Index the retirement age to longevity — i.e., increase the retirement age to qualify for Social Security — to age 69 by 2075.
Index Social Security yearly increases to inflation rather than wages, which will generally mean lower cost of living increases and less money per average recipient.
“Increase progressivity of benefit formula” — i.e., means test part of Social Security benefits by 2050.
Force more low-income individuals into Medicaid managed care.
Increase Medicaid co-pays.
Accelerate already-planned cuts to Medicare Advantage and home health care programs.
Create a cap for Medicaid/Medicare growth that would force Congress and the President to increase premiums or co-pays or raise the Medicare eligibility age (among other options) if the system encounters cost overruns over the course of 5 years.
Senator Bernie Sanders said in a statement:
“The Simpson-Bowles deficit reduction plan is extremely disappointing and something that should be vigorously opposed by the American people. The huge increase in the national debt in recent years was caused by two unpaid wars, tax breaks for the wealthy, a Medicare prescription drug bill written by the pharmaceutical industry, and the Wall Street bailout. Unlike Social Security, none of these proposals were paid for. Not only has Social Security not contributed a dime to the deficit, it has a $2.6 trillion surplus.
“It is reprehensible to ask working people, including many who do physically-demanding labor, to work until they are 69 years of age. It also is totally impractical. As they compete for jobs with 25-year-olds, many older workers will go unemployed and have virtually no income. Frankly, there will not be too much demand within the construction industry for 69-year-old bricklayers.
“Despite all of the right-wing rhetoric, Social Security is not going bankrupt. According to the Congressional Budget Office, Social Security can pay every nickel owed to every eligible American for the next 29 years and after that about 80 percent of benefits.
“If we are serious about making Social Security strong and solvent for the next 75 years, President Obama has the right solution. On October 14, 2010, he restated a long-held position that the cap on income subject to Social Security payroll taxes, now at $106,800, should be raised. As the president has long stated, it is absurd that billionaires pay the same amount into the system as someone who earns $106,800.
“With the richest people in this country getting richer and the middle class in decline, it is absurd that billionaires pay the same amount into the Social Security system as someone who earns $106,800.”
To be clear, this is not the final report of the fiscal commission, and several commission members have expressed strong opposition. But we should be taking it seriously as an attempt to influence the basic terms of the debate going forward, so that they can’t next offer up something that’s still horrible and paint it as a compromise just because it’s not quite as bad as this.
The threat to Social Security is real. Economist Dean Barker today, writing at TPM gives us some insight into why we should be very frightened:
This effort is being led by billionaire investment banker Peter Peterson. Mr. Peterson has personally profited to the tune of tens of millions of dollars from the “fund managers’ tax subsidy,” an obscure provision of the tax code that allows billionaires to pay a lower tax rate than schoolteachers and firefighters. However, Peterson believes in giving back. He has committed $1 billion to an effort that is intended to take away the Social Security benefits that people have worked and paid for.
As part of this effort, Peterson set up a whole new foundation, the Peter G. Peterson Foundation. He and/or his foundation created a “news service,” the Fiscal Times, which is intended to promote the view that we have no choice but to cut Social Security. The Fiscal Times has entered into agreements with the Washington Post and other credible newspapers to provide material.
Peterson is also funding the creation of a high school curriculum which is intended to tell our children that the in the future the country will be too poor to finance Social Security. He funded a silly exercise called “America Speaks,” which was supposed to convince an assembly of selected participants that we must cut Social Security after a daylong immersion in Peterson-style propaganda. (The people didn’t buy it.) And now his crew is spending $20 million on an ad campaign to convince people the world will end if we don’t cut Social Security.
Peterson’s started his own media propaganda outlet, and is actively involved in brainwashing high school students – all aimed at destroying Social Security. He’s got more money than he could ever spend in his life, but he wants to make sure YOUR retirement is spent living in a cardboard box.
Not only is this a perversion of the American social contract and the American dream, it’s also a slap in the collective faces of we the taxpayers who bailed these miserable greedsuckers out with TARP.
Think Progress has been taking a close look at laws that might come out of a Republican-controlled Congress (if that’s the outcome of next week’s elections), and yes, Social Security could be at risk. As TP notes, after their failure to privatize Social Security in 2005 Republicans learned to hide that that was their intention. But that doesn’t mean they don’t want to do it.
In total, 47 percent of House Republicans and 49 percent of Senate Republicans are on record supporting the privatization of Social Security. Some, including Rep. Michele Bachmann (R-MN), want to go even further and “wean everybody” off of Social Security altogether.
Here’s the list of Republicans who have supported privatizing Social Security. Read it and think about this: if they’d succeeded at putting Social Security into the stock market in 2005, what would have happened to America’s senior citizens when the financial collapse hit in 2008?
