The annual reports from the Social Security and Medicare Trustees released today “have good news for all Americans,” said AFL-CIO President Richard Trumka.
Social Security and Medicare will be there for us and our families if elected leaders listen to the American people and reject calls to cut benefits. Instead of undermining these crucial programs, we must build on their success and adopt measures to strengthen and expand them.
Richard Fiesta, executive director of the Alliance for Retired Americans, said the most important lesson from the Social Security report “is that Social Security has a large and growing surplus. Today’s report projects Social Security’s cumulative surplus to be roughly $2.8 trillion in 2014, growing to about $2.9 trillion around 2020.
Trumka noted that while “America’s most important retirement program” will remain strong for many more years to come:
It has become increasingly clear, however, that strengthening Social Security for the future must include improvements in benefits. Social Security remains the sole retirement income plan that is broadly available and that Americans can count on to provide secure lifetime benefits.
The Medicare report, Fiesta said, “reminds us once again that the Affordable Care Act is controlling health care costs.” He said:
It is great news that the life of the Medicare Trust Fund has been extended by another four years to 2030. Attempts to repeal health care reform would only undo the progress we have made in controlling health care costs.
The Social Security Trustees reported once again that the Disability Trust Fund can pay full benefits until 2016, with enough revenue after that time to cover about 80% of promised benefits. Trumka said:
Congress should act soon to ensure disabled workers and their families will continue to receive the benefits they have earned. This can be done by allocating a larger share of current payroll tax contributions to the Disability program, as has been done many times before. Congress should reject calls to misuse this opportunity to undermine the sole source of disability income protection that is working well for America’s families.
Current and future retirees must be wary of those politicians who will use today’s Social Security and Medicare Trustees reports as political cover for radical changes that would put seniors, the disabled and the families of deceased workers at risk.
House Republican leaders passed Rep. Paul Ryan’s (R-Wis.) budget this week by a vote of 219 to 205, with no Democrats voting in favor. The Ryan budget is chock full of so many terrible ideas that it’s hard to single out the biggest stinkers, but here goes.
1. Raising the Medicare Eligibility Age from 65 to 67. Not only would raising the eligibility age shift costs to 65- and 66-year-olds and to seniors who still qualify for Medicare benefits, but it would actually *increase* overall costs throughout the health care system. Worst. Idea. Ever.
2. Giving Corporations More Tax Breaks for Outsourcing Jobs. The Ryan budget calls for a “territorial tax system,” which would eliminate U.S. taxes on the offshore profits of companies that send jobs overseas. Second worst idea ever.
3. Costing 4 Million Jobs. And that’s only in two years! According to the Economic Policy Institute, the Ryan budget would cost 1.1 million jobs in 2015 and 3 million jobs in 2016. Millions more jobs would be lost in subsequent years.
4. Giving Millionaires a $200,000 Tax Cut. The Ryan budget would cut the top marginal income tax rate from 39.6% to 25%, giving people who make more than $1 million per year tax cuts averaging between $200,000 and $330,000.
5. Turning Medicare into a Voucher Program. The Ryan budget once again proposes to end the Medicare guarantee, which would raise premiums for seniors who choose traditional Medicare and leave traditional Medicare to “wither on the vine” as private plans capture the healthiest seniors.
6. Gutting Education. The Ryan budget would slash funding for kindergarten to 12th grade education by$89 billion and higher education by $260 billion over 10 years, making college less affordable and increasingstudent indebtedness by $47 billion.
7. Gutting Investment in Transportation. The Ryan budget would slash transportation investments by$52 billion in 2015, costing jobs and making America less competitive.
8. Gutting Medicaid. The Ryan budget would cut Medicaid funding by $732 billion over 10 years by turning Medicaid into a block grant program. It would further cut Medicaid funding by repealing the Affordable Care Act, for a total cut to Medicaid of some $1.5 trillion.
9. Slashing Tax Rates for Profitable Corporations. The Ryan budget would slash the corporate tax rate from 35% to 25%, squandering $1.2 trillion to $1.5 trillion in tax revenue over 10 years.
