Speaker of the House Paul Ryan will try again to privatize Medicare.
President-elect Donald Trump said during the campaign that he will protect Medicare as it is.
Speaker Paul Ryan
But Ryan doesn’t seem to expect a fight with Trump. Why not? Does he have reason to believe that Trump didn’t mean what he said? Reporters need to press Trump to declare where he stands.
Grass-roots advocates should not stand by idly and assume the Democrats in Congress will defend Medicare. They should be letting their congressional representatives and Senators know that tampering with Medicare is unacceptable.
I give Ryan and the Tea Party Republicans credit. They never give up pushing for their goals. They take ideas that seem radical and make them mainstream.
And they strike when the iron is hot! They never hesitate to use whatever power they have to advance their agenda.
Liberals and progressives can learn from their example. Instead of just passively trying to preserve Medicare and also Obamacare as they are, they should be demanding a Medicare-for-all system to replace Obamacare.
I like to write good things to write about President Obama. It helps me to convince myself that I am a fair-minded person, and also convince my friends, most of whom are supporters of the President.
But usually when I do, it turns out there is a catch. I feel as if I were Charlie Brown in the comic strip once again trusting Lucy to hold the football so he can kick it.
I wrote a post the other day praising the President for budget proposals, which contained some modest tax increases on the upper income brackets and some modest benefits from working people.
But now I realize I missed important parts—more spending for the military, tax reductions for the rich and cuts to Medicare.
Andre Demon, writing for the World Socialist Web Site, pointed out:
Obama’s budget proposal would increase Pentagon spending by 7 percent, adding an additional $38 billion to bring the total defense budget to $534 billion.
Obama is separately proposing $51 billion in additional funding for the wars in Iraq and Syria, including money to back the so-called “moderate” opposition in Syria, as well for as the ongoing US troop presence in Afghanistan.
The budget calls for the corporate tax rate to be cut to 25 percent for manufacturers and 28 percent for other corporations, down from the current rate of 35 percent.
The proposal would also allow US corporations to repatriate past profits generated overseas at a tax rate of only 14 percent. Foreign profits would be taxed at 19 percent in the future.
Currently, US corporations pay a rate of 35 percent on foreign profits, which many corporations avoid by keeping their foreign earnings abroad.
These tax cuts are accompanied by $400 billion in cuts to Medicare, Medicaid and the Department of Health and Human Services.
The budget proposes to raise $66 billion over ten years by charging higher Medicare premiums to upper-income patients, a move that would undermine Medicare’s status as a universal entitlement and open the door to means testing and the transformation of the government health insurance program for seniors into a poverty program.
The plan would cut another “$116 billion in Medicare payments to drug companies for medicines prescribed for low-income patients,” according to the New York Times.
It would also slash $100 billion for the treatment of Medicare patients following their discharge from the hospital, affecting primarily the elderly.
President Obama has pushed for new trade treaties that give foreign corporations the right to appeal for damages if countries pass laws that unjustly deprive them of profits. Similar provisions in existing trade treaties have been used against environmental regulation, subsidies for renewable energy and financial regulation. Proposed new treaties are believed to go further.
The proposed Trans Pacific Partnership agreement appears doomed, but the Trans Atlantic Free Trade Agreement (aka the Transatlantic Trade and Investment Partnership) and the Trade in Services Agreement might sneak in under the public’s radar. Corporate American favors these treaties, so the GOP might go for them.
President Obama repeatedly proposed changing the formula for Social Security benefits and raising the age for Medicare, in exchange for modest tax increases on upper income brackets. Even though the tax increases are off the table, Republicans might go for such a “grand bargain” on other issues.
If President Obama discovers some new threat that he says requires military intervention in a foreign country, the Republicans in Congress are sure to support him—short of actually voting authorization, which he says he doesn’t need anyway. Likewise for new authority for surveillance, preventive detention, drone strikes, prosecution of whistle-blowers, etc.
The Canadian government and Trans Canada corporation want to bring corrosive tar sands bitumen from northern Alberta to oil refineries in the United States. Republicans in Congress are strongly in favor of this. President Obama’s stand on the Keystone XL pipeline is uncertain, but federal regulators have already quietly approved the alternative Alberta Clipper pipeline. Overall the President is a strong promoter of energy development, including hydraulic fracturing for natural gas.
President Obama says that he wants laws and regulations that limit the greenhouse gas emissions that contribute to global warming. A larger segment of the Republicans deny that human-caused climate change is even taking place, let alone that something should be done about it.
The only feasible immigration reform, as I see it, is some provision providing a path to citizenship for the millions of unauthorized immigrants already in this country. I admit this is not good, but the alternatives are worse.
Tommy Douglas, as virtually all Canadians know, was the father of Medicare in Canada, which was first introduced in Saskatchewan and then rolled out into Canada as a whole. Canadian Medicare inspired U.S. Medicare, but it covers almost all Canadians while the U.S. plan only covers the 65 and older population.
