Next year, the millions of Social Security recipients will see the smallest cost-of-living adjustment ever—just 1.5% or about $19 a month. If the politicians—and their billionaire friends who don’t want to pay the same taxes workers do—who are pressing hard for the “chained” CPI benefit cut had their way, the adjustment would be even smaller than 2014’s historic low.
Edward F. Coyle, executive director of the Alliance for Retired Americans, says, “I hope this news about next year’s Social Security COLA will cause politicians in Washington to reconsider their support for the ‘chained’ CPI.”
How can anyone look at an increase of around 1.5% and think ‘That’s too big?’ Clearly, these politicians need to spend more time talking to seniors who are struggling. Next year’s increase will be 1.5%. Imagine if it were even less. Then imagine if that smaller increase were to be compounded over time. That is the ‘chained’ CPI.
The “chained” CPI proposal would reduce cost-of-living adjustments for Social Security and prevent benefits from keeping up with inflation. At age 75, a senior’s benefits would be cut by about $650 per year (on average). At age 85, those benefits would be cut by about $1,150 per year, and at age 95, by about $1,600 per year. For more on what the “chained” CPI would do, go to the Alliance “chained” CPI fact sheet.
On the other hand, Sen. Tom Harkin (D-Iowa) and Rep. Linda Sánchez (D-Calif.) have introduced the Strengthening Social Security Act (S. 567 and H.R. 3118). The legislation would measure inflation not with the “chained” CPI, but with a more accurate measure of inflation for seniors (the CPI-E). It also would improve Social Security’s solvency by lifting the cap on earnings subject to the Social Security tax, so that all of America’s workers pay the same rate.
AFL-CIO Policy Director and Special Counsel Damon Silvers recently told Salon that the AFL-CIO opposes any benefit cuts to Social Security, Medicare and Medicaid.
The labor movement is going to fight to the death to stop cuts to Social Security and Medicare and Medicaid. Not ‘unreasonable cuts.’ Not ‘cuts without tax increases.’ Cuts period. We’re against all of them, we will fight them ferociously, and we will give no cover to any Democrat who supports them
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.
Detroit public workers have already made sacrifices to keep the city afloat, including a $160 million in annual savings from a 10 percent pay cut, health benefit reductions, and a 40 percent cut in future pension benefits, Orr is making public worker pension cuts a key part of Detroit’s restructuring.
Remember, Orr was appointed by Gov. Snyder to be “emergency financial manager,” a position that does not answer to voters yet can overrule any local elected official. Michigan repealed the governor’s ability to appoint such managers in 2012, but Snyder and the legislature simply passed the law again.
My name is Donald Smith and I worked for the city of Detroit for more than 29 years.
Over close to 3 decades of service to the city earned me a pension of about $800 a month. After taxes and health care expenses are taken out, I am left with very little money each month to pay my rent, buy groceries and to cover my medical prescriptions.
Because of your decision to force Detroit into bankruptcy, I am starting to wonder which of my basic I needs can live without. I did not bankrupt Detroit – in fact, I went to work every day to make it a better place to live. So I can’t understand why you would ask retirees like me to give up the pension benefits we earned.
If you believe that we can afford to make do with less, then you must not know us. That’s why I want to invite you to my home so you can get to know me and see what life is like for retired city employees. I hope you’ll join my family for dinner and hear what really matters to us in Detroit.
We are willing to work around your busy schedule. We look forward to sharing a meal and our perspective with you.
Smith gets $800 a month from his public pension and $1,000 a month in Social Security. “Sometimes I have to make up my mind between getting my medicine and food,” he told WXYZ.
My grandfather spent 20 years of his life working in a Detroit factory.
He worked hard for what he earned. He trusted that sacrificing some of his pay to invest it in a pension would pay off after years of hard work. So that’s what he did. He retired, and his pension allowed him to provide for himself and my grandmother.
He and his coworkers knew that the pensions that they invested in were a valuable part of their income, not just a handout from their employer.
Right now, in Detroit, Emergency Financial Manager Kevyn Orr doesn’t see pensions the same way.
A quick review: In 2011, Gov. Rick Snyder and his allies in the Republican-controlled legislature passed a bill allowing entire cities to be taken over by “emergency financial managers.” These EFMs, appointed by the governor, were allowed to completely overrule decisions made by local elected leaders.
What Orr isn’t saying is what these workers sacrificed to protect their pensions. They accepted pay cuts, health insurance cuts and cuts to future pension benefits just to guarantee that the pensions they had worked a lifetime for would be there for them when they retired.
This is unacceptable, and we need to do better.
We can’t allow the wealthy elite like Snyder and Orr to take away hard-earned income from working families. Workers like my grandfather worked, saved, and sacrificed for years to make sure their pension would be there. It’s not a piggy bank for Orr and his rich friends to play with.