Fifty years ago today, President Lyndon B. Johnson declared a war on poverty and worked with Congress to pass legislation designed to lower poverty levels and mitigate the effects of poverty on America’s families. Not long after the war on poverty initiatives went into effect, and startedshowing significant results, conservatives went on the attack, attempting to weaken, defund or eliminate many of the policies that were working quite well. But the program was so effective that it still helped, and helps, keep tens of millions of Americans out of poverty. Now Sen. Marco Rubio (R-Fla.) isweighing in on the war on poverty by claiming that it has failed, a smoke screen that he and others are using to continue their agenda to weaken or eliminate the war on poverty.
Two claims are central to conservative arguments that the war on poverty is a failure. The first is tortured logic that goes something like this: “We’ve been fighting the war on poverty for 50 years and poverty still exists, therefore it’s a failure.” Beyond the fact that this level of oversimplification doesn’t belong in a serious conversation about poverty (we rarely “eliminate” problems, we improve the situation as the real world goal), it completely ignores the conservative responsibility for the programs not being as effective as they could be. From budget cuts to added red tape that makes it harder for citizens to participate in lifelines they are eligible for, conservatives have fought for decades to make the war on poverty less successful. To now claim that these lifelines are inherently flawed, as opposed to being sabotaged, is laughable at best.
The second claim relies on a dumbing-down of statistics that would make George W. Bush proud. By the official government poverty measure, the poverty rate in 1964 was 19%. In the latest version of that official number, the rate is 15%. The argument goes that 50 years is a long time and a lot of money to decrease poverty such a small amount. Ignoring the fact that 4% of the population is still millions of people, the official number is flawed. It only includes cash income. Over the years, more and more anti-poverty programs were moved away from direct cash payments to non-cash benefits and tax credits. So this official measure ignores many of the programs designed to keep Americans out of poverty. A more accurate measure is the Supplemental Poverty Measure (SPM), which accounts for non-cash income. The SPM shows a decline in the poverty rate more than twice that of the official number, from 26% in 1967 to 16% now.
It’s clear that by any valid measurement, the war on poverty has been highly successful, particularly when you look at specific policies and what aspects of poverty they target. Here are a few key numbers that show the success of the war on poverty:
Antipoverty programs kept 41 million Americans out of poverty in 2012, including 9 million children.
Social Security kept 26.6 million people out of poverty in 2012, including 17 million seniors and more than 1 million children.
Medicare, Medicaid, the Children’s Health Insurance Program and health care subsidies help 150 million Americans get health insurance.
The programs have long-term effects, too. Research shows that children who received food stamps in the 1960s and 1970s grew up healthier and were more likely to finish school. At age 19, they were 6% less likely to have stunted growth, 5% less likely to have heart disease, 16% less likely to be obese and 18% more likely to have completed high school.
This isn’t to say that the war on poverty is an unqualified success or that more doesn’t need to be done. But it is to say that conservative arguments about the war on poverty are highly inaccurate and the policy proposals put for by Rubio and his allies would do the exact opposite of what they claim and would undermine the progress that has been made in the last 50 years. More appropriate solutions to the problems of poverty would roll back right-wing assaults on antipoverty programs and would stimulate job creation and higher wages for working families. But don’t hold your breath thinking that the Marco Rubios of the world will do the right thing.
We’ve heard of the looming retirement security crisis, but this statistic is extremely sobering: The majority of black and Latino workers (62% and 69%, respectively) do not own assets in a retirement account. This is from a new report by the National Institute on Retirement Security (NIRS) released this week.
To make things worse, three out of four black households and four out of five Latino households ages 25 to 64 have less than $10,000 in retirement savings, compared to one out of two white households.
“Those are startling findings,” says Diane Oakley, executive director of NIRS. “The typical household of color has nothing saved in a retirement account.”
Oakley raises the point that tax incentives meant to bolster retirement savings more often than not fail to help black and Latino workers, who on average have less money available to save for retirement.
“One of the big issues here is a gap in access,” Oakley tells The Washington Post. “We have what is essentially a voluntary retirement system and what we know is when we look at minority households, their access to retirement plans on the job is much less than that for whites.”
