Tag: Social Security

What To Do About Social Security and Medicare

The Daily Escape:

Lupine and poppies, near Glendale, AZ – March 2023 photo by Marion Cart

From Joe Perticone:

“Social Security and Medicare are headed for insolvency—that’s just a mathematical, demographic fact. But when it comes to addressing the problem, there’s virtually nothing the two parties actually agree on. For years, Republicans have waffled between proposing cuts and kicking the can down the road.”

Republicans are correct that Social Security (SS) and Medicare (M) are marching toward insolvency. But they trip over their own feet with their proposals to save them. Republicans are wrong to think they can solve the solvency questions without raising taxes. Once the Republicans take taxes off the table, they’re left without any real solutions to propose.

The Biden administration has done a good job in pre-emptively going after Republican’s ideas about cuts in Social Security and Medicare benefits. The result is that the GOP is squabbling between themselves and scrambling to come up with a plan they could take to the public.

It’s not just the federal debt that should be discussed. Dr. Donald Berwick head of Medicare and Medicaid during the Obama administration wrote in JAMA: (emphasis by Wrongo):

“A total of 41% of US adults, 100 million people, bear medical debts. One of every 8 individuals owes more than $10,000. In Massachusetts, 46% of adults say they skip needed care because of costs. As of 2021, 58% of all debt collections in the US are for medical bills.”

The WaPo explains why people who live in the American South have bad credit scores. It turns out that neither race nor poverty were the deciding factors. It was medical debt:

“Of the 100 counties with the highest share of adults struggling to pay their medical debt, 92 are in the South, and the other eight are in neighboring Oklahoma and Missouri…”

But why the South? Yes, as a region, it’s unhealthy. But there are several Northeastern states where residents struggle with chronic health conditions but have good credit. One thing that stands out is the lack of Medicaid:

“…a recent analysis in the Journal of the American Medical Association…found that medical debt became more concentrated in lower-income communities in states that did not expand Medicaid after key provisions of the Affordable Care Act took effect in 2014.”

So bad health and bad credit are because of Republican governors’ refusal to expand Medicaid to cover more poor people. Leave it to the south to show a MAGA future for all of us: undereducated, unhealthy, and neck-deep in debt.

More from WaPo:

“In states that immediately expanded Medicaid, medical debt was slashed nearly in half between 2013 and 2020. In states that didn’t expand Medicaid, medical debt fell just 10%, the JAMA team found. And in low-income communities in those states, debt levels actually rose.”

It’s probably not a surprise that deep medical indebtedness isn’t a threat in any other developed nation on earth. It isn’t a surprise that health care in the US costs nearly twice as much as care in any other developed nation, while US health status and longevity lag far behind.

Legislating in the US is always a process. That means Congress labors to find incremental gains they dress up as reforms. The 1983 deal struck by Reagan and Democratic Speaker Tip O’Neill is considered to be one of the great bipartisan compromises. It combined benefit cuts with revenue increases to put Social Security back on a sound financial footing that has lasted for decades.

This time, getting rid of the income cap on the SS tax would help to keep it funded for an additional 35 years. At that point the Baby Boom demographic bulge will be over, and a different set of reforms can be proposed.

Medicare is the second largest program in the federal budget, equaling 10% of the total. Medicare spending is also a major driver of long-term federal spending and is projected to rise from 4% of GDP in FY 2021 to about 6% in FY 2052 due to the retirement of the Baby Boom generation and the continuing rapid growth of per capita healthcare costs:

Medicaid accounts for another 9%. But it’s also the largest source of federal revenues for state budgets. As a result of the federal dollar matching structure, Medicaid has a unique role in state budgets as both an expenditure item and a source of revenue.

Over the next few years, we’re going to need to come up with solutions to the problem of what to do about growing health care costs that are (along with lower tax revenues from recent Republican tax cuts) driving our ever larger US budget deficits.

Both sides are going to have to compromise. There’s no way we’re going to balance the budget in 10 years (or ever) unless we talk about increasing revenues while slowing the growth in the costs of health care that our entitlement programs cover.

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Fixing Social Security

The Daily Escape:

Tahitian Gardenia, Maui – 2013 photo by Wrongo

On June 13th, The New York Times had an article on the Social Security (SS) shortfall: (emphasis by Wrongo)

“Unless a political solution is reached, Social Security’s so-called trust funds are expected to be depleted within about 15 years. Then, something that has been unimaginable for decades would be required under current law: Benefit checks for retirees would be cut by about 20 percent across the board.”

