Social Justice

Is This The Financial Pearl Harbour The Neocons Have Been Praying For?

Philip Palij — Mon, 18 Jul 2011 05:18:04 -0400

This Guardian headline speaks of madness:

As the US nears the brink, the budget row is exposing Republican madness

Perhaps it is, or it could be the fruition of neocon policy and hard work. Maybe its the same thing, but that of course would depend on your world view.

Sen. Warner’s Claim of Rapidly Shrinking Worker-to-Retiree Ratio Based on Misleading Numbers

Scott Hochberg — Mon, 18 Apr 2011 16:00:00 -0400

On Face the Nation this Sunday, Sen. Mark Warner was asked by host Bob Schieffer why his ‘Gang of Six’ would take on Social Security reform in their forthcoming budget proposal. His response reflected a commonly-held myth about Social Security’s history that greatly exaggerates the changes in the worker-to-retiree ratio between 1950 and today. Warner gave as his rationale the popular refrain that "part of this is just math: 16 workers for every one retiree 50 years ago, three workers for every retiree now."

Senator Warner is claiming that Social Security is less financially secure than in decades past because it no longer has a sustainable worker-to-retiree ratio. But this statement is highly misleading, and in fact it is a version of the same conservative spin that President Bush often used during his attempt to privatize the program.

In fact, the high ratio of workers to retirees in 1950 was an anomaly, which resulted from the larger number of workers that were incorporated into the program at the time, such as millions of farm workers and domestic workers. Furthermore, because the program was still relatively new, the first workers to contribute to the program had not yet started to collect benefits. To demonstrate how meaningless the 16:1 number it, consider this: Only five years later [in 1955], the worker-to-beneficiary ratio was halved to 8:1, and by 1975 it was down to what it is today. And just ten years earlier, in 1940, the ratio had been 149.5 workers for every one retiree!

The truth is that as the economy grows and technological innovation increases, fewer workers are needed to generate the same and higher levels of economic productivity. So long as the economy is growing, having even a 2:1 ratio of workers to retirees is sustainable. The worker-to-retiree ratio has been stable for almost forty years and has not failed to supply adequate levels of benefits. Nor will it, provided our economy continues to recover at a reasonable rate. Senator Warner should know that the 16-to-1 statistic is little more than a falsely inflated argument that Social Security’s opponents have long used to delegitimize the program and push for calls for its’ “reform.”

(For more on the evolution of the worker-to-retiree ratio, see Nancy J. Altman’s explanation on page 274 of The Battle for Social Security: From FDR’s Promise to Bush’s Gamble.)

Scrap the Cap, Strengthen Social Security

Daniel Marans — Mon, 04 Apr 2011 19:00:25 -0400

When Sen. Tom Harkin (D-IA) called for "raising the cap" on Social Security's taxable wage base at a "Back Off Social Security" rally and press conference a week ago, he elicited roars of approval and chants of "raise the cap" from the hundreds-strong crowd. But if, as Sen. Harkin noted, the cap is fundamentally unfair, then why was it even created? And would raising the cap alone solve Social Security's projected long-term shortfall? What about scrapping the cap altogether?

Sen. Tom Harkin (D-IA) speaking about the cap on Social Security's taxable wage base at the "Back Off Social Security" event on the Hill on March 28th. "Why is it that a factory worker making $50,000 pays the payroll tax on 100 percent of her income, while a banker making $500,000 pays the tax on only the first $106,800, just 21 percent of his income? Let's raise the cap!" Harkin proclaimed.
Photo Courtesy of Ellie van Houtte.

First, it is worth providing a brief description and history of the "cap" on Social Security's "contribution and benefit base," also known as the "maximum taxable wage base." Social Security limits the amount of earnings subject to taxation through FICA contribution, and in turn, the base upon which an individual's benefits are calculated. When the program was created in 1935, the maximum taxable wage base was $3,000, which covered 92.5% of all earnings paid to workers covered under Social Security. (For more on the history of the cap see Nancy J. Altman's invaluable history of the program, The Battle for Social Security: From FDR's Vision to Bush's Gamble, from which I have mined the above information on the history of the cap.)