In another study examining how the current retirement system is failing America’s workers, Economic Policy Institute’s Monique Morrissey and Natalie Sabadish argue these gaps in retirement security make the case all the more strongly to bolster Social Security benefits, not cut them:
The trends exhibited in these figures paint a picture of increasingly inadequate savings and retirement income for successive cohorts and growing disparities by income, race, ethnicity, education and marital status. Even women, who by some measures appear to be narrowing gaps with men (in large part because men are faring worse than they did before) are ill-served by an inefficient retirement system that shifts risk onto workers, including the risk of outliving one’s retirement savings. The existence of a retirement system that does not work for most workers underscores the importance of preserving and strengthening Social Security, defending defined-benefit pensions for workers who have them and seeking solutions for those who do not.
At your Thanksgiving dinner this year, the new health care law is bound to come up in conversation. You’ll hear a lot of myths about the Affordable Care Act, and Working America wants you to be prepared with the facts.
MYTH: “Obamacare will make my premiums go up.”
The vast majority of people are expected to pay lower health insurance premiums under the Affordable Care Act, and many will also be eligible for financial assistance. In fact, premiums in some states are higher because of politicians blocking parts of the new law.
Remember before health reform? Even if you had insurance, you were paying a ton out of pocket for services your plan didn’t cover, sometimes even simple services like blood tests. But now that there are rules about what plans have to cover, we’ll all save money in the long run by paying less out of pocket, even if premiums for some folks are higher.
MYTH: “Obama lied about me being able to keep my health care plan under Obamacare.”
The rollout of the Affordable Care Act hasn’t been perfect, but President Obama didn’t lie. Health insurance companies, not any elected official, are responsible for plans being canceled.
Before Obamacare, there were few rules about what health plans had to cover. Millions of Americans had plans that were so shoddy, they ended up paying out of pocket for a lot of their medical costs. Too often, having insurance was a lot like not having insurance.
Under the Affordable Care Act, health insurance plans must cover at least 60% of the total cost of medical services for a standard population. Plans must also cover at least ten essential services, including lab services and hospitalization. Just like how there are rules about selling lead toys, bad meat, and moldy produce, the new law established rules about the quality of health insurance plans. These rules kick in on January 1, 2014.
The problem is that even after the law was passed, insurance companies kept pushing plans that didn’t meet these minimum standards. The insurance companies knew these plans would have to be canceled when the new law kicked in, but they kept selling them anyway.
Given the lack of warning from their insurance company, many customers were shocked to discover that their plans would soon be canceled. What’s worse, many companies are taking advantage of this situation by trying to push those customers onto more expensive plans.
If your plan was canceled, there are solutions. You can purchase insurance on the Health Insurance Marketplace, where you’ll have more options. Depending on your income and the size of your family, you may be eligible for financial assistance that will make coverage even more affordable.
MYTH: “Obamacare steals from Medicare.”
The Affordable Care Act actually helps Medicare by eliminating waste and inefficiency. Medicare benefits are not affected by the health reform law — but they would be affected if we turned it into a voucher system.
But where does that number come from? The Affordable Care Act seeks to reduce future Medicare spending, and the savings are estimated at $716 billion over 10 years. The savings come from reducing subsidies to private Medicare Advantage plans (saving taxpayer money!) and from taxes on drug companies, device makers, and insurers. Luckily, those companies will be able to afford those new fees because of all the new customers they’ll get as a result of the law.
So, Medicare benefits will not be affected by Obamacare — but they would be affected by the budgets proposed by Rep. Paul Ryan and passed by the Republican-controlled House of Representatives, which replaces Medicare with “vouchers” to use on the private market.
MYTH: “Obamacare is forcing me to buy health care.”
Let’s face it: everyone will need health care at some point in their lives. Under the new law, you can either purchase health insurance or pay a small fee. Regardless, prices are lower for everyone.
Before Obamacare, many people who could not afford insurance got their medical care from the emergency room. Emergency care is more expensive than preventive care and free of charge for those who use it but cannot afford to pay for services, so when more people wait until an emergency to access care (because they couldn’t see a doctor beforehand) that increases overall health care costs and leads to higher premiums for everyone.
Essentially, Americans were already paying for “universal health care” through the emergency room, which made health care more expensive, less efficient, and more dangerous for patients.
The Affordable Care Act takes that burden off our shoulders by asking every individual to buy insurance — the “individual mandate.” Every American has to have some sort of health insurance or pay a fee; because of subsidies and other assistance having coverage is almost always the easier choice.