While the country remains shut down because of irresponsible House Republican hostage-taking, progressive members of Congress and working families are looking ahead to fight against any proposed grand “bargain” that would include benefit cuts to Social Security, Medicaid or Medicare. Members of the Congressional Progressive Caucus (CPC) spoke Thursday before working families and allies, specifically rejecting any such cuts.
While some politicians and pundits are proposing the use of the so-called “chained” CPI to determine Social Security cost-of-living adjustments over time, progressives and working families realize that the “chained” CPI would actually cut the income of retirees and people with disabilities. Hostage-taking House Republicans keep changing their random demands to end the government shutdown, and their latest demand is for Democrats to agree to cut Social Security benefits or Republicans will keep hurting people through refusing to pass a clean continuing resolution.
Rep. Elijah Cummings (D-Md.) noted the problems with “chained” CPI: “The ‘chained’ CPI would result in very real and harmful cuts for seniors, the most vulnerable in our society. These cuts would only deepen over time while the cost of living goes up.”
Pointing out a better policy option, Rep. Mike Honda (D-Calif.) said: “Instead of talking about the ‘chained’ CPI or cutting benefits, my mom would say you just need to make the pie bigger, we’re just going to talk about one cut—and that’s cut the crap….Cut the crap, scrap the cap.” Currently, wealthy Americans don’t pay into Social Security on any income above $113,700. Scrapping that arbitrary cap would go a long way to shoring up Social Security’s future.
Rep. Alan Grayson (D-Fla.) made it clear where the CPC stands on these issues: “We will vote against any and every cut to Social Security, Medicare and Medicaid,” he said. “If it ain’t broke, don’t break it.”
Pension battles are heating up in cities across the nation as conservatives and Republicans are pushing to strip public workers of their retirement plans, often with little or nothing offered as a replacement. The primary argument, although a false one, is that these pensions are “too expensive” and that during times of fiscal woes, cities can’t afford them. In reality, these plans are often little more than veiled attempts to abandon commitments to workers and shift spending to more conservative priorities.
Working families had a victory in Tucson, Ariz., this month when a judge threw an initiative off the November ballot after it was determined that many of the required signatures gathered to put the question before the voters were improperly gathered. The initiative would’ve eliminated the city’s pension plan and replaced it with a 401(k)-style plan.
While there was a victory for working families in Arizona, pension plans in numerous other cities aren’t quite as safe. Here are five cities to watch as pension plans become a more prominent target of conservatives:
1. Cincinnati: A group of mostly out-of-state tea party activists, including the Liberty Initiative Fund from Virginia, succeeded in gathering enough signatures to put an initiative on the Nov. 13 ballot that is very similar to the one that just failed in Tucson. The plan, if passed, would eliminate the city’s pension fund for any future hires, replacing it with 401(k)-style private funds directed by individual employees, effectively privatizing the pension system. Many of the city employees who would be in the new plans are not eligible for Social Security and would have no safety net to fall back on if the stock market did poorly or they failed to successfully manage their new accounts.
2. Jacksonville, Fla.: The Pew Charitable Trust is partnering with the John & Laura Arnold Foundation and is expected to promote what is called a “cash balance” plan to replace the city’s current pension plan. If the plan mirrors what Pew proposed in Kentucky, it would amount to a significant reduction in retirement savings for future retirees, who would get a set cash amount based on years of service. This measure has not been officially proposed yet.
3. Memphis, Tenn.: The mayor’s office is proposing a series of pension changes that the local Fire Fighters (IAFF) call a barrage of attacks on workers. The proposed changes include setting a minimum age to receive retirement benefits, reducing benefits for employees who take early retirement and using a salary average to determine pension benefits.
4. Phoenix: Citizens for Pension Reform is gathering signatures for a ballot initiative that would switch the city’s pension plan from a defined-benefit plan to a defined-contribution plan and capping potential benefits for current employees. The switch, similar to the proposals in other cities, would amount to a benefit cut.
5. Tulsa, Okla.: The mayor is also suggesting making the change from a defined-benefit plan to a defined-contribution plan. The change would affect only new employees and would not include firefighters or police, who are enrolled in a state-managed retirement system.
In a humorous treatment of a serious subject, AFSCME is using GIFs—those ubiquitous, short animated photos—to tell the story of Detroit’s bankruptcy.
Featuring goofiness from cat boxing, to “Seinfeld’s” Newman, corgis on a treadmill, Eminem’s out-of-it halftime interview with Kirk Herbstreit and Brent Musburger and 20 more, GIFtroit outlines the facts behind Detroit’s bankruptcy, including Gov. Rick Snyder’s (R) hijacking of state revenue due Detroit, his financial “martial law” edict that strips cities of the power to govern themselves, Wall Street’s role and more.