The cap increases annually with the Average Wage Index (AWI), which reflects the average growth in the country's wages. Legislation passed in 1977 instituted periodic increases in the cap that were meant to insure it would cover 90% of the country's earnings. By 1983, the last time Social Security was reformed to account for financial and demographic realities, the cap covered 90% of earnings.

At the time it was created, the logic behind the cap was that wages above a certain level represent the earnings of the wealthiest Americans, and thus need not be insured by Social Security. Capping the wage base was intended to prevent a situation in which the government would be obligated to pay benefits of, say, millions of dollars to the country's billionaires. It also was meant to ensure the richest Americans' support for the program by exempting them from being taxed on wages they had no interest in insuring. All told, it has largely succeeded in both of those goals.

But even as it has served its purpose, the cap has created a situation that many Americans would consider unfair (if they even knew it were the case). Today the cap is at $106,800. That means that no matter how rich you get, you only have to contribute FICA taxes on the first $106,800 of your earnings. Middle class people pay 6.2% of their income to the program, and the rich pay a fraction of that amount on theirs.

In addition to its unequal nature, in recent years, the cap has covered a diminishing portion of country's earnings, putting it under sharper scrutiny from the same crowd that once tacitly accepted it. Since 1983, average wage growth has been skewed by disproportionate increases in the wealthiest Americans. Growth in the AWI has not reflected widespread wage increases. As a result, the cap now only covers 85% of earnings and is projected to cover 83% in the coming years.

This would be less of a problem if there weren't extraordinary political pressure for major benefit cuts in order to shore up Social Security's finances. If the choice is between scrapping the cap and benefit cuts that would have a comparable financial impact, advocates reason, the right choice is clearly the former. What's more, depending on how it is done, scrapping the cap could provide enough revenue to actually increase benefits.

In fact, many progressive Social Security advocates who are opposed to benefit cuts of any kind, have already endorsed scrapping the cap, in whole or in part. Rep. Jan Schakowsky's reform plan relies on both lifting the cap to 90% and scrapping it entirely on the employer side, provisions that would eliminate nearly three-quarters of the shortfall. (It should be noted that Bob Ball, the father of modern Social Security, favored such an approach, in conjunction with several other measures.) Rep. Ted Deutch has proposed a plan that would scrap the cap entirely, while providing only very modest benefits on earnings above the current cap. Those components of Deutch's bill, the "Preserving Our Promise to Seniors Act," would make Social Security solvent for the next 75 years, and then some.

Poll after poll shows that vast majorities of the American public support getting rid of the cap entirely, an approach that would align them with Rep. Deutch. Nearly two-thirds (66%) of Americans support scrapping the cap on both employers and employees, including 59% of Republicans and 60% of Tea Partiers, according to a poll done by Lake Research Partners.

What opponents of benefit cuts need to be wary of is deficit hawks treating a half-move like restoring the cap to cover 90% of earnings like a significant concession that gives license to major benefit cuts. For the center-right Bowles-Simpson and Rivlin-Domenici plans, which would fill Social Security's shortfall through two-thirds benefit cuts, lifting the cap to cover 90% of earnings is the one-third of their plan that would increase revenue. That this counts as a "balanced" plan is pathetic. We must make clear that raising the cap so that it covers 90% of earnings is the bare minimum. Because it would only serve to restore the cap to what it was intended in 1977, raising the cap to cover 90% of income does not constitute a compromise to the Left deserving of reciprocation in the form of benefit cuts.

Finally, for progressives, the question remains: How committed should we be to the original purpose of the cap, which is to prevent Social Security from either paying too much in benefits to the rich, or demanding too much of them in taxes? Personally, I think Rep. Deutch's "Preserving Our Pomise to Seniors Act" strikes the proper balance by preserving the link between benefits and wages. (Although I work for Social Security Works, the views presented here in no way represent the views of the organization.) Under Deutch's plan benefits would replace 3% of earnings between $106,800 and $250,000, and 0.25% of earnings above $250,000. The best part is, counting that portion of the new earnings toward benefits comes at a negligible cost.

Besides, the political risk of taxing the rich on all of their income is belied by similar changes to Medicare taxes. The cap on taxable wages Medicare Part A was removed back in 1993, and thus far, it has gone largely unnoticed.