MYTH: “Obamacare isn’t working because the federal government can’t do anything right.”
A bumpy start for a massive and complex law doesn’t mean Obamacare “isn’t’t working.” And Medicaid expansion, which is a program of the federal government, is already helping millions of people under the new law.
Unfortunately, governors and legislators in 24 states are refusing to accept Medicaid expansion, even though it would cost their states almost nothing until 2020. About 5 million Americans who would be eligible for Medicaid can’t access it because of these politicians. The more uninsured, the more people using the emergency room for care, which drives up costs for everyone.
It’s been about 8 weeks since the website was launched, and glitches are being fixed every day. Remember: Social Security and Medicare took several years to get up and running. That doesn’t mean they are failures.
MYTH: “Obamacare is a government takeover of health care. I don’t want socialized medicine!”
Every plan offered through the Health Insurance Marketplace is offered by a private company. Far from “socialized medicine,” the Affordable Care Act is based on free market ideas.
The government is not in the business of selling insurance. Every plan available on the health exchange is offered by a private company, co-op, or other health related organization.
Obamacare is in fact based on free market principles: that competition between private insurance companies will bring down prices. Some of the central ideas behind Obamacare come from the Heritage Foundation, a conservative think tank, and were first proposed by Republicans in Congress during the 1990’s.
How? A combination of fees on insurers and device-makers, ending subsidies to expensive Medicare Advantage plans, and reducing Medicare payments to hospitals and insurers by eliminating waste and fraud.
And you know what else? Like we’ve said, when more people have health insurance and fewer people are using the emergency room for care, that saves money for all of us.
A new report from the Center for Effective Government and the Institute for Policy Studies shows that two groups of corporate CEOs pushing for cuts to Social Security benefits, such as the “chained” CPI, personally have massive retirement plans. They also have allowed massive deficits to grow in their employees’ pension funds. While these CEOs—members of the Business Roundtable and the Fix the Debt Coalition—sit on retirement funds most people couldn’t even dream of, they have hurt their own employees’ retirement security and are looking to do the same for people who don’t even work for them.
According to the report, more than 25% of Fix the Debt members are also members of the Business Roundtable, including more than half of the Business Roundtable’s executive council. Fix the Debt is made up of more than 135 CEOs and tries to paint itself as very dedicated to serving the public, with the goal of protecting Social Security. The Business Roundtable, which includes more than 200 CEOs, doesn’t even pretend that it cares about public interest.
Members of the Business Roundtable, the report shows, have retirement accounts more than 1,200 times greater than the median retirement savings of U.S. workers near retirement age. When they retire, the $14.5 million fund they average will give them monthly retirement payments of nearly $90,000. The average monthly payment for everyone else is about $70.
While many of the Business Roundtable CEOs don’t even offer their employees pension plans, those who do aren’t exactly managing those funds well. The report found that 10 of the CEOs who do offer pensions plans have funds that run deficits between $4.9 billion and $22.6 billion. CEOs like those in the Business Roundtable and Fix the Debt are major players in the country’s growing retirement security crisis:
Over the past several decades, chief executives have slashed retirement benefits for their employees. Traditional defined-benefit corporate pensions covered 38% of private-sector workers in the early 1990s, compared with just 18% today, according to the Bureau of Labor Statistics. The number of companies providing traditional pension plans has dropped from just over 112,000 in 1985 to 22,697 in 2013.
Contrary to what The Washington Post and the billionaires who are trying to cut Social Security by pitting young people against seniors say, the nation does face a retirement crisis and Social Security doesn’t need to be cut. It must be—and can be—strengthened, said Sen. Elizabeth Warren (D-Mass.) in a powerful speech on the Senate floor Monday.
Just 18% of private-sector workers have traditional defined pension plans, and even with some employers providing 401(k) plans, she said that nearly half of workers lack access to those limited plans. More than 44 million workers have no retirement assistance from their employers.
With tens of millions of people more financially stressed as they approach retirement, with more and more people left out of the private retirement security system and with the economic security of our families unraveling, Social Security is rapidly becoming the only lifeline that millions of seniors have to keep their heads above water.