With life expectancy increasing, by 2035, Social Security estimates, the number of Americans 65 or older will increase to more than 79 million, from about 49 million today. This is the high point of eligibility, as the number of Baby Boomers will start to decline by then.

Americans are counting on Congress to fix this problem. As usual, there are two answers, one offered by each Party. The GOP thinks that we can’t afford SS and Medicare. In fact, they’ve been trying to cut our SS checks since the Reagan presidency. The right-wing Heritage Foundation offered a new policy paper in May. As in the past, they favor cuts to benefits and siphoning money from payroll taxes into individual investment accounts. This is a recycling of George W. Bush’s 2005 idea, that the Democrats blocked at the time. The Heritage Foundation overlooks that at one time, pensions were widespread, and SS was a supplementary source of income for many retirees, not their primary source as it is for most today.

The Democrats have suggested an increase in Social Security benefits, along with higher taxes for the wealthy. Taken together, these measures would eliminate the SS program’s financial shortfall.

Millions of words have been written about how to deal with the shortfall. Here is one idea from Dale Coberly posted at the Angry Bear:

“All we have to do is pay an extra dollar per week per person per year.  After next year It will be more like a dollar and ten cents.  And if we wait another year it will be about a dollar and twenty cents for the first few years, then a great deal less than a dollar per week on average. This would keep Social Security solvent essentially forever.  The Deputy Chief Actuary at Social Security agrees that this is true.”

Most of the political discussion is about “we can’t afford it”. They mean the US government. But, when we think that if the individual wage earner CAN afford it, there’s no reason why the government can’t pay for it. This isn’t socialism, and the US government doesn’t have to come up with $ Trillions all at once.

Social Security was not designed to be welfare. It isn’t an “entitlement”, as though it’s an unearned benefit. People contribute a hefty portion of their annual income for their entire working lives to the SS fund, and they have the right to their SS payments in retirement. The original intent was for workers to save enough money to pay benefits when they were too old to work. Today, even the “rich” are not paying in more than they will get back with reasonable interest.

The Times article doesn’t mention that the easiest, and most obvious solution is raising or eliminating the SS cap. Most people forget that only the first $132,900 are taxed. Anyone earning more than that is paying into Social Security at the same rate as the rest of us.

Here’s a message to Jeff Sommers, who wrote the NYT article: You are fanning the flames of a false emergency when there is a sound solution to be implemented.

Several studies have shown that simply removing the cap, which affects less than 10% of US taxpayers, would solve the SS program’s solvency issues indefinitely. No benefit cuts needed. No political horse trading needed between the Republicans and Democrats, except that the GOP base will scream bloody murder if they are forced to pay in more than they will get back.

But, why should we give a pass to the rich, when the rest of us depend disproportionately on social security income to meet basic needs?

Now all we need is the political courage to get it done, which is in absurdly short supply these days.

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Will Dems Counter the GOP’s Plan to Cut Social Security?

The Daily Escape:

Fall in Paradise Valley, Yellowstone NP – photo by Annie Griffiths

The mid-terms are coming, and we are having difficulty focusing on some important issues, because America has a short attention span, and we’ve been Kavanaugh ‘ed and Khashoggi ‘ed so much lately.

Two issues that are linked are the amazing deficit caused by the Trump tax cuts, and the moves being plotted by Mitch McConnell, Paul Ryan and others to cut Medicare, Medicaid and Social Security.

Let’s start with tax revenues. It was clear to critics that the 2017 GOP tax cut was going to quickly increase the budget deficit and add $ trillions of the national debt, and here it is:

The federal deficit grew by nearly $800 billion over the first fiscal year of Trump’s presidency, during which the Republican Congress passed a tax cut targeted mostly to corporations and the wealthy, which is projected to add more than $1 trillion to the deficit over the next 10 years.

And it didn’t take long for Republicans to insist that the deficits were actually caused by Social Security, Medicare, and Medicaid, not their tax cuts for corporations and the wealthy. From Vox:

Fresh off the news that the deficit is increasing under President Donald Trump, Senate Majority Leader Mitch McConnell told Bloomberg News that Congress should target Social Security and Medicare for cuts to address the growing federal debt.