Here are the 104 Republicans in Congress who support privatizing Social Security (leadership in bold):
The Center on Budget and Policy Priorities takes a close look at Rep. Paul Ryan’s plan for cutting Social Security. Pointing out that the average Social Security retirement benefit is around $14,000 per year, they go on:
Starting from this modest base, Rep. Ryan’s Social Security plan would cut benefits for future retirees significantly in two ways: (1) reducing benefits for the top 70 percent of wage earners through price-indexing the benefit formula, and (2) reducing benefits at all earnings levels by further increasing Social Security’s full retirement age.
(snip)
Rep. Ryan’s indexing proposal imposes the greatest reductions on those with the highest earnings, and it exempts those with the very lowest earnings, so it is sometimes called “progressive” price indexing. Nonetheless, it would affect fully 70 percent of all Social Security beneficiaries — everyone with earnings above $22,000 in today’s terms. Over time, price indexing would turn Social Security into a program that provides only a small retirement benefit — and one that is largely unrelated to prior earnings.
The second benefit reduction is an increase in Social Security’s full retirement age. The full retirement age was 65, is now 66, and will reach 67 for people born in 1960 and later. Rep. Ryan’s plan would accelerate the increase to 67 and would index the full retirement age to life expectancy thereafter. As a result, the full retirement age would reach 68 for people born around 1983 and higher ages for later cohorts. As shown in Table 1, an increase in the full retirement age amounts to an across-the-board cut in benefits. A one-year increase in the full retirement age is equivalent to a roughly 7 percent cut in benefits for a person retiring at any given age, whether a person retires at age 62 or works to age 70 and does not begin drawing benefits until then.
The report goes on and it doesn’t get any better. Like private accounts that only benefit high earners, while harming Social Security as a whole.
This is the kind of stuff we’re up against over the next year or so. And what’s especially frustrating is, there is no Social Security crisis.
Social Security is running a surplus of $77 billion this year and amassing a trust fund large enough to last through the peak retirement years of the Baby Boomers. Social Security can only spend what it receives in tax revenues and has accumulated in its trust fund from past surpluses and interest earnings. It cannot add to the deficit if the trust fund is exhausted because the law prohibits it from borrowing (if current revenues and savings in the trust fund are not sufficient to pay promised benefits, these have to be cut). Though modest changes will be needed to put Social Security in balance over the 75-year planning period, the projected shortfall is less than 1% of gross domestic product (GDP).
Social Security is currently in surplus and will take in more than it pays out until at least 2037, more than a quarter century from now.
Raising the employer and employee payroll tax rates by just 1.1 percent each would erase the entire 75-year projected shortfall.
Inequality leads to the projected Social Security shortfall: as income growth has become concentrated at the top, more income has fallen above the payroll cap of $106,800. Congress could close the entire 75 year projected funding gap by raising or eliminating the cap on taxable payroll income.
Not just an I.O.U.: Income to the Social Security trust funds must be invested in guaranteed Treasury securities, which can be redeemed at any time at face value, giving the trust funds the same flexibility as cash.
Social Security can never add to the yearly deficit; by law it cannot draw a single dollar from general revenues, even if payroll taxes fall short of scheduled benefits.
Read more on Social Security and other important issues at Our Fiscal Security.
We don’t hear this often enough. Raising the Social Security retirement age is going to be hard on people who have worked in physically demanding jobs. From the NY Times:
At the Cooper Tire plant in Findlay, Ohio, Jack Hartley, who is 58, works a 12-hour shift assembling tires: pulling piles of rubber and lining over a drum, cutting the material with a hot knife, lifting the half-finished tire, which weighs 10 to 20 pounds, and throwing it onto a rack.
Mr. Hartley says the pain started for him when he was 50. He doesn’t know if he can last till age 66, when he is eligible to collect full Social Security benefits.
After years of debate about how to keep Social Security solvent, the White House has created an 18-member panel to consider changes, including raising the retirement age. Representative John A. Boehner, Republican of Ohio and the House minority leader, has called for raising the age as high as 70 in the next 20 years, and many Democrats have endorsed similar steps, against opposition from some liberal groups. The panel will report by Dec. 1, after the midterm elections.
and
Any changes in Social Security’s retirement age will not affect workers currently in their late 50s and their 60s, who are eligible for full benefits at age 66. But their experiences now are a harbinger of things to come, said Teresa Ghilarducci, a professor of economics at the New School for Social Research in New York, who opposes raising the Social Security retirement age because she says it will have a disproportionate impact on lower-income workers and minorities, who tend to have lower life expectancies and so fewer years of collecting benefits. At the same time, blue-collar workers often spend more years paying into Social Security because they start full-time work younger, she said.
“People who need to retire early — and they need to — are folks that start working in their late teens, whereas people who are promoting raising the retirement age are people who were in graduate school or professional school and got into jobs that would logically take them into their late 60s and 70s,” she said.
That last paragraph is the important one. The people making these decisions are people who have not done physically demanding work. They are not janitors, miners, steelworkers, cooks, carpenters, nurse’s aides, or waiters- all jobs that take a toll on the body. Years of heavy lifting, carrying, and repetitive motion create chronic pain.