But instead of taking on the retirement crisis, instead of strengthening Social Security, Warren said, “some in Washington are actually fighting to cut benefits.”
So long as these problems continue to exist and so long as we are in the midst of a real and growing retirement crisis—a crisis that is shaking the foundations of what was once a vibrant and secure middle class—the absolute last thing we should be doing is talking about cutting back on Social Security. The absolute last thing we should do in 2013— at the very moment that Social Security has become the principal lifeline for millions of our seniors—is allow the program to begin to be dismantled inch by inch.
Cutting Social Security would mean cutting benefits for the two-thirds of seniors who rely on it for the majority of their income, said Warren. It would also affect the 14 million whose Social Security benefits keep them out of poverty.
While those calling to cut Social Security hid their intentions behind the claim that their “chained” CPI proposal is just a more accurate way to calculate the cost-of-living increases for seniors, Warren said:
“Chained” CPI? It’s just a fancy way of saying cut benefits…[instead] with some modest adjustments, we can keep the system solvent for many more years—and could even increase benefits.
No retirement crisis? Tell that to the millions of Americans who are facing retirement without a pension. Tell that to the millions of Americans who have nothing to fall back on except Social Security. There is a $6.6 trillion gap between what Americans under 65 are currently saving and what they will need to maintain their current standard of living when they hit retirement. $6.6 trillion, and that assumes Social Security benefits aren’t cut. Make no mistake: There is a crisis.
She also said the call to cut Social Security “has an uglier side.” The Post editorial and groups pushing Social Security cuts, like billionaire Peter Peterson’s “Fix the Debt” organization, are trying to drive a wedge between younger people and seniors by framing the debate as a choice between “more children in poverty versus more seniors in poverty.”
The suggestion that we have become a country where those living in poverty fight each other for a handful of crumbs tossed off the tables of the very wealthy is fundamentally wrong. This is about our values, and our values tell us that we don’t build a future by first deciding who among our most vulnerable will be left to starve.
Warren told the senators, “We don’t build a future for our children by cutting basic retirement benefits for their grandparents,” but instead:
We build a future for our kids by strengthening our economy, by investing in education and infrastructure and research, by rebuilding a strong and robust middle class in which every kid gets a chance and the most vulnerable have a strong safety net.
But sometimes “cuts” hide in the form of other changes to earned benefits. Silvers gave the example of “Chained CPI,” which cuts Social Security by changing how benefits are calculated. “Chained CPI is the vampire of American politics,” Silvers told the Washington Post. “It keep being shot through the heart and it keeps reviving.”
Here’s another vampire idea that needs to die: raising the Medicare eligibility age to 67.
The argument typically goes like this: with modern medicine, people are living longer than they did when Medicare set the retirement age at 65, so why not raise the eligibility age to keep up with the times? After all, we need to save money!
This argument conveniently ignores what happens to the millions of 65 and 66 year olds who would no longer be able to access coverage through Medicare, which they have paid into throughout their entire lives.
Many of these seniors with low enough incomes will be pushed into Medicaid, shifting costs onto that other program. Some will have incomes high enough to be ineligible for Medicaid but low enough to qualify for subsidies to purchase insurance on the health exchanges on the Affordable Care Act.
But many more seniors will lose coverage altogether, according to the Center for Budget and Policy Priorities, because while their incomes make them ineligible for Medicaid or subsidies, health insurance companies will consider them to be extremely expensive. “Because exchange plans could charge the oldest workers three times as much as the youngest, unsubsidized premiums could reach $10,000 to $12,000 (in 2014 terms) for 65- and 66-year-old individuals and twice that for couples.” Even if every state implemented ACA completely, that’s about 200,000 more uninsured seniors, according to Matt Stoller of the Roosevelt Institute.
So for increased pressure on Medicaid and more seniors unable to buy coverage at all, how much money do we save? The Congressional Budget Office has updated numbers on that front: the net savings would amount to less than $3 billion a year, a paltry sum in the context of the federal budget.
Thursday, the CBO said the overall savings wouldn’t amount to as much as it had previously estimated. Instead of saving the federal government about $113 billion over a decade, CBO now figures it’s more like $19 billion over eight years starting in 2016.