Douglas was a champion of civil liberties. As a member of Parliament, he had the courage in 1970 to refuse to support the War Measures Act, which, in response to terrorist activity in Quebec, expanded police and military powers and curtailed civil liberties throughout Canada.
In 2004, Douglas was voted the greatest Canadian in a nationally televised CBC contest.
Jon Perr explained for Daily Kos why Obamacare does not fix the dysfunctional U.S. health insurance system.
On January 1, 2014, the Affordable Care Act went fully into effect. But for all of the furious fighting over the law these past five years, Obamacare was always an evolutionary reform grafted onto the existing American health care system. The Medicaid public insurance program has been extended to roughly four million lower income Americans so far. About two million more people have purchased private insurance, many of them aided by subsidies from Uncle Sam.
And while many (though not all) of the worst abuses that let insurers pad their profits by denying or dropping care for the sick have been banned, the edifice of private insurance remains largely intact.
Far from a “government takeover of health care,” Obamacare preserves all of the hallmarks—private insurance companies, private hospitals, private doctors, and the patchwork of different systems for veterans, seniors, workers, and the poor—that define the American model of health care provision.
Many more Americans want to keep the Affordable Care Act or make it stronger (47 percent) than want to repeal it or replace it with a Republican alternative (37 percent). I do not venture to predict how they will think a year from now when the technical problems will (presumably) be resolved and the law will go into force.
House Speaker Nancy Pelosi was right. We won’t really understand what’s in the law until it goes into operation. I am sure that lives will be saved by forcing insurance companies to cover people with pre-existing conditions, and I hope that a lot more people will benefit financially than will be hurt. But even if things work out for the best, Obamacare at best is deeply flawed.
New Medical Gatekeepers. The ACA makes for-profit insurance companies the gatekeepers between physicians and patients. The only way to have a doctor of your choice is to find an insurer that has that doctor on its roster.
Insurance companies get even greater leverage than they have now in imposing a corporate business model on physicians. A physician who spends too much time on sick and needy patients will not be cost-effective from a business standpoint, and may be dropped from the roster. This isn’t new, but Obamacare locks it in.
Controlling the Wrong Costs. President Obama is cutting Medicare reimbursements to health care providers. At the same time he has locked for-profit insurance companies into the system, and declined to negotiate with pharmaceutical companies to lower drug prices.
This is a typical example of how things work in American life nowadays. The people who do things that create value are being squeezed. The people who extract profits from what others create are left untouched.
It may well be that health care providers are overcharging Medicare. I don’t have the facts and figures to express an informed opinion either way. It does seem to me that, for example, $800 is a lot to charge for an ambulance ride. But I might think differently if I knew what it cost to pay for and maintain a fully-equipped ambulance, to pay for and maintain the ambulance station, and what it costs to train and pay ambulance crews and keep them available 24 hours a day 7 days a week.
But it is obvious that there is no public benefit in going through a for-profit insurance company to get a benefit mandated by government, or in paying more for a drug than foreigners pay for the same drug.
Complexification. One of the problems with the American health care system—a mixture of employer-based insurance, individual insurance, Medicare, Medicaid and veterans’ benefits—was its complexity. The Affordable Care Act makes it more complicated, and I think that is the main reason why the Exchanges and sign-up system don’t work.
There would not be any problems in signing up if Congress had enacted a single-payer plan (Medicare for all) or, if that was not feasible, simply expanded Medicare or federalized and expanded Medicaid. The voluntary public option proposed by Senator Barack Obama in 2008 would have been more difficult, but still simpler than what was advocated.
Raising the Medicare eligibility age is a proposed solution for a nonexistent problem.
Medicare trustees in 1990 forecast that the Medicare program would become insolvent in 13 years. It was still solvent 21 years later, and they still were making the same prediction. The 2013 projection of the Congressional Research Office, not shown above, pushes back the insolvency date to 2026—still 13 years in the future, still as far away as ever.
Insolvency would mean that there would be no reserves in the Medicare trust fund to pay benefits. When those reserves are exhausted, the CBO estimates that Medicare would still be able to pay 87 percent of authorized hospital benefits out of income; if nothing changed. Payments of hospital benefits would decline in the next 20 years to 71 percent of benefits. Physician, outpatient and prescription drug benefits have their own revenue streams, and wouldn’t be affected.
Why does the insolvency of Medicare continually recede into the future? It is partly because of the growth of the economy. The key to keeping Medicare, and also Social Security, solvent is not by chipping away at benefits. It is by promoting a full-employment, high-wage economy.
The other reason that increasing the Medicare eligibility age is a bad idea is that, according to the Kaiser Family Foundation, it would result in a net increase in costs to the public as a whole. Individuals and their employers would have to spend more, and more people would be eligible for Medicaid and for subsidies under the Affordable Care Act.
The above chart is based on analysis in 2011. The Congressional Budget Office recently the net federal savings in raising the Medicare eligibility age would be much less than shown on the chart. The saving would about $1.9 billion a year, not $5.7 billion.