John Boehner earned his wealth sitting behind a desk. His voice (in concert with like-minded legislators) cannot be allowed to overshadow the voices of those who never got rich, working at jobs that required hard physical labor.
Former Wyoming Senator Alan Simpson, the Republican co-chairman of the National Commission on Fiscal Responsibility and Reform, who is known for having a long-time bias against Social Security, sent an email to a prominent women’s rights advocate early this week, which said in part:
“I’ve made some plenty smart cracks about people on Social Security who milk it to the last degree. You know ‘em too. It’s the same with any system in America. We’ve reached a point now where it’s like a milk cow with 310 million tits! Call when you get honest work!”
Ashley Carson, executive director of OWL, the Older Women’s League, who received the Simpson email, made it public in a statement released (pdf) Wednesday.
In an email to Ashley Carson, OWL Executive Director, Simpson refers to Social Security as “a milk cow with 310 million tits.” Simpson also insults her intelligence, and claims she doesn’t do “honest work.” This kind of language plainly displays a complete disregard not only for women and seniors, but for the American workers who pay into Social Security throughout their working lives, and who receive benefits they earned through their own contributions. Taking those benefits when a worker can no longer work is not “milking the system.” It’s our money, and we deserve it.
Ashley Carson states: “This kind of blatant disrespect for women, and for the social fabric of our coun-try, has no place in a serious discussion about our deficit. Mr. Simpson’s fifteen minutes of sexism and degradation are over. Now is the time for serious people to have serious conversations about how to move our nation forward, protecting the men and women who have worked their whole lives to make this country great.”
But Simpson is just one cog in a Commission that is fundamentally undemocratic. Serious decisions about programs that provide health care and retirement security should not be shifted away from the elected Members of Congress, who answer to their constituents, to a select group of political insid-ers. And forcing Congress to vote on whatever recommendations the Commission makes – without the ability to debate and amend the recommendations – flies in the face of democracy.
Alan Simpson must be removed, but we should not forget that he is just one sexist, disrespectful and embarrassing component of a process that usurps the rights of citizens to hold their elected representative accountable. OWL looks forward to a serious, respectful, and honest debate in both Houses of Congress about the real causes of the deficit, and real solutions. Alan Simpson and the President’s Commission are not part of the real solutions Americans need.
Simpson has reportedly “apologized” for his remarks. But a storm of protests and calls for his removal have continued unabated.
I always thought that the deficit commission was a bad idea; it has only looked worse over time, as the buzz is that Democrats are caving in to Republicans, leaning ever further toward an all-cuts, no taxes solution, including a sharp rise in the retirement age.
I’ve also had my eye on Alan Simpson, the supposedly grown-up Republican co-chair, who has been talking nonsense about Social Security from the get-go.
[...]
And no, an apology won’t suffice. Simpson was completely in character here; it was perfectly consistent with everything else he’s said, and with his previous behavior. He has to go.
Ryan Grim reports at the Huffington Post with a host of updates on the growing coalition calling for Simpson’s removal and opposing plans to cut Social Security.
The author is the winner of the 2010 CREDO Mobile/Netroots Nation award for Blog Activist of the Year.
Sam Seder has a great new video now featured on StrengthenSocialSecurity.org on what working people think about the attempts to weaken Social Security while giving tax breaks to the rich.
Rather than extending tax breaks for those who already have plenty of money and cutting Social Security, a fair tax approach could actually strengthen and expand Social Security. That’s exactly what EPI economist Monique Morrissey proposed earlier this year, and highlighted in a brief New York TimesOp-Ed piece on Sunday:
Do you want to know how much LeBron James pays in Social Security taxes each year? Bill Gates? Oprah? Your dermatologist? $6,622. That’s the maximum anyone pays in Social Security taxes, because earnings above $106,800 are not taxed.
By slowly raising the cap — say, 2 percent each year, though increasing it faster would raise more revenue — so that it eventually covered 90 percent of all income, we could eliminate roughly a third of Social Security’s projected shortfall. Next year, people like Mr. James would pay slightly more than they pay now while eventually receiving slightly higher benefits.
That would help restore a balance to our tax base that has disappeared over the past few decades, as incomes among top earners have grown so much more than incomes among those earning below the cap. Indeed, 16 percent of earnings in this country are completely untaxed by Social Security — a huge windfall for the rich and a terrible shortfall for the benefits program.
Better yet, we could close about 70 percent of the shortfall if we immediately eliminated the cap on the employer side. Both employers and employees pay a 6.2 percent Social Security tax on earnings only up to $106,800. Instead, employers should pay their share of the tax on their employees’ full salaries.
I’m sure someone, somewhere would complain that this just makes too much sense.
The author is the winner of the 2010 CREDO Mobile/Netroots Nation award for Blog Activist of the Year.
