Social Security Round-up for 2/28
March 1, 2011 - 1:03am ET
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The latest stories and commentary in the battle to save America's most successful government program.
I'm writing a series of posts as a blogging fellow for the Strengthen Social Security Campaign, a coalition of more than 270 national and state organizations.
(Okay, finally caught up on these, after this post, only new stories with my commentary added...)
Imagine that you bought an insurance policy that guaranteed you $1,100 a month starting at age 62. When you tried to collect, you couldn't reach an agent on the phone, so you went to the office during its business hours, but the office was closed. When you finally found a day when the office was open, the overwhelmed employees made you wait hours and then told you that you would have to wait longer than usual to start getting your first monthly check because the agency had decided to cut back its hours, even though it was running a profit.
This could happen to you. You have purchased a retirement insurance annuity, as well as life insurance and disability insurance, and have paid for all the associated administrative costs, through deductions from your paycheck, the ones labeled "FICA" or "Social Security." Congress places a limit on what the Social Security Administration can spend, but the money is yours, deducted straight from your paychecks, solely for payment of Social Security's promised benefits and associated administrative costs.
But the Republicans in the House of Representatives want to strip away $1.7 billion from the already underfunded agency, money that is needed simply to keep offices open. If the Republicans' budget plan goes through, the entire agency, including all 1,300 field offices might have to close for a month. A letter in anticipation of this has already been sent out to all employees. The phones would not be answered, and claims processing would halt. Around 700,000 workers who had purchased annuities and paid for the overhead would be forced into a backlog. Even worse, given the well documented need to replace SSA's aging computer system, the Republicans' proposed cuts threaten the whole program, if the current system and its backup were to fail before the building of the new system, already behind schedule, were completed.
No business would take these steps with its most popular product. No one is claiming there is waste. To the contrary, SSA is extremely efficient, spending less that one penny of every dollar on administration, with the other 99 cents going for our benefits. A private corporation would love to have this level of efficiency. So why are the Republicans, who claim they want the government to be more like business, deliberately seeking to undermine its most successful product?
George Orwell would be proud. The latest Washington catchphrase deserves a place of honor in the 1984 lexicon, right between "War Is Peace" and "Love Is Hate." It's a virus of the language that's spreading faster than the stomach flu.
"The President's budget punts on entitlement reform," reads a statement by House Republicans. "Our budget will lead where the President has failed, and it will include real entitlement reforms." "You have to do entitlement reforms if you are serious about this budget," says Rep. Paul Ryan.
Reality check: Nobody's proposing 'entitlement reform.' That term is a cloaking device for some very ugly intentions. It's a meaningless manufactured phrase cooked up by some highly-paid consultant, and it diminishes the sum total of human understanding every time it's used. The phrase is a euphemism for deep cuts to programs that are vital and even life-saving for millions of elderly and poor people, but it's politically unpalatable to say that. So it became necessary to come up with yet another cognition-killing term designed to numb us from the human toll of our political actions. "Entitlement reform" is the new "collateral damage."
But this time the collateral damage is us.
FactCheck.org, a project of the Annenburg Public Policy Center, wrongly attacked a number of prominent Democrats for correctly pointing out that Social Security does not contribute to the deficit. The people attacked, included New York Senator Charles Schumer, Senate Majority Whip Richard Durbin, and President Obama’s Budget Director Jacob Lew, who had all correctly pointed out that Social Security does not contribute to the budget deficit.
This point should be pretty straightforward. Under the law, Social Security is financed by a designated tax, the 12.4 percent payroll that workers pay on their first $107,000 of income each year. The money raised through this tax is used to pay benefits. Any surplus is used to buy U.S. government bonds. All funding for the program comes either from this tax or from the bonds held by the program’s trust fund. (The Social Security system is also is credited with a portion of the income tax paid on Social Security benefits.)
Social Security is prohibited from spending any money beyond what it has in its trust fund. This means that it cannot lawfully contribute to the federal budget deficit, since every penny that it pays out must have come from taxes raised through the program or the interest garnered from the bonds held by the trust fund.
Before people can have a rational discussion, they have to agree on certain basic facts. And that's one of them.
Republicans in Congress do not care about the budget deficit.
Yes, I know there's going to be a lot of squealing now. How that's not true at all, how only Republicans care about fiscal responsibility. How this is just typical liberal blather. So, as a public service, there, it's been said.
But of course, what is said out of one side of the mouth doesn't mean it matches the reality and facts of the other side. And just because Republicans, conservatives and members of the "Tea Party" corporations have been convinced by what they've been fed, that doesn't make it true either. The reality remains:
Republicans in Congress do not care about the budget deficit.