While $1.9 billion is a lot of money, the United States is a nation of more than 300 million people, which means the saving comes to less than $65 per person. I agree that would be an amount worth saving, if not for the fact that it is offset by increased costs and hardship to the American public as a whole.
Liberals in Washington can’t win for losing. While President Obama and the congressional Democrats did stand firm against the blackmail threat of a government shutdown and debt default, merely keeping the government functioning is not a great triumph. While the Democrats control the White House and the Senate and the Republicans only control the House of Representatives, it is the Democrats who act as if they are a defeated minority.
The writer mocked the “fever dream bizzaro world” of a conference convened last Thursday by the Center for American Progress, a liberal think tank. Among the “irrelevant pipe dreams” were a higher minimum wage, investing more money in education, infrastructure and scientific research and doing something about climate change. She did not advance any arguments as to why these are bad ideas. She merely took for granted that they are politically unrealistic.
Maybe they are. The default baseline position is the budget sequester, which locks in reductions in government spending across the board, which means less for scientific research, less for repairs of roads and bridges, less for school lunches and food stamps. It’s hard to see how the Democrats can get out of this without giving up even more on historic liberal programs, such as Social Security and Medicare.
And they may not see this as a dilemma. President Obama has long hinted at his willingness to cut Social Security and Medicare. This may have been a factor in the Republican resurgence in 2010.
President Obama’s top economic adviser appears to think that the economic recovery depends on restoring business “confidence” and confidence can be restored only by cutting social safety net programs. And a significant number of Democrats in the Senate are willing to go along with this.
So the Democratic program consists of Obamacare, reductions in other social programs and a moderate increase in taxes for rich people. I think most voters are looking for a program that will address falling wages and long-term unemployment, even though that may seem like an “irrelevant pipe dream” to Washington insiders.
President Obama early in his term of office told a group of Wall Street bankers that he was the only one standing between them and the people with pitchforks. I think it is time to join the people with pitchforks.
There is a deeply entrenched financial and corporate oligarchy who for the most part do contribute anything anywhere near equal to what they take, whose interests do not coincide with the public interest and who do not feel any responsibility for the common good. It is time to break their lock on government and end their special privileges.
Even though I think the Affordable Care Act is a bad law, I’m opposed to most of the people who oppose the law.
Most opponents of the law are against it because they don’t agree with having the government guarantee a minimum level of medical care to all. I’m opposed to the law because I don’t think it will come anywhere near to accomplishing that purpose.
Defenders of the Affordable Care Act point out that it originated as a conservative Republican plan, drafted by the right-wing Heritage Foundation and first implemented by Mitt Romney as governor of Massachusetts.
From my standpoint, that is the problem. I am a liberal Democrat who voted for Barack Obama in 2008, and I did not vote for him in order to advance a conservative Republican agenda.
I’m pretty sure that the Heritage staff did not offer up their plan because they felt an urgent desire to assure health insurance for everybody. I think they proposed their plan as a way to avoid enacting Medicare-for-all, aka a single-payer plan.
The chief merit of the Obama / Heritage plan from the right-wing point of view is that it locks the for-profit insurance companies into the system and gives them a captive market, even though they add no value to medical care. The threat of a universal system would be that there would be no role for the insurance cmpanies.
Back in 2008, the single-payer plan was the mainstream Democratic position. Both Hillary Clinton and John Edwards advocated it in their presidential campaigns. Barack Obama offered a moderate compromise, a public option in which an affordable government insurance plan would be made available, which at the time that seemed reasonable to me.
But as soon as President Obama took office, he embraced the Heritage / Romney plan. His staff ridiculed anybody who took his campaign promise seriously.
If Obama thought that this would bring the Republicans on board, he was sadly mistaken. They reverted to what they really wanted all along, which is to do nothing or take away what we have.
In five years, the former mainstream liberal position has been taken off the table for discussion. The former mainstream conservative position has been redefined as the liberal position. The extreme right-wing position which was not then on the table has been redefined as the mainstream conservative position.
Nobody really wanted Obamacare. It was originally proposed as a lesser evil from the conservative point of view, and it was enacted as being a lesser evil from the liberal point of view. The right-wing Republican goal is to get rid of it altogether. The liberal Democratic goal should be to replace it with something adequate.
I don’t see how the Affordable Care Act, aka Obamacare, can work. It’s too complicated. It provides too many openings to game and undermine the system. It doesn’t get at the causes of out-of-control health insurance costs.
There are good things in Obamacare—the provisions that you can’t be denied medical insurance for a pre-existing condition; that grown children continue to be covered by their parents’ policies until age 26; that insurance companies can’t set a lifetime limit for coverage.
But the employer mandate gives an incentive for companies to avoid health insurance costs by cutting workers or cutting hours so that they are exempt from the bill. The individual mandate give the health insurance industry a captive market without any protection against overcharging or underinsuring.
