Posts Tagged ‘Social Security cuts’

GOP wants to raise Social Security benefits age

July 20, 2015

Almost all the Republican candidates—including Jeb Bush, Marco Rubio, Scott Walker, Ted Cruz, Chris Christie and Rand Paul, but not Mike Huckabee or Donald Trump—want an increase in the age for receiving full Social Security benefits.  This is a bad idea.

They are using Social Security as a wedge issue to divide the old from the young.  But in fact, the longer us old-timers are forced to work, the fewer jobs there are for young workers and the less opportunity for young workers to rise.

berniesandersAs Bernie Sanders has pointed out, the Social Security trust fund, which is invested in interest-bearing Treasury bonds, is sufficient to ensure that full benefits will be paid for many years to come, and full benefits can be continued indefinitely by raising the income ceiling on Social Security taxes.

Until recently, there was a bipartisan consensus on reducing Social Security benefits.  Benefits are already being cut by means of a law now in effect that gradually raises the age for full benefits from 65 to 67 (it’s now 66).

President Obama’s budgets called for calculating Social Security cost-of-living increases by means of something called the Chained CPI, which discounts actual price increases when meaning inflation.

He dropped the idea when he proposed the current 2015 budget after opposition from liberal Democrats such as Elizabeth Warren.

Hillary Clinton said she is opposed to plans to privatize or “undermine” Social Security.   So far as I know, she hasn’t said anything more specific.  Two other Democratic candidates—Bernie Sanders and Martin O’Malley—think Social Security benefits should be increased.  I agree with Sanders and O’Malley.

I say—hooray for partisanship.  It is better than bipartisan agreement on bad ideas.


The passing scene: Links & comments 11/9/13

November 9, 2013

South Africa breaks out of ‘partnership’ agreement trap by Joseph Stiglitz for the Bangkok Post.

The government of South Africa is party to trade treaties that, like the proposed Trans-Pacific Partnership and the Transatlantic Trade and Investment Treaty, grant international corporations privileged positions over the nation’s citizens.  But it is letting these treaties expire and renegotiating them.  Other countries should and are following suit.

America’s Death Spiral in the Middle East by Bob Dreyfuss for TomDispatch.

In the Middle East, the United States is despised by its enemies, its supposed allies, and even leaders it put in power.  The only hope of salvaging the U.S. position, according to this writer, is an alliance with Iran.  I think he’s right.

Syria’s Assault on Doctors by Annie Sparrow for The New York Review of Books.

I think President Obama was right to back off from attacking Syria, because this would have made a bad situation even worse, but the plight of the Syrian people remains.

Meet the Private Companies Helping Cops Spy on Protesters by John Knefel for Rolling Stone.

A U.N. report finds the global private security industry is booming by Elliott Hannon for Slate.

President Eisenhower warned of danger of a military-industrial complex.  Now we have a surveillance-industrial complex and a police-industrial complex.

Obama Gets Behind Democrats’ $10.10 Minimum Wage Proposal by Dave Jamieson for Huffington Post.

Obama wants to cut Social Security by Ben Strubel for New Economic Perspectives.

I am glad of the President’s decision to support a higher minimum wage.  I wish he were as relentless in pressing for that as he is for indexing Social Security to the “chained CPI”.

Billionaire Steven Cohen Can’t Make His Mommy’s Monkey Jump by Greg Palast for Truthout.

Palast profiles a member of what Theodore Roosevelt called “the wealthy criminal class.”  No matter how many billions he has, he thinks he needs more.

What not to do about Social Security

March 22, 2013


Recently the Institute for Policy Studies ran a comparison of how proposed reductions in Social Security benefits—raising the retirement age, and lowering cost of living adjustments by means of the Chained CPI—would affect a home health aide, 51-year-old Rhonda Straw, and corporate CEOs Stephen Hemsley of UnitedHealth Group, the largest U.S. health insurer, and Larry Merlo of CVS Caremark, the largest U.S. drug retailer.


Click on Inequality in the Social Security Debate for the full IPS article.

What to do about Social Security

March 22, 2013


Sometime within the next couple of decades, barring surprises, the Social Security trust fund will be exhausted.  That doesn’t mean there will be no money to pay Social Security benefits.  It means that the accumulated surplus funds earmarked to pay for the Baby Boom generation’s retirement will be exhausted, and payroll taxes won’t be enough to cover full benefits.

One way to deal with this is to raise the cap on payroll taxes, as proposed by Senator Bernie Sanders, an independent from Vermont.  Neither President Obama nor the Democratic and Republican leadership in Congress is considering this.  Instead, their method of heading off a future reduction in benefits is a present reduction in benefits, either through raising the retirement age or reducing cost-of-living increases by calculating them with the Chained CPI.

Obama sells GOP agenda to Democrats

March 20, 2013

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.

Shared SacrificeI 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?


Social Security is in danger—from Obama

July 22, 2011

President Obama is using the debt ceiling talks as an excuse to reduce Social Security benefits—even though Social Security adds not one cent to the national government’s debt.

Click to enlarge

The method by which this would be accomplished would be to index Social Security benefits to something called the “chained Consumer Price Index” which would go up at a slower rate than the regular Consumer Price Index.  This could lower the annual income of the average retiree by small amounts year by year, but the cumulative amount would be large—nearly $1,000 a year by age 85, nearly $1,400 a year by age 95.

The idea of the chained CPI is that people adapt to higher prices by changing their habits, and so their actual cost of living does not go up at as fast a rate as actual prices.  This is different from the “substitution effect,” which is incorporated into the regular CPI—that if the price of beef goes up, but the price of chicken does not, then people will switch to chicken and this affects their cost of food.  (This illustrates the principle.  I don’t know if it is an actual example.)(This is an actual example)  The chained CPI takes into account not only substitutions of products, but changes in lifestyle.  If you take a “staycation” instead of a regular vacation, your cost of living doesn’t rise with the cost of travel.  (I’m not sure if this is an actual example).

The problem with this is that the budgets of elderly people are not so flexible.   Even the regular CPI does not reflect the cost of living of the elderly.  A couple of years back, the Bureau of Labor Statistics created a new index called the “Consumer Price Index–