Scrapping the cap is not perfect. For those earners immediately above the cap, it may prove to be a difficult adjustment. There are also other more progressive ways of generating revenue for Social Security, like dedicating a portion of the estate tax to Social Security, or taxing unearned income. (And to be fair, Rep. Schakowsky and others who support raising rather than scrapping the cap, propose other progressive methods of increasing revenues.) But scrapping the cap is the most popular because it would restore the principles of fairness that Americans hold dear. No one should pay taxes on a smaller portion of their income just because they are rich. As Tom Harkin asked, with indignation that spoke for the frustration of a recession-battered workforce, "Why is it that a factory worker making $50,000 pays the payroll tax on 100 percent of her income, while a banker making $500,000 pays the tax on only the first $106,800, just 21 percent of his income?"

It is unlikely that any Social Security reform proposal that consists purely of revenue increases will be seriously considered in the current political climate. A campaign to "Scrap the cap" may be the only one that has a chance. At the very least, it will help let the public know that benefit cuts are not necessary. So, for now, at least, "scrap the cap," should be our rallying cry.

Fiscal Commission Co-Chair Alan Simpson Calls America "Stupid"

Daniel Marans — Mon, 07 Mar 2011 16:35:32 -0500

"You've got a country that is stupid, a government that is stupid," Fiscal Commission Co-Chair and Fmr. GOP Senator Alan Simpson said in an interview on CNN this past Monday morning. His words sum up the feelings of a band of elitist budget hawks, who blame ordinary Americans for our current economic and budgetary problems.

Remember how conservatives always call liberals the Blame America First crowd for suggesting a connection between American interventionism and anti-American sentiment? Well, now they're blaming America first, only rather than critiquing our governing elites, they are blaming working America for problems they had nothing to do with. Call it the real Blame America First crowd.

Now, to be fair, here is the full quote from Simpson:

But the real one is, everybody at their kitchen table--we're always talking about the couple at the kitchen table--well, here it is: For every buck we spend, we borrow forty cents. If that isn't stupid--we've got a country that is stupid, a government that is stupid, to borrow forty cents, not from your good old uncle Henry, but from the world.

Okay, he may be right that, in a vacuum, borrowing that much money is "stupid." It's just what he and every other Washington budget hawk doesn't say that makes those words so ignorant and hurtful. The bulk of our short-term deficit is the result of, in this order, the Bush tax cuts, two unfunded wars, the revenue lost as a result of the recession, and other emergency spending the government had to take on to stave off a worse crisis. That is not the fault of ordinary Americans sitting at their kitchen tables. It is the fault of greedy Wall St. banks that got rich off of crashing the economy, and the government officials who enabled them.

But while middle class Americans did not cause the crisis, they are now paying for it, and then some. We are currently experiencing a depression-level employment crisis. 13 million Americans are out of work and countless more have settled for part-time work, but need full-time work to make ends meet. Millions have lost their homes and their savings.

Washington has only done the bare minimum to create jobs and help those who have been hurt most by the economic downturn. The long-term unemployed are constantly on the verge of being cut off from unemployment insurance and left to a life of destitution. Bailed out banks are still foreclosing on homeowners who they can afford to re-finance. Worse still, they often do so on false premises, using fraudulent paperwork.

And now DC elites like Alan Simpson, have the nerve to bully those same Americans into swallowing deficit reduction measures that would cut what small benefits they have left? Because it is the "top national priority"?! It amounts to punishing Americans twice for a crime they did not commit.

If the Alan Simpsons of the world cared half as much about the future of America as they claim, then they would be proposing deficit solutions that get at the deficit's root causes, rather than scapegoating the American people. They would be the leading advocates of defense cuts, allowing the Bush tax cuts to expire, and reforming the underlying costs of our health care system. They might even recommend that we adopt a 0.5% financial speculation tax on the banks who caused the crisis, which conservative estimates show would raise $100 billion in revenue annually.

But Alan Simpson has no interest in making decisions that are actually "hard." Maybe it's because, as the rich, privileged son of a governor, he doesn't want to betray his own economic self-interest and class.

Either way, he and the other Washington budget hawks should stop blaming America first. America isn't stupid. They are.

FactCheck.Org Joins Anti-Social Security Lynch Mob

Daniel Marans — Thu, 03 Mar 2011 17:25:39 -0500

Call it speaking untruth to power. Until recently, FactCheck.Org had a well-deserved reputation for exposing and correcting the lies of elected officials. But in the article, “Democrats Deny Social Security’s Red Ink,” FactCheck is guilty of distorting the truth, and the politicians it criticizes get it right. The media watchdog has now joined the chorus of elite media outlets hell-bent on convincing a wary public that Social Security will not be there for them. Click here for a chart comparing the article’s claims with the truth, and a graph showing Social Security’s surplus. Click here, here and here for more comprehensive takedowns of the article.

Staying Vigilant on Social Security

Daniel Marans — Mon, 14 Feb 2011 14:25:10 -0500

We should all thank the President for refusing to include Social Security cuts in his 2012 budget. But we should not take the President’s decision for granted. Apparently, the White House was prepared to include specific cuts in Social Security benefits in the 2012 budget just to bring Republicans to the table, but a groundswell of progressive opposition helped stop it in its tracks, the Wall Street Journal reported on Friday.

The lesson is clear: What we are doing is working. But we are still facing a real threat to Social Security, and a White House whose idea of negotiating is conceding in advance to Republican demands. We must temper our current praise for the president with vigilance for the future. Cuts are not yet dead; we need to keep up the pressure.

While it may not have been the leading cause, progressive pressure certainly played a role in convincing the White House not to endorse benefit cuts. Administration officials quoted in the Wall Street Journal article said that the White House backed down because it was not sure that cuts would bring Republicans to the table, but they don’t say what led them to believe that. The biggest explicit response the White House got to the rumored benefit cuts was from the progressive, labor, minority and women’s groups that make up the Strengthen Social Security Campaign. Republicans’ willingness to play ball was unclear, but progressive outrage was anything but. From the Journal article:

The decision to hold off was made as the White House came under pressure from Democrats and liberal interest groups who oppose any cuts to Social Security benefits…

In early January, AFL-CIO President Richard Trumka met with Mr. Obama and argued that Social Security did not need immediate action. On Jan. 20, the Congressional Progressive Caucus wrote Mr. Obama to urge him to resist efforts to cut benefits. And a large coalition of unions, women's organizations and other liberal groups called Strengthen Social Security lobbied White House economic aides and organized supporters to send a half million emails and letters to the White House.

More importantly, just because they came to their senses this time, doesn’t mean the White House has rethought its naïve negotiating strategy. If the Administration thinks Republicans are ready to cut a deal, Social Security will still be on the table. Here’s the key quote:

Officials weighed suggesting that Congress raise the ceiling on wages subject to the Social Security payroll tax and allow benefits to rise more slowly than under current law, according to three people familiar with the deliberations. The hope was to engage Republicans in talks.

But aides decided against putting forward the ideas, sure to be unpopular, without a clear signal from Republicans that they were ready to talk. As a result, the budget President Barack Obama will release Monday won't include any specific proposals to alter Social Security.

The question is: Why do they think the Republicans will ever be “ready to talk”? Even if such concessions could bring Republicans to the table, what would be a worthy exchange for Social Security cuts? Why should we have the debate on their terms, when we have historically had the upper hand on the issue? Conceding Social Security cuts would be understandable if Republicans had backed the President into a political corner, and he had no choice in the matter. But the White House wanted to offer the Republicans cuts unprompted, on the assumption that it would be received as a gesture of good faith.

Once again, the President’s advisers failed Negotiating 101: Never be the first to tip your hand. If you have something you want, start with a high-ball offer and make them work you down to the optimal deal.

Instead, the Administration seems intent on negotiating with itself before talks even start. It didn’t work with the stimulus, it didn’t work on health care, and it didn’t work on the Bush tax cuts. It certainly won’t work now for Social Security.

For the first time in history, the public trusts Republicans more than Democrats to deal with Social Security and it’s not because Americans have started favoring benefit cuts. If the President doesn’t start with a strong hand on Social Security, the Republicans will waste no time hanging it around his neck. Having stolen the high ground from Democrats on Medicare during the health care debate, they are no doubt salivating at the prospect of adding Social Security to their political repertoire.

That said, it is unlikely that the White House will suddenly wake up to the politics of Social Security and adopt smart negotiating tactics.

But for lack of an epiphany on the part of the Administration, we must settle for leveraging our sheer power as a movement. The President needs to know that we will continue to fight efforts to cut the program tooth and nail, and give him all the political cover he needs if he joins us in opposing cuts.

For now though, let’s thank the President for doing the right thing. He can thank us later on.

White House Budget Extends Lifeline to the Disabled

Daniel Marans — Mon, 14 Feb 2011 13:36:12 -0500

In yet another sign that the White House has taken to championing Social Security, the new budget would add $1 billion in funding for the Social Security Administration to help reduce Social Security’s disability claims backlog.

Here is the relevant excerpt from the President’s budget (p. 163):

The President believes that all Americans should have the opportunity to retire with dignity. To fund this commitment, the President’s Budget includes $12.5 billion for SSA operations; an increase of $1 billion above 2010 to keep the President’s commitment to reduce the backlog of disability claims. The Budget also reflects the need to find areas for cost savings wherever possible. Accordingly, the Budget includes funding to more effectively and efficiently process thousands of continuing disability reviews to enhance program integrity for long-term savings, and supports disability pilot programs to help ensure that only successful and cost-effective programs are implemented.

Currently, there is a 514-day waiting period just to get a hearing for Disability Insurance benefits. The result is that millions of disabled Americans who need Social Security to survive are denied its benefits. The President’s funding increase will no doubt ease their pain, and bring us closer to making the disability claims process efficient and fair.

The House Republicans’ Continuing Resolution proposal, by contrast, would reduce the Social Security Administration's funding from 2010 levels by $625 million.

Deficit Hawk Hypocrisy: Proposed Social Security "Reform" Would Devastate the Poorest

Daniel Marans — Fri, 11 Feb 2011 17:47:38 -0500

If you thought you were done hearing about Washington’s favorite budget hawk duo, think again. The Bowles-Simpson saga continues. A few months ago, when Fiscal Commission Co-Chairs Erskine Bowles and Alan Simpson released their Social Security proposal, even their worst critics conceded that the plan would improve benefits for the very poorest. At the time, however, many of us were skeptical that benefits could be significantly improved at such a low cost. Sadly, our worst fears have been confirmed: the Bowles-Simpson proposal’s so-called benefit increases for the poorest are merely window dressing for massive benefit cuts. According to a new analysis by the Chief Actuary of the Social Security Administration, the Bowles-Simpson proposal would reduce benefits by as much as $1,107 (16%) for 60% of “Very Low” earners, those workers with average annual earnings of around $10,800. Click here to see a graph of the benefit cuts prepared by Social Security Works, or check it out below.

The findings contradict the claims of Fiscal Commission Co-Chairs, Erskine Bowles and Alan Simpson that their plan would do more to “reduce poverty among the very poorest.” (The Moment of Truth, p. 43) In fact, it was a central component of their public-relations campaign. They were using our own principles against us by goading us to oppose changes in Social Security that would help the poor. They tried to “out-progressive” progressives, claiming we cared less about the poor than they did.

And for a while their strategy seemed to be working. Never mind that making the program more redistributive would radically transform Social Security from a wage-insurance program to a welfare plan, ultimately hurting the poor the most by pitting the middle class against them. Making the minimum benefit more adequate has been a longtime goal of advocates with the low-income community. Some liberals were privately asking, If the Bowles-Simpson proposal, or something like it, were to be shoved down our throats come hell-or-high water, would “sweeteners” like the enhanced special minimum benefit make it more palatable?

Now we can safely put those doubts to rest. The facts have come to the rescue. There is nothing redeeming left in the Bowles-Simpson plan. It is all pain and no gain.

Contrary to previous estimates, the Bowles-Simpson proposal would reduce benefits by as much as $1,107 (16%) for 60% of “Very Low” earners, those workers with average annual earnings of around $10,800, the SSA analysis reveals. The benefit cuts result from the strict work history requirements of two key provisions in the Bowles-Simpson proposal: the Hardship Exemption and the enhanced special minimum benefit. Because 60% of $10,800 earners have fewer than 25 years of “covered” earnings, they would be ineligible for both.

The Hardship Exemption would exempt low-wage workers earning up to 250% of the poverty level from the proposed increase in the retirement ages. But workers would need at least 25 years of earnings covered under Social Security to qualify for it. And it is precisely the poorest workers who are least likely to have those kinds of long work histories in the formal economy. Many of these workers have childcare responsibilities, suffer from poor health and long-term unemployment, or work in off-the-books jobs, so it is much harder for them to accumulate 25 years in “covered earnings.” The condition would fall particularly hard on single mothers and disabled workers. Those 60% of $10,800 earners who fail to make the cut would have to work longer for less in return. What is especially egregious in forcing them to retire later is that the poorest workers often work in physically demanding jobs, and live significantly shorter than the rest of the population.

The enhanced special minimum benefit would provide workers’ whose benefits leave them below the poverty line with benefits that amount to 125% of the federal poverty level. But workers would need 30 years of “covered” earnings to qualify for the full special minimum benefit. For every year less than 30 that a worker has in “covered” earnings, the benefit would be reduced by 5%. If the regular benefit is higher than the special minimum, the worker would get whichever is higher. The special minimum stops being more generous at about 25 years of earnings, leaving 60% of $10,800 earners back at a poverty-level benefit. Worse still, the old benefit would be reduced by the Bowles-Simpson proposal’s cuts to the COLA, and increases in the retirement age.

The moral of the story is simple. Be wary of deficit hawks that try to hide behind progressive rhetoric. We can and should fight for improvements in the adequacy of Social Security benefits for the poorest and most vulnerable. But we should do it for its own sake, not in the context of looking for ways to cut the program. When squeezing Social Security for budget savings is your primary goal and improving its adequacy is secondary at best, there is a built-in incentive to use watered-down and ineffective policies to make across-the-board cuts seem smaller and less harmful than they really are.

Budget Hawks Are “Excited” by the Thought of Cutting the Social Security COLA—Only Don’t Ask Why

Daniel Marans — Fri, 21 Jan 2011 19:12:45 -0500

One of the lesser known, but most devastating Social Security cuts being discussed in Beltway circles is the adoption of a new, less generous version of the Consumer Price Index (CPI) for calculating the yearly cost-of-living adjustment (aka COLA) in Social Security benefits. It is called the “Chained”-CPI, which is fitting, because it will chain you to your parents when they have to move in with you for their golden years. Most importantly, it is the only proposed benefit cut that will whack current and future retirees.

When advocates challenge the new formula though, the conservatives and pseudo-Democrats hawking this proposal are no longer even bothering to defend the “Chained” CPI on its merits. (In fact, the current CPI is, if anything, too modest.) They simply coo at how brilliant and “exciting” of a new policy tool it is. Maya MacGuineas’s cheerful performance at a Senate briefing this morning was a case in point.

MacGuineas, a former Wall Street banker and current president of the Pete Peterson-funded Center for a Responsible Federal Budget, was a panelist at an Urban Institute-sponsored Senate briefing, “The $5 Trillion Question: What Do the Budget Commissions’ Social Security Proposals Mean for Retirees and Taxpayers?” When asked what she would like to see from the President in the forthcoming State of the Union address, she joked about the “Chained” CPI, but not everyone in the audience was laughing. To paraphrase her remarks:

“I kid to my family that I may be the only one in the country who is waiting to hear the President say he’ll support the ‘Chained’ CPI in his State of the Union speech! I will literally be jumping off of my couch in excitement if he does.”

MacGuineas is right that she is likely to be the only person having a “Tom Cruise moment” over the “Chained” CPI—only not for the reason she thinks. She was making fun of herself for knowing the wonkish nuggets that average Americans just don’t know. But even Social Security experts and policy wonks who know the “Chained” CPI proposal are not exactly salivating over it. That’s because while the “Chained” CPI might be the gosh-darned most exciting new policy for Beltway budget hawks like MacGuineas, it would represent a 0.3% benefit cut every year, which would compound over time, cutting $108 billion in benefits over ten years.

What’s more, despite MacGuineas’s protests to the contrary, it is not even a more accurate measure of inflation. You see, the “Chained” CPI assumes that when the price of certain goods increases, consumers choose less expensive substitutes. As a result, the Chained CPI registers slower growth in inflation. But the substitution method does not work for the medical services that make up the lion’s share of seniors’ expenses. You can't exactly trade in your prescription prostate drugs or open-heart surgery for cheaper substitutes.

Even the current CPI, tailored as it is for the regular population, does not adequately weigh the medical expenses of the seniors who rely on Social Security. The Bureau of Labor Statistics has created a new, experimental Consumer Price Index for the elderly, called the CPI-E. The CPI-E grew by 126% from 1982 to 2007, compared to the normal CPI’s 110% growth rate, demonstrating the true cost curve facing the elderly.

Joan Entmacher, the Vice President for Family Economic Security at the national Women’s law Center, and a nationally renowned expert on issues affecting low-income women, challenged MacGuineas on this point during the Q &A session. Why she asked, are we discussing reducing a COLA that is already inadequate, rather than adopting the CPI-E?

MacGuineas’s response was pathetic. “We can’t tailor-make a CPI for specific populations,” she said, with a chuckle. “We believe the case is strong that the current CPI formula is inaccurate. No change will be perfect, but we need to start there.” MacGuineas did nothing to deny Entmacher’s arguments, and indeed, the facts about the CPI’s inadequacy for the elderly, but apparently she just doesn’t care, because “nothing is perfect.” And about the idea of “tailor-made” CPI for the elderly? We don't need to create a new one; we already have it: it's called the CPI-E.

In truth, MacGuineas and her fellow travelers care more about saving money than doing what is right for Americans’ retirement security. They use the accuracy argument as cover. And when called out on their chicanery, they stick to their guns come what may.

To sum up, the conservative case for the Chained CPI amounts to, uh…Well, it’s just, “exciting”!

The Mask Slips: "Third Way" Admits Intention to Balance the Budget on the Back of Social Security

Daniel Marans — Thu, 20 Jan 2011 16:28:20 -0500

Progressives really owe Third Way a debt of gratitude. Finally, some austerity hawks that come clean about the true intentions of their proposals to cut Social Security. Unlike Erskine Bowles and Alan Simpson, who were shamed into insisting that their proposed cuts were only for the purpose of “strengthening Social Security,” in Third Way's report, "Saving Social Security,"Jim Kessler and David Kendall effectively admit that cutting Social Security should be a part of deficit reduction.

You see, Third Way would have us shore up Social Security’s finances with a package that is two-thirds cuts and one-third revenue increases. They must have known this is just a wee bit unbalanced, especially for a capital “D” Democratic think tank like theirs, because they feel the need to justify it throughout the paper. They explain that we need to free up the revenue from Social Security for other purposes:

In a vacuum, we could in theory continue raising payroll taxes to keep up with the baby boom retirement. But those tax and spending decisions affect the entire U.S. economy and budget. Left unchecked, these trends will leave a small portion of our federal budget devoted to education, innovation, infrastructure and national defense, squeezing our badly needed public investments and jeop¬ardizing our security. To avert this coming crisis, Social Security reform must be achieved principally through savings in benefits, not tax increases, as we seek to rebalance the long-term U.S. budget toward investments and economic growth.

Well, there you have it: the massive debt just ties our hands. Even though Social Security does not contribute a penny to the debt, and is forbidden by law from borrowing from the general budget, we need the money that currently goes toward it to pay down the deficit--supposedly so we can increase or maintain spending on other programs. There is apparently some magic line above which taxes cannot rise, and honoring our commitment to American workers no longer fits within that line.

Depriving Social Security of needed revenue in order to pay for other programs is the equivalent of rich, fat kids robbing a poor, emaciated kid of his lunch at the playground. The latter doesn’t ask anything of anybody, but they still feel entitled to rob him of all he’s got.

In short, while past rumors of Congress raiding the Social Security trust fund have been lies, if Third Way had its way, they would finally be true.

Why not up the ante? Let’s just throw away the illusion of a timeline on Social Security’s solvency altogether and start plundering the trust fund for us to use right away! If we do that, I’m sure the American people would trust the government to spend their hard-earned tax dollars well.