The Republican right wing’s war opposes Obamacare for exactly the wrong reason. They oppose Obamacare not because it can’t achieve it’s stated goal of providing adequate medical care for all Americans, but because they are opposed to that goal.
President Obama actually is helped by the kind of enemies he has. It makes his medical insurance plan seem better than it is. That’s one reason I was willing to give Obamacare the benefit of the doubt when it first was proposed. I thought that anything so vehemently opposed by the likes of Sarah Palin and Rick Perry must have something good about it.
The battle now going on in Washington over taxes and entitlements is a fixed fight. Democratic and Republic leaders now agree that crucial safety net programs such as Social Security and Medicare would be cut. The only question is whether reductions in entitlements will be accompanied by moderate tax increases on the upper-income brackets, as the Democrats propose, or not, as the Republicans insists.
I blame President Barack Obama more than I blame right-wing Republicans such as Rep. Paul Ryan. It is obvious what Ryan’s objective is—to destroy the social safety net, minimize taxes on rich people and give free rein to corporations. And his supporters are in full agreement with his objective.
Obama’s actions are the opposite of his rhetoric, and, unlike with Ryan, the opposite of what his core supporters want. I oppose the whole right-wing corporatist coalition—Ryan, Scott Walker the Koch brothers, the American Legislative Exchange Council and all the rest. But I feel betrayed by Obama.
When it comes to the Bill of Rights, President Obama lacks the courage to do what’s right in the face of public opinion. But when it comes to going against the economic interests of his core supporters, he does possess the courage, as well as the political skill, to enact unpopular policies that are deeply wrong.
I forget who said that if Barack Obama is a liberal, he is an idiot, but that if he is a conservative, he is a genius. I think he’s a genius. Who else could have created a situation in which Democrats regard attacks on Social Security and Medicare as the moderate liberal position?
Thomas B. Edsall wrote a good article in the New York Times earlier this weekmonth about how the consensus of the Washington elite goes against the views of the majority of American voters.
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Public opinion polls indicate that most Americans want to protect the social safety net by, if necessary, raising taxes on rich people, while the Washington consensus, including both Democrats and Republicans, is that taxes should be kept low and the social safety net should be reduced.
Social Security and Medicare policy are a good example.
Cutting benefits is frequently discussed in the halls of Congress, in research institutes and by analysts and columnists. The idea of subjecting earned income over $113,700 to the Social Security payroll tax and making the Medicare tax more progressive – steps that would affect only the relatively affluent — is largely missing from the policy conversation.
The Washington cognoscenti are more inclined to discuss two main approaches that are far less costly for the affluent: means-testing of benefits and raising the age of eligibility for Social Security and Medicare. Sidenote: policy makers and national journalists who weigh in on this issue generally earn more than $113,700 a year.
Raising the age of eligibility for Social Security is a bad idea. It means a net cut in Social Security benefits. It especially hurts poor people because they don’t live as long, on average, as rich people. In today’s USA, if you’re laid off from work in your 50s, it is going to be exceedingly difficult to get a new job that pays a middle-class salary.
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Means-testing Social Security—that is, denying Social Security benefits to people who are well off—is a bad idea. It would penalize people for saving and trying to provide for themselves, which would be bad in itself and also provide ammunition for those who want to get rid of Social Security altogether.
Another popular proposal is the tinker with the cost-of-living adjustment by tying it to something called the Chained Consumer Price Index, which would rise more slowly than actual prices. As I argued in a previous post, this would be a stealth cut in Social Security benefits and all other programs that are tied to the existing CPI.
Edsall said that raising the cap on income subject to Social Security taxes would solve the problem. With an increase in payroll taxes amounting to 0.6 of a percentage point of Gross Domestic Product, the Congressional Budget Office projects that the Social Security trust fund would be in surplus for 75 years. Federal taxes in 2009, 2010 and 2011 were 15.1, 15.1 and 15.4 percent of GDP, which is the lowest since 1950, Edsall said. While this is off the table for discussion in Washington, public opinion polls indicate that this is the solution favored by a majority of the American public.
Elite anxiety over entitlement-driven budget deficits and accumulating national debt has created a powerful class in the nation’s capital. The agenda of this class is in many respects on a collision course with mounting demands for action by those lower down the ladder to address the threat to government social insurance programs. Intransigent opposition by the better off and their representatives to raising the necessary revenue means that not only Social Security and Medicare face a budgetary ax.
Among the additional likely casualties: WIC, which provides free nutrition for women, infants and children; long-term and emergency unemployment compensation benefits; low-income housing vouchers; vaccines for poor children; schooling for children with disabilities; special education; preschool programs; child care for disadvantaged and vulnerable children; after-school programs; treatment of the mentally ill; and meals for sick and homebound seniors.
This conflict could not have come at a more difficult time: the United States is in the midst of a zero sum struggle requiring politicians to pick losers, not winners. The population of those over 65 is set to multiply, with longevity steadily increasing even as median annual household income for the population at large has shrunk to $51,584 in January 2013 from $54,000 in 2008.