At an elegantly catered tea-time roundtable fête with reporters Wednesday afternoon, likely Republican presidential candidate Mike Huckabee said public sector unions ought to be entirely eliminated, or hamstrung to limit worker benefits and influence over elected officials. During the same session, though, he admitted that a life of public service, and running for public office, has left him without a sizable nest egg. In fact, he acknowledged that he wants to delay a final decision about the presidential campaign so he can put away more of the big-time private sector money he's currently making.
In his “Washington Sketch,” Dana Milbank suggested that New Jersey governor Chris Christie “tells ugly truths.” One “truth” he points to is Christie’s claim that “You’re going to have to raise the retirement age for Social Security.” For Milbank, Christie’s willingness to state this claim in a straightforward way sets him apart from the typical “blow dried politician who says whatever the voters want to hear.”
The problem is that Christie’s “ugly truth” about Social Security isn’t actually true. Christie echoes the mainstream media’s frequently repeated claim that to maintain the long-term solvency of Social Security we must raise the retirement age or cut benefits in some other way. But Social Security isn’t expected to have a shortfall for another 26 years, and even then its projected shortfall will be manageable (if no changes to the system are made, Social Security will still be able to pay 75 to 78 percent of scheduled benefits after 2036). This long-term funding gap in Social Security could easily be closed by raising revenues for the system; cutting benefits is simply not necessary.
First, the retirement program has a $2.6 trillion surplus; it's an island of green in a sea of red ink. Second, virtually all of the nation's long-term deficit can be blamed on interest on the national debt and rising health-care costs. Third, the idea that pensions must be cut relies on two assumptions: that the Social Security program is in trouble, and that its revenues cannot be increased - neither of which withstands examination.
It's true that our political dialog is focused on some problems that are not acute while ignoring those that are. But you'll notice that it's not the Tea Party agenda actually being enacted so much as the Tea Party's corporate owners. They are making a big play to completely defund and totally defang the left. The real Tea Party agenda (culture war issues) is being passed in the House, but it's mostly bread and circuses --- and it's keeping liberals occupied playing defense. (In this environment you can't take anything for granted --- you never know who the Democrats will sacrifice.)These irrational budget "fixes" are shock doctrine moves, obviously coordinated by the GOP down to the state level.
Isn't it funny how the corporate conservatives always offer the same solutions to every problem? Even when the solution doesn't really have much to do with the problem? Iraq didn't attack us, and Social Security doesn't have anything to do with deficits. But the "solution" to 9/11 was to attack Iraq, and the proposed "solution" to deficits is to "fix" Social Security. And the "solution" to state budget crises is to get rid of public employee unions. Why?
Got a crisis? A tax cut will fix it. Getting rid of unions will fix it. Privatizing Social Security will fix it. And gutting government solves everything. Doesn't even matter what the problem is!
The latest move in that direction came on Tuesday, when Jason Furman, deputy director of the President Barack Obama's National Economic Council, insisted that talk of Social Security reform "is not one you care about" if "you are worried about our long-run fiscal future."
"The reason you care about it is because you want to strengthen Social Security," Furman added in a speech at the progressive nonprofit group NDN. "It is such a critical part of our social insurance, the bedrock of retirement security for senior citizens, one of the leading anti-poverty programs for children, critical support for people with disabilities. And for all those reasons and the fact that its solvency ... is another 26 years, till 2037, the real motivation is strengthening the program."
At one point, the host asked McCain about the future solvency of the Social Security program. The host asked if there’s a simple solution to future shortfalls like saying that “everyone that’s under 50, you get to retire at 67.” McCain replied by saying that the program could be changed by increasing the eligibility for benefits by “a month every year or so” or by lifting the payroll tax cap. He went on to malign the program, saying that the system is “basically…already” bankrupt and that it’s a “Ponzi scheme that Bernie Madoff would be proud of”
Rep. Bill Huzeinga (R-MI) championed these regressive cuts to Social Security during an appearance on Fox News last week. During a discussion about the federal budget deficit, Huzeinga said that we “certainly” should be having a “conversation” about raising the retirement age for Social Security. He explained that at a recent town hall meeting, a constituent complained about these cuts, and that Huzeinga responded by telling him, “Look, I’m 42. I’ll be 106 when these recommendations, if we adopted them right now, would actually come into place. I’m gonna be okay”
The problem there is the horse already left the barn on the revenue side of things with the tax-cut deal. Yes, there's a mismatch between outlays and revenues and the deal allows that mismatch to continue. Complicating this more for Social Security is the payroll tax holiday, and the revenues that will be lost for the program during a time when high unemployment is already creating a hit on it. So the difficulty for the administration in trying to create a parallel process for budget negotiation in which Social Security is strengthened is going to be next to impossible. Getting Social Security strengthened in this environment is going to be a massive challenge. At this point, just leaving it out of the negotiations entirely seems to be the saftest bet.
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Views expressed on this page are those of the authors and not necessarily those of Campaign for America's Future or Institute for America's Future