The White House and GOP leaders promised America that the tax cuts would pay for themselves, but they haven’t. The growing federal deficit hasn’t caused Republican leaders to reconsider their tax policy. Instead, they argue that entitlement reform — Republican-speak for cuts to social safety net programs — is what’s really needed to address the federal deficit. From McConnell’s interview with Bloomberg this week:

It’s disappointing, but it’s not a Republican problem….It’s a bipartisan problem: unwillingness to address the real drivers of the debt by doing anything to adjust those programs to the demographics of America in the future.

Republicans have opposed Social Security and Medicare since they were created. But because these programs enjoy overwhelming support from the American people, they would not normally talk about their plans for benefit cuts three weeks before an election.

But, they are doing just that.

This is a real issue, since those programs make up a large share of federal spending: Medicare was 15% of the federal budget in 2017, and it’s projected to grow to 18% by 2028. Social Security is a bigger chunk of the budget (24% in 2016), and our aging population will put a greater strain on the program. Here is the budget breakdown:

Democrats want to expand, not cut these programs. Republicans may see their last, best chance to cut them slipping away with the mid-terms. They seem determined not to let that happen, so this will be a big issue in the lame duck sessions. The GOP will use the cost of their tax giveaways as the excuse to do what they have wanted to do to social programs all along.

If the GOP is talking like this before the mid-terms, imagine the carnage if they keep control of both Houses of Congress!

People who want to defend Social Security and Medicare better work hard to get out the vote in November. And the latest news about the House isn’t encouraging. Larry Sabato’s Crystal Ball reports that Democrats aren’t there yet:

A race-by-race analysis of Democratic House targets shows the party is close to winning the majority, but they do not have it put away, in our judgment, with Election Day less than three weeks away.

Barring a big, positive late change in the political environment in favor of Republicans, the bare minimum for Democratic House gains is in the mid-to-high teens. The needed 23-seat net gain is not that far beyond that and there are many different paths Democrats can take to achieve it.

He says Dems can count on 18, but need 23…

Assuming that the Dems won’t go along with the GOP’s planned social spending cuts, Republicans will try to blame Nancy Pelosi, Chuck Schumer and the Democrats, assuming their cuts to social programs fail.

Republicans will say “Democrats plan to raise taxes on tens of millions of middle-class Americans” to cut the deficit, and that’s true. But, it would be just a part of the package of fiscal moves to cut the deficit, with the primary focus on clawing back some of the massive Republican corporate tax cuts.

Democrats need to talk this up in the next three weeks to counter the GOP’s clearly articulated game plan.

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Saturday Soother – December 16, 2017

The Daily Escape:

Central Park NYC, December 12th – 2017 photo by Rommel Tan

Long-time readers know that Wrongo has a very low opinion of Speaker of the House Paul Ryan (R-WI), who he considers an intellectual joker. He is often given a pass by the main stream media, who suggest that he is a thoughtful and principled Republican. But once again, he looked like a partially-informed hack on Thursday when he said that Americans need to have more babies or risk a collapse of Medicare and Social Security.

His concern is about the declining US birth rate. The Boston Globe reports that:

Ten years ago, the typical American woman had about 2.1 children. Today, it is about 1.77, representing a collapse in fertility on par with the declines in other countries that yielded Japan’s rapidly graying population in the 1990s, or Canada’s massive present-day demand for immigrants.

From Ryan’s news conference: (parenthesis by Wrongo)

People — this is going to be the new economic challenge for America. People…I did my part, (Ryan has three kids) but we need to have higher birth rates in this country. Meaning, baby boomers are retiring, and we have fewer people following them in the work force…We have something like a 90% increase in the retirement population in America, but only a 19% increase in the working population in America…

It is true that birth rates in the US have declined, but that’s not necessarily bad news. For example, birth rates for teenagers hit a record low last year. Also, Wrongo recently described McKinsey’s report on jobs lost to automation that showed 75 million jobs are at risk in the US by 2030.

Perhaps we already have too many workers for the jobs revolution that is occurring all around us.

And there’s an obvious solution to the problem that Ryan ignores: Allowing more immigrants into the country, either to fill the jobs being vacated by retiring baby boomers, or as necessary to meet tomorrow’s job requirements. But Ryan shows that he’s all in with Trump’s hard line anti-immigration positions.

Should American women become brood mares? This isn’t a new concept. The fear of being outnumbered by racial and ethnic minorities is the driving force behind today’s alt-right, and the view was around in earlier white nationalist movements. HuffPo interviewed Kelly J. Baker, author of “Gospel According to the Klan”. Baker says that the need to ensure that white women were having more white babies was a key part of the Ku Klux Klan’s platform during its resurgence in the 1920s: (emphasis by Wrongo)

Baker said that the 1920s Klan was “nervous” about the possibility of widespread birth control for white women…To push back against the rising availability of effective birth control, the Klan told white women that having as many white children as possible is your job and it matters for your family and your race and for America.