In this kind of conflict over limited goods, one of the most valuable resources that can get lost in the fray is the wisdom of the electorate at large. In this case, the electorate is pointing toward progressive tax increases for those closer to the top far more readily than members of the political class, for whom high-earners are a crucial source of campaign contributions.
Edsall wrote a book published last year called The Age of Austerity: How Scarcity Will Reshape American Politics. I have skimmed it but not studied it, but I can say that his general assumption is that the age of shared prosperity is over, and that no group of Americans can now gain except at the expense of someone else. The rich are going to cling to their riches, we senior citizens are going to cling to Social Security and Medicare, nobody else is going to give up anything either, and American politics is going to be increasingly bitter.
It’s very true that many social and economic problems would go away, or become a lot easier to deal with, if we had a full-employment, high-wage economy as in the 1950s and 1960s. Our political debate would be over who is going to gain the most rather than who is going to have to sacrifice the most. Edsall doesn’t think these days are coming back. He is an astute observer and he could be right.
Journalists with inside information on the Obama administration are floating the idea of raising the age of Medicare eligibility from age 65 to age 67. They say this would be a small price to pay in return for a grand bargain with Republicans in Congress to raise taxes on incomes above $250,000 from 35 percent to 37 percent.
This is a terrible idea, but that’s not a reason why President Obama won’t propose it, or that it won’t go through.
As these charts show, people—especially poor people— do postpone needed medical treatment because they can’t afford it.
I know of people myself, many of them laid off from their jobs in middle age, who are postponing medical treatment until they reach age 65 and become eligible for Medicare. The life expectancy of people at age 65 is about 15 or 20 years. Cutting two years out of their coverage would be a 10 to 15 percent cut. I suppose such people are invisible if everybody you know is a white-collar professional with a college education and good employer-paid health insurance. It is different for people in ill health who are on their feet all day in jobs in places such as Wal-Mart
As a negotiating position, raising the Medicare age doesn’t make any sense. President Obama would be selling out the interests of elderly poor people and while at the same time giving up on his mild proposal to restore the Clinton era tax rates. The explanation is that the President accepts the Washington consensus that it is necessary to cut “entitlements.” By offering entitlement cuts as part of a grand bargain, he can finesse the deal and bring Democrats along. The great thing about bipartisan agreements is that nobody is responsible.
I think that cutting entitlements is President Obama’s goal. He offered to raise the age of Medicare eligibility in negotiations in 2011. I think he believes he is being a statesman who sees beyond the narrow interests of his constituents. But whatever it is, the only way to stop it is for working people to notify their congressional representatives that this is unacceptable.
A blogger in New York state’s North Country says she’s going to vote for Barack Obama in order to ensure than Social Security and Medicare are here for her children and grandchildren.
Once upon a time I cast a vote that I later deeply regretted. I was a member of a labor union, and I voted for a contract that preserved my benefits, but reduced them for people who would be hired in the future. Upon reflection, that vote left a bitter taste in my mouth. I vowed to never again cast a vote that would preserve privileges for myself, and deny them to others.
This election is another occasion when I’m being offered that choice.
Over and over, Romney, Ryan and their surrogates say that if you are 55 years or older, your Social Security and Medicare benefits will not change under the Ryan budget, which Romney has pledged to sign into law. That’s not good enough for me.
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Obama’s public stance on Social Security is that he “believes that no current beneficiaries should see their basic benefits reduced and he will not accept an approach that slashes benefits for future generations.” I’ve read many articles over the years that point out that the fix for Social Security is a small one: lift the income ceiling for the payroll tax that funds the program so that wealthier people pay more into the system. If that seems unfair to those wealthier people, I answer that it means that their rate of return drops, but that they benefit – we all benefit – when our elderly are not poor. An economic analysis done by Gary Engelhardt and Jonathan Gruber in 2004 states that the poverty rate among the elderly declined from 35 percent in 1960 to 10 percent in 1995, and concludes that this reduction in poverty can be explained by increases in Social Security support.
I don’t think of Social Security as a retirement investment. I think of it as an insurance program that we all pay in to so that our parents will have greater financial stability in old age, and so that we ourselves will have greater financial stability when we get old. I want my kids and grandkids (and YOUR kids and grandkids) to also be part of the program.
The fix for Medicare is tougher, with the poorly funded addition of prescription drug coverage in 2006 not helping the financial situation. Healthcare costs are tough to handle at all levels right now, whether you are poor on Medicaid, receiving Medicare, have private insurance (as I do), or are uninsured. Obamacare actually helps Medicare, extending the period of time until costs exceed revenues. I know that a fix is needed, but I won’t sign on to one with my vote that will greatly increase health insurance costs for my kids and grandkids while preserving my benefits.