It will keep people working longer, and that means it will cost their employers—and everyone with private insurance—more in insurance premiums to cover this older, sicker population. The thing is, people still need health care when they’re 65. There isn’t a magic two years between 65 and 67 when everyone is healthy and doesn’t need to go to the doctor.
If we are serious about raising revenue and dealing with our fiscal health, we ought to stop looking at seniors – who have earned Social Security and Medicare by paying into it through a lifetime of paychecks – and start looking at the complex web of tax avoidance schemes of the very billionaires and large corporations that are pushing these cuts to begin with.
“Chained CPI is like the vampire of American politics,” Silvers said. “It keeps being shot through the heart and it keeps reviving. The reason it keeps coming back is because it has billionaires behind it.”
Naturally, the network’s anchors didn’t much like the sound of that. CNBC is one of Wall Street’s main TV mouthpieces, and it is in Wall Street’s interest that Social Security and Medicare are perceived as “entitlements” instead of the earned benefits of workers. After all, they want our politicians to balance the budget and “fix the debt” on our backs, not by raising taxes on their large incomes and investments.
The exchange Silvers had with CNBC anchor Simon Hobbs crystallized this clearly.
Damon Silvers: We’re being really clear. We’re not going to give cover to Democrats who think it’s a good idea to take away economic security from our most vulnerable citizens. We’re extremely clear about that and not embarrassed about it whatsoever. We want a really clear message out there. If you cut social security benefits or medicare benefits to our seniors, to our most vulnerable people in the country, you are going to get no support on it. It only treating them fairly there will be any progress going forward.
Simon Hobbs: Are you as clear on the reality that if you have don’t cut entitlement benefits this country may well go bankrupt?
Damon Silvers: That’s frankly not true. That’s a lie put forward by billionaires who don’t want to pay higher taxes. Social Security is the best funded aspect of our retirement system today and Medicare’s long-term issues are integrated with the long-term issues of our health care system. Neither program is overgenerous. In fact both programs are undergenerous. The only people who believe what you said are people not counting on those programs and who are worried their very large incomes will be taxed.
The letter, signed by 51 Republican lawmakers, says that “Social Security provides us the best opportunity to begin solving our nation’s significant budget imbalances” and that “the ongoing fiscal discussions in Congress provide an opportunity to address entitlement program deficits…with our limited time frame to take action before we run up against fiscal deadlines.”
In other words, let’s use Social Security to reduce the deficit, and let’s use this manufactured budget crisis to get our way.
How do these 51 Republicans want to “change” Social Security to solve our budget imbalances? Their letter is not specific, but they point out that there are a “relatively few, well-known options” to do so.
Indeed there are. We have seen these well-known options trotted out by Republican members of Congress over and over again.
For example, the cover letter from Rep. Reid Ribble (R-Wis.) specifically identifies three “well-known options” to cut Social Security benefits:
Cutting Social Security benefits with a chained CPI cost-of-living formula;
Ribble spells out exactly how the upcoming “fiscal deadlines” can be used to get these Social Security proposals through Congress. First, you increase the debt ceiling for six weeks, then in the intervening six weeks you attach Social Security legislation to a longer-term increase in the debt ceiling.
Perhaps the most “well-known option” to reduce the deficit by “changing” Social Security is the “chained” CPI, which would cut Social Security benefits by reducing Social Security cost-of-living adjustments (COLAs).
In Ribble’s district in Wisconsin, there are more than 140,000 Social Security recipients whose benefits would be cut because of the “chained” CPI. The benefits of Ribble’s constituents would be cut $4 million in 2015 and $57 million in 2023.
It might be safe to assume that many of these constituents who would suffer the most from Republican hostage-taking are tea party Republicans.
Of course, cutting Social Security benefits is just one of the ransom demands made by Republicans in Congress. As AFL-CIO Policy Director Damon Silvers recently wrote:
That’s why people need to tell the president, ‘stand tall, we are with you. No negotiating with hostage-takers. Not about the Affordable Care Act, not about the Grand Bargain and certainly not about cuts to Social Security, Medicare or Medicaid, or more giveaways for big corporations that outsource jobs. You won the election. You must defend democracy and you must stand up for the 99%, and that means no more rewarding hostage-takers.’