And now, Ryan makes this a mainstream GOP idea. For all of the political empowerment of women in today’s headlines, the Ryan argument lands in the same place as today’s alt-right, and yesterday’s KKK.

Ryan and the GOP want to see more babies, but they won’t support young kids with health insurance through the Children’s Health Insurance Program (CHIP). Quartz reports that next month, 600,000 American children will lose their CHIP coverage. CHIP has been instrumental in ensuring health care coverage of children in US families that aren’t poor enough to qualify for Medicaid, but cannot afford any other form of insurance.

Republicans talk a lot about the cost of healthcare. The cost of not providing healthcare to children in an America with failing schools is impossible to calculate. It is very high, it lasts lifetimes and possibly, generations.

Yet, Ryan is saying that American women need to have more babies to Make America Great Again.

And we know that he’s asking for more white babies.

OK, it’s Saturday, and we need a break from toxic politics, and maybe from obsessing about shopping for gifts. Hanukkah began this week, so Wrongo looked for a soothing piece of music that was inspired by the celebration of the Festival of Lights. Here is “Hanukkah Overture for String Orchestra and Clarinet” by Adam Shugar.

If you look at the YouTube video, you will see that it has just 5,000 views. It should have many more. You should watch it because the music is good, and unlike most orchestral pieces, this string orchestra performs while standing. The video is shot from a high angle, and looking down allows you to see them all as they play together, almost like a choreographed dance. Here is “Hanukkah Overture for String Orchestra and Clarinet” played by the Orchestre Nouvelle Génération under the direction of Airat Ichmouratov, with Mark Simons on clarinet:

Those who read the Wrongologist in email can view the video here.

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Saturday Soother – December 2, 2017

The Daily Escape:

St Petersburg Russia’s Church of the Saviour – photo by Amos Chapple

As Wrongo writes this on Friday, it appears that the Senate Republicans have the votes to pass their version of the tax bill. The House passed their version on November 16th. The House Republican’s tax bill includes a major shift in tax policy that will mean a hidden tax increase on every American taxpayer over the coming decades. From the Washington Times:

Republican tax-writers have decided to shift the tax code’s inflation index from the Consumer Price Index, or CPI, to something known as chained CPI, which is a slower-growing method of calculating cost-of-living increases.

How would this work? The new tax proposal replaces the current CPI, which is based on changes in prices for urban consumers, with the chained CPI. Various estimates show that this method would lower reported inflation by as much as 0.30% a year.

This will create two pocketbook issues for taxpayers. First, using a lower rate of inflation to calculate future tax rates will mean that tax brackets will adjust more slowly than with regular CPI. Therefore, taxpayers will move into higher tax brackets if their income increases faster than chained CPI, paying more in taxes. More from the Washington Times: (emphasis by the Wrongologist)

It works out to taxpayers paying $128 billion more to Uncle Sam than they would otherwise over the next decade, and $500 billion more in the subsequent decade.

Second, chained CPI will change how the government calculates inflation for the purpose of adjusting Social Security payments. CPI is the basis for cost-of-living adjustments that affect many government benefits. If the measure of inflation is reduced, then the increases in Social Security payouts to the public would also be lowered.

This, despite the fact that CPI already tends to under-report price increases. If chained CPI is implemented, Barry Ritholtz says: (emphasis and brackets by the Wrongologist)

It would allow Congress to come up with about half of the funds needed to cover the proposed GOP tax cuts by pushing more people into higher tax brackets and [by]…creating a hidden tax on everyone who will ever get Social Security in the future.

This is based on the long-held Republican idea that “if only we could lower inflation as reported in the consumer price index, we could afford more tax cuts.”

And adopting chained CPI will reduce future Social Security payments without America having any sort of honest debate about it. You can compare the two measures of inflation side by side at this Bureau of Labor Statistics page: Chained consumer price index for all urban consumers (C-CPI-U) and the consumer price index.

When Trump was elected, the floodgates were opened. Any old, bad Republican idea is now legitimate.