What it comes down to for me: If we decide as a nation that we can no longer afford to take care of our elderly as we are doing now, then a scaling back of benefits should happen now, for everyone. Our young people by and large are not any more able to put money aside for their retirement and future healthcare costs than my generation was, so why should we be sheltered while they take the brunt of both paying for my benefits and then not getting similar benefits when they retire?
I’m voting for the team that seems to want to at least try to solve the problems so that we don’t rob a basic level of security from our kids and grandkids. The future generations who will be affected by a downgrade of Social Security and Medicare are not way off in the foggy future. They will be sitting around the table at this year’s holiday dinners with us.
I think scifiknitter is dead right about the importance of defending Social Security and Medicare from Mitt Romney and Paul Ryan. But I don’t share her confidence that Barack Obama can be counted on to defend these vital programs for the next generation.
The President time and time again has expressed a willingness to cut Social Security, Medicare and other social programs in return for a return to Clinton-era tax rates on Americans in the upper income brackets. He packed the Simpson-Bowles deficit reduction commission with advocates of cutting back on Social Security. This is not something he was forced to do. He could have achieved his tax goals simply by allowing the Bush era tax cuts to expire.
President Obama had not made Social Security and Medicare a central issue in the campaign. In the debates, he told Governor Romney that he thought the two of them largely agreed about Social Security, and that he was open to the same kind of fixes that were made under President Reagan. Those fixes entailed increasing payroll taxes and raising the Social Security retirement age.
The President says he will not accept reductions in “basic” benefits for current recipients or “slashes” in benefits for future generations. He doesn’t define “basic” or “slashes,” so if you read his statement as a lawyer would, you see he gives himself a great deal of leeway.
I think that President Obama’s goal is a grand bargain with the Republican leadership to balance the federal budget by means of moderate tax increases with cutbacks in government spending, including entitlement programs. He has expressed a willingness to make more cutbacks in social programs than rich people would pay in increased taxes. I don’t know what is in his mind, but my guess is that he accepts the elite consensus of opinion and sincerely believes that cutbacks in social programs are necessary.
Click on Romney’s statements on Social Securityfor quotes illustrating Mitt Romney’s positions. He really is as extreme an enemy of Social Security as scifiknitter says he is.
Click on Why even President Obama won’t champion Social Security for economics journalist Dean Baker’s analysis of the reasons why Obama and other American politicians won’t stand up for the United States’ most popular social program.
Both President Barack Obama and Governor Mitt Romney are reported to be toying with the idea of raising the Medicare eligibility age from 65 to 67, along with Social Security. This is a bad idea. It will save the government money, but it will not save the public money. Instead it will shift the cost to individuals and private businesses.
Medicare delivers health insurance at a lower cost than private insurance. That is because it doesn’t siphon off part of its revenue as profits for owners and shareholders, and because it doesn’t hire actuaries to figure out who to disqualify because they’re unhealthy. The Center for Budget and Public Priorities did a study that showed that raising the Medicare eligibility age will actually raise the cost of health insurance because of the ways it will shift the burden.
That is assuming that the people who are disqualified from Medicare for two years will get health care and health insurance from other sources. Many of them probably won’t. When you’re laid off from your job in your 50s, as many people have been, it is unlikely that you’re going to get a new job with health insurance benefits. It’s not certain you’re going to get a new job at all. I know of people who put off getting medical checkups or certain medical treatments until they become eligible for Medicare. Raising the eligibility age will mean more people without coverage waiting longer.
Thomas Ferguson, a political scientist at the University of Massachusetts at Amherst, Boston, is one of the most astute political observers I know about. He is going to be a regular on the Real News Network. I’m just now catching up with his first broadcast, which was last Friday. Here it is.
Click on The investment theory of politicsfor my account of Ferguson’s idea that American political parties represent conflicting business interests rather than the public, and that voters only get a choice on issues that don’t affect corporate profits or on which corporate interests are in conflict. In the post, I review Ferguson’s 1995 book, Golden Rule: the Investment Theory of Political Parties and the Logic of Money-Driven Politics.
Click on Business, not politics, driving nation rightwardfor my review of Right Turn: the Decline of the Democrats and the Future of American Politics, which Ferguson co-authored with Joel Rogers in 1986.
Unfortunately both books are out of print and a lot of his current writing is in scholarly publications not available on-line, so the Real News Network is doing a good service to the public by giving Ferguson a public platform.
[8/26/12] I had hoped to post a follow-up interview with Thomas Ferguson this weekend, but it didn’t happen.
Mitt Romney’s selection of Rep. Paul Ryan of Wisconsin as his running mate is a bad thing. Ryan, the chair of the House Budget Committee, is a radical right-winger who has proposed privatizing Social Security and wants to replace Medicare with an inadequate voucher program. His budget proposals would entail not only eliminating most of the social safety net, but most governmental services. He proposes drastic tax reductions for rich people, while increasing taxes for working people.
It would be a disaster for the country if Mitt Romney were to be elected, and then die in office, making Ryan President. Or if Romney were to follow Ryan’s lead in domestic policy, as President George W. Bush followed Vice President Richard Cheney’s lead in national security affairs during his first six years in office.