GIFtroit also explains how more than 21,000 city retires are threatened with pension and health care benefit cuts while current city workers, including firefighters and police officers, face wage, benefit and job cuts.
While retirees and workers are the targets of the budget-gutting advocated by Snyder’s appointed “emergency financial manager,” Kevyn Orr, GIFtroit points out that Orr is:
Living in a taxpayer-funded hotel penthouse suite, spending extravagant amounts on room service and hiring assistants at $225,000 salaries.
AFSCME and other Detroit unions are challenging the city’s claims in U.S. Bankruptcy Court, and Judge Steven Rhodes is expected to rule on the city’s eligibility for bankruptcy protection later in the fall. Today, more than 100 Detroit workers, retirees and residents who filed objections to the bankruptcy are getting a chance to speak out before Rhodes.
1. “There is nobody in this country who got rich on their own. Nobody. You built a factory out there—good for you. But I want to be clear. You moved your goods to market on roads the rest of us paid for. You hired workers the rest of us paid to educate. You were safe in your factory because of police forces and fire forces that the rest of us paid for. You didn’t have to worry that marauding bands would come and seize everything at your factory….Now look. You built a factory and it turned into something terrific or a great idea—God bless! Keep a hunk of it. But part of the underlying social contract is you take a hunk of that and pay forward for the next kid who comes along.”—September 2011.
2. “People feel like the system is rigged against them, and here is the painful part, they’re right. The system is rigged.”—September 2012.
3. “Hardworking men and women who are busting their tails in full-time jobs shouldn’t be left in poverty.”—August 2013.
4. “Look around. Oil companies guzzle down the billions in profits. Billionaires pay a lower tax rate than their secretaries, and Wall Street CEOs, the same ones that direct our economy and destroyed millions of jobs still strut around Congress, no shame, demanding favors, and acting like we should thank them. Does anyone here have a problem with that?”—September, 2012.
5. “It is critical that the American people, and not just their financial institutions, be represented at the negotiating table.”—Summer 2009.
6. “Americans are fighters. We’re tough, resourceful and creative, and if we have the chance to fight on a level playing field, where everyone pays a fair share and everyone has a real shot, then no one—no one can stop us.”—September 2012.
7. “And that’s how we build the economy of the future. An economy with more jobs and less debt, we root it in fairness. We grow it with opportunity. And we build it together.”—September 2012.
8. “I understand the frustration, I share their frustration with what’s going on, that right now Washington is wired to work well for those on Wall Street who can hire lobbyists and lawyers and it doesn’t work very well for the rest of us.”—October 2011.
9. “If you’re caught with an ounce of cocaine, the chances are good you’re going to jail….Evidently, if you launder nearly a billion dollars for drug cartels and violate our international sanctions, your company pays a fine and you go home and sleep in your own bed at night.”—March 2013.
10. “Corporations are not people. People have hearts, they have kids, they get jobs, they get sick, they cry, they dance. They live, they love and they die. And that matters. That matters because we don’t run this country for corporations, we run it for people.”—September 2012.
11. “If there had been a Financial Product Safety Commission in place 10 years ago, the current financial crisis would have been averted.”—Summer 2009.
12. “Nobody’s safe. Health insurance? That didn’t protect 1 million Americans who were financially ruined by illness or medical bills last year.”—February 2005.
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In a victory for some 3,100 retired Mine Workers (UMWA) members and a setback for Peabody Energy and its attempt to duck its health care obligations, a U.S. Court of Appeals’ bankruptcy appellate panel todayreversed a lower court’s ruling that would have allowed Peabody to shed its responsibilities.
The retirees worked for Heritage Coal before Peabody spun it off to Patriot Coal. The UMWA says Peabody created Patriot solely for the purpose of ducking health care and other obligations for miners and retirees.
A bright ray of good news in what has been a long, dreary period for the retirees, their dependents and widows who have been desperately worried about what’s going to happen to their health care.
The union has been engaged in a Fairness at Patriot campaign to win justice and protect the pensions and health care for the workers and retirees at Patriot and to hold Peabody accountable to its obligations. Says Roberts:
Peabody has spent years trying to get rid of its obligations to the thousands of retirees who made it the richest coal company in the world. This decision foils part of that plan. And it makes us even more determined to keep fighting to make sure the company lives up to its entire obligation to these miners.
UMWA members at Patriot Coal operations in West Virginia and Kentucky last week ratified a settlement the union reached with the company that makes significant improvements in terms and conditions of employment over a federal bankruptcy judge’s order from last May. But says Roberts:
We are now able to turn our full attention to securing the lifetime health care benefits Peabody and Arch Minerals [which also was involved in the creation of Patriot] promised these retirees. If those companies thought our public effort to highlight their poor corporate citizenship was over, they will quickly find out otherwise. We’re moving into a new phase of that effort, and soon. We fully intend to hold Peabody and Arch accountable.