to argue that we can't count on having competent people to run the economy, then they can rightly complain that DI is not idiot proof. But as a practical matter it is not possible to design a major social insurance program that can remain financially solid in the face of severe economic mismanagement. The main problem with DI is clearly the state of the economy, not the structure of the program."

But not so much the state of the economy for the top 0.01%, but the economy for everyone else (wage growth has been stagnant or declining for the last 35 years.)

The easiest fix to properly fund disability would be to:

  1. Immediately raise the federal minimum wage to $15 an hour and index it to inflation (as Senator Bernie Sanders proposes.)
  2. Eliminate the $118,500 annual income cap for Social Security taxes so everyone pays this tax on 100% of their earnings (just as the bottom 95% of all wage earners currently do.)
  3. Tax capital gains for Social Security (which has always been exempt for Social Security taxes) — but with an exception on the first $200,000 that someone may earn, such as the sell of their primary home. In other words, CEOs would pay Social Security taxes on capital gains they receive from the millions they make on stock option grants — and billionaires from investments in stocks (which are artificially driven higher by stock buybacks.)
  4. Transfer funds from the old age fund to the disability fund until the above reforms are fully in place.

The first biggest problem is, only Progressive Democrats in Congress and U.S. Senators such Senator Elizabeth Warren and Bernie Sanders would ever consider these types of reforms for Social Security funding. And virtually ALL Republicans — and "moderate" Democrats like Hillary Clinton and Joe Biden — would never propose or endorse such a plan (The GOP always wants CUTS in this program.)

The Congressional Progressive Caucus (CPC) proposed The People’s Budget, which supports increasing Social Security’s modest benefits, separate and apart from budget discussions. The CPC endorses expanding Social Security’s benefits — while also employing a more accurate measure of inflation (CPI-E), which was called for in the Strengthening Social Security Act that Sanders endorses.

The Congressional Progressive Caucus also endorses “Scrapping-the-Cap” in The People’s Budget, which raises the taxable maximum to include 90% of economy-wide earnings, and eliminates the maximum that employers pay on behalf of their high-income employees. Under the current system, income above a taxable maximum is not subject to any Social Security tax, meaning that high-income individuals pay less as a share of their income than everyone else.

Near the very top of the list in The Progressive Promise it says: "To preserve guaranteed Social Security benefits for all Americans, protect private pensions, and require corporate accountability."

The second biggest problem is, informing the American voters and getting them to start voting in their own best economic interests — by getting them to vote for "progressives" (like FDR), rather than "moderates" (like Hillary) or "conservatives" (like most Republicans).

As a reminder: Social Security benefits can be garnished for outstanding student loans — another issue that Progressives (not moderates) in Congress have been championing for a long time:


  1. I'm wondering why the "moderate" Democrats are so worried about Bernie Sanders. Is there something in his platform that they don't agree with? Are they afraid he will sign GOP-sponsored legislation into law? Are they afraid they will lose African-American and Latino voters in the general election? Do they think Hillary (or Biden) will have a better chance of beating a GOP candidate in 2016? What are the "moderate" Democrats so afraid of? Losing power?

  2. Just like Nancy Pelosi said about Obamacare, we have to pass it first to see what's in it...

    Republican presidential contender Carly Fiorina is "not prepared" to talk about Social Security, saying she will only propose reforms after she's president. "I am not prepared to go to the American people and talk to them about how we're going to reform Social Security and Medicare," Fiorina told CNBC's John Harwood in an interview published Wednesday, "until I can demonstrate to them that the government can execute with excellence, perform its responsibilities with excellence, serve the people who pay for it with excellence." Harwood was impressed. "That is a dodge worthy of a very good politician," he told the former Hewlett-Packard CEO.