But even if Romney loses, the Ryan choice changes the terms of debate. President Barack Obama has offered to cut Social Security and Medicare, protected Wall Street from business failure and criminal prosecution, and done little or nothing to help labor. But with Romney and Ryan as his opponents, he can define these as progressive positions.
Kevin Drum of Mother Jones pointed out that Paul Ryan has a new Medicare plan which (arguably) is not as bad as last year’s plan. The new plan would call for private insurers and Medicare to submit competitive bids, and for the government to issue vouchers equivalent to the second-lowest bid. People would be covered for the two lowest bids and could pay extra if they wanted premium coverage.
The problem with this, as Drum pointed out, is that this won’t necessarily hold down Medicare costs, since premiums for private insurance have gone up faster than Medicare—even though private employers (presumably) get competitive bids for their employee health insurance plans. What happens if the bids come in higher than what Ryan wants to budget for vouchers? Who pays the difference? The government? Seniors?
SOCIAL SECURITY CLOSER TO INSOLVENCY: Government says trust funds will run dry in 2033.
That was the headline over the lede [1] story this morning in my local newspaper, the Democrat and Chronicle. Stephen Ohlemacher, the Associated Press reporter, began as follows:
Social Security is rushing even faster toward insolvency, driven by retiring baby boomers, a weak economy and politicians’ reluctance to take painful action to fix the huge retirement and disability program.
The trust funds that support Social Security will run dry in 2033—three years earlier than previously projected—the government said Monday.
There was no change in the year that Medicare’s hospital insurance fund is projected to run out of money. It’s still 2024. … …
But then when you get to paragraph six, you learn what “running dry” means.
If the Social Security and Medicare funds ever become exhausted, the nation’s two biggest benefit programs would only collect enough money in payroll taxes to pay partial benefits. Social Security could only cover about 75 percent of benefits, the trustees said in their annual report. Medicare’s giant hospital fund could pay 87 percent of costs.
In other words, Social Security and Medicare will not have run out of money when the funds “run dry”. The two programs will have used up the surplus in the Social Security and Medicare trust funds that were created by increasing payroll taxes during the Reagan administration, in anticipation of the retirement of the Baby Boom generation. There are different ways this could be handled, including a moderate increase in the ceiling for payroll taxes. But Social Security and Medicare will not be broke.
The estimated date that Social Security and Medicare will exhaust their surpluses fluctuates a great deal from year to year, depending on changes in the current state of the economic and forecasts for the future. By some past estimates, these funds should already have been exhausted.
There is a larger issue than the amount of Treasury bonds in the Social Security trust fund. Financial assets are not wealth, whether they be Treasury bonds, corporate stocks or bank savings certificates. They are claims on wealth. The real wealth is the amount of goods and services that are produced in any given year. If the working-age population is not producing enough to support themselves and us retirees as well, that is a problem, no matter what we have in our retirement accounts or the Social Security administration has in its trust fund.
The answer is to somehow get back to a high-wage, full-employment economy, where somebody in their 50s who loses their job is not unemployable. We need both better productivity and a more widely-shared prosperity. If a quarter of the nation’s increase in wealth is flowing to the upper 1 percent of the population, as it is now, there is not much left over for 85-year-old widows who depend on Social Security. And if productivity increases are not keeping up with the increase in the aging population, then there is less to go around. Of course we can improve the demographic balance by increasing the number of working-age immigrants.
Click on Robert Greenstein for a sober statement on the Social Security trustees’ report by the founder and President of the Center on Budget and Policy Priorities.
Click on Paul Van de Waterfor a sober statement on the Medicare trustees’ report by a senior fellow for the Center on Budget and Policy Priorities.
Senator Joseph Lieberman has proposed saving money on Medicare by raising the age of eligibility from 65 to 67, and President Obama has indicated he is open to such a plan.
The red circle represents the annual Medicare budget. The blue sliver represents the estimated saving to the federal government from Senator Lieberman’s proposal.
If the federal government raised the eligibility age for Medicare from 65 to 67, it would save $5.7 billion in 2014, the Kaiser Family Foundation estimates. While that is a very large number, it is less than 1 percent of $643.4 billion, the Medicare trustees’ estimate of their budget for 2014.
There is more to the story. Kaiser Family estimates that the 65-year-olds and 66-year-olds who are no longer eligible for Medicare would spend $3.7 billion of their own money on health insurance premiums and medical bills in 2014, and employers would spend an added $4.5 billion for employees and retirees who are no longer eligible for Medicare. Since both Medicare and the health insurance exchanges would cover a slightly older and unhealthier population, premiums would go up an estimated $2.4 billion.
The total: Private individuals and companies would have to spend an added $11.4 billion to offset the $5.7 billion reduction in the government’s Medicare budget.
There’s still more. A study indicates that once you become eligible for Medicare, your chances of surviving a serious illness improve by 20 percent.
So the only thing that would be accomplished by Senator Lieberman’s proposal is to enable certain politicians to say they’re tough—tough, that is, on the old, sick and vulnerable, not the rich and powerful.
An article in the Fall 2009 issue of the Stanford Social Innovation Review explained the study that showed Medicare reduces the death rate from serious illness. The original article is behind a pay wall, but I found a copy on an unrelated web site.
Senate Minority Leader Mitch McConnell proposed giving President Obama the responsibility for addressing the federal budget deficit. If I were a conservative Republican banker, I would be very happy to entrust President Obama with that responsibility.
As Jonathan Zasloff, a contributor to the Reality-Based Community web log, commented:
Just a year before a general election, the country’s unemployment rate is over 9 percent and its effective unemployment rate might be twice that. Obama’s solution to the searing crisis of the middle class apparently is to raise the Medicare eligibility age from 65 to 67, in exchange for tax increases that will occur anyway. Oh yes, and $2 trillion of other unspecified cuts, which always figure to work beautifully during a recession. … What is there in any of this that a progressive could possibly object to?
President Obama has managed to make McConnell, House Speaker John Boehner and House Majority Leader Eric Cantor look like fools, by conceding the substance of what they demand. His characteristic political tactic—giving his opponents enough rope to hang themselves—has worked well for him once again. At the same time he has abandoned historic Democratic principles and constituencies. What price victory?
Zasloff sees two ways to interpret President Obama’s actions.
1. Obama is a Democrat, and he is a political moron.
2. Obama is a Republican, and he is a political genius.
The Republican Party is amazing. The Republicans, after winning a majority in the House of Representatives, have done more to change the direction of the country than the Democrats did in the two years that they controlled the Presidency and had majorities in both Houses of Congress.
Click to view
President Obama has agreed to shift from doing something about the present unemployment and foreclosure crises to addressing the future federal budget deficit. And he has further agreed that the federal budget will be balanced largely at the expense of the elderly, the sick and the unemployed rather than upper income taxpayers.
And even with this, it is still an open question as to whether the Republicans will accept Obama’s terms or force the federal government into defaulting on its debt anyway—resulting in loss of faith in U.S. financial solvency and higher interest rates for decades to come and maybe indefinitely.
Either President Obama is an exceptionally weak President, or his priorities are different from what his supporters assume they are. Just as only a supposedly conservative Republican could go to China, only a supposedly liberal Democrat can cut Social Security and means-test Medicare. If this is what the President had in mind to do anyway, his supposed dilemma is not a dilemma. He is like B’rer Rabbit being thrown into the briar patch.
When will Medicare become insolvent? Pick a number from the chart below.
In 1991, the Medicare trustees predicted the fund would run short by 1999. The latest prediction is that will be be okay until 2024.
Now, the failure of dire predictions to come true doesn’t mean they never will. The ending of the story of the boy who cried “wolf” was that, one day, the wolf really came.
But remember that “insolvent” does not mean “broke.” It means that, at some future date which we cannot predict, Medicare will not be able to pay 100 percent of promised benefits unless a change is made in the meantime.
I’m 74 years old. I’m a member of the most fortunate generation in American history so far. Like almost everyone in my generation who was willing and able to work, I held reasonably secure jobs at reasonably good wages. Between my discharge from the Army and my retirement, I had only two employers. Now I enjoy a secure retirement, based on Social Security, a company pension and my own savings and investments.
Few people under age 55 enjoy are so fortunate. They have typically experienced layoffs, downsizings, flat wages (in inflation-adjusted terms) and diminishing pension and health benefits. During the late 1980s and the 1990s, when I reported on business for the Rochester (NY) Democrat and Chronicle, some companies in Rochester negotiated two-tier wage contracts, under which existing wages and benefits would be maintained for the existing union members, but newly hired workers would get less. The assumption was that people will fight to keep what they have, but accept being denied what they never knew.
Labor unions are based – or should be based – on the principle of equal pay for equal work, and the principle that an injury to one is an injury to all. Besides being morally wrong, two-tier contracts are short-sighted. The newly-hired second-class workers will direct their justified resentment not at the company, but at the union leaders and members who sold them out. If sacrifice is necessary to preserve jobs, it should be shared by everyone, including management.
Now Paul Ryan, Alan Simpson and others propose a two-tier retirement system. People of my generation would get to keep our Social Security and Medicare at current levels, but the new retirees would have to retire later and receive fewer benefits. We current retirees would be foolish to fall for this. The wrath of the generation behind us would fall not on those privatized Social Security and voucherized Medicare, but those of us who still enjoy retirement security. I don’t believe that the proposed cutbacks are necessary, but, if they are, they should be shared equally by all.
You already see this in the split between union and non-union workers. Some non-union workers, seeing the better wages and job security that union members get, do not conclude that they should have unions of their own. Rather they think of the union members are enjoying special privileges that should be taken away.
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