Assuming that the House and Senate bills are reconciled and a tax bill is passed and signed by Trump, it may well be the worst piece of legislation in a century. It would finally undo the legacy of both FDR and Lyndon Johnson, something that has been a wet dream of the Right for generations. Emboldened by its passage, the GOP will follow it by taking a scythe to much of what remains of the social safety net.  Worse still, since the GOP is doing away with the inheritance tax, Republicans will have ensconced themselves as a permanent, hereditary financial and governing elite.

That will surely make America Great Again.

We have to get up off the couch, and fight for what remains of the New Deal and Great Society programs. This fight will be town-by-town, political office by political office, until progressives can compete in every red state for control of its legislature and governorship.

It’s another Saturday, the end of a long week in which it became clear that the country is approaching a cliff. We need some inspiration. So we turn to Meghan Markle.

Wrongo hadn’t heard of Meghan Markle until her engagement to the guy who is 6th in the line of succession to the throne in England, splashed across the news. But, it turns out she is an intelligent, independent person with agency. Markle was named the UN’s Woman’s Advocate for Political Participation and Leadership in 2015. Here she is speaking about advocacy at the 2015 UN Women conference. It’s a winning and inspiring performance, and, while it’s a sample of one, it shows that Millennials are gonna do a fine job with the planet:

Those who read the Wrongologist in email can view the video here.

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Make Social Security Great Again

A senior House Republican is circulating a proposal that would make major cuts and changes to the Social Security system.

Insiders think this is a move to contravene President-elect Trump’s vow to leave the retirement program for 61 million retirees and their families untouched.

The proposal was drafted by Rep. Sam Johnson (R-TX), chair of the subcommittee on Social Security of the House Ways and Means Committee. It was formally introduced as a bill last Thursday. It includes two measures that might attract some interest from Democrats. One would increase retirement benefits for lower-income workers, and another would increase the minimum benefit for low-income earners who worked full careers.

OTOH, other provisions put in place a series of highly controversial measures long debated by both parties. Those measures include:

  • Gradually raising the retirement age for receiving full benefits from 67 to 69.
  • Adopting a less generous cost of living index than the current one.
  • Inaugurating means testing by changing the benefits formula to reduce payments to wealthier retirees.
  • Eliminating the annual COLA adjustments for wealthier individuals and their families.

Democrats think that Johnson’s plan, if adopted, would cut current benefits. From Nancy Pelosi:

Slashing Social Security and ending Medicare are absolutely not what the American people voted for in November…Democrats will not stand by while Republicans dismantle the promise of a healthy and dignified retirement for working people in America.

Rep. Johnson is 86 and has both a military pension and a congressional pension, so Social Security is far less important to him than it is to you.

For Republicans, Johnson’s bill is the opening salvo in a much larger conversation about Medicare and Medicaid in the coming year. Speaker Paul Ryan (R-WI) and House Budget Committee Chair Tom Price (R-GA), who will be the next secretary of health and human services, are both on record as wanting major changes to Medicare and Medicaid.

Democrats see the 2017 GOP plans as a frontal assault on the nation’s social safety net.

The argument has been that the Social Security trust fund will run out of money, but it is not in imminent danger. The Trustees Report in March warned that the fund will begin running out of money in 2034 when beneficiaries will have to face a 21% benefit cut.

Last week, Rep. Tom Cole of Oklahoma, a House Republican, and Rep. John Delaney of Maryland, a Democrat, renewed their support for a plan to create a bipartisan, 13-member panel to recommend to Congress ways to prevent the massive trust fund from running out of money while extending its solvency for another 75 years.

They envision that the new commission would operate along the lines of one created 35 years ago, in the Reagan administration. That commission helped pave the way for legislation that extended the life of Social Security by 50 years. Some possible proposals, such as raising the retirement age, increasing federal payroll tax revenues or altering the cost of living adjustments to save money will trigger strong opposition from the AARP, progressive activists and Democrats.

It’s long been a GOP theme that since Social Security needs a fix by 2033, we need to cut benefits now. Never mind that a minor upward adjustment to the income limit for the Social Security tax would resolve the problem with no cuts to benefits.

We’ll see if President Donald J. Trump supports this bill, after saying very loudly during the campaign that he was against touching Social Security.

Maybe the J stands for “just kidding.”

Since we’re on the verge of becoming “great” again, or, at the very least, having the trains run on time, maybe El Jefe can get the GOP to leave Social Security alone?

If you’re someone who requires the aid that social security brings and are having trouble making a claim, you may wish to contact someone like a Social Security disability lawyer in KY. This way you’ll have some expertise on side so that you can put forward a case that could have a better chance of succeeding than if you go it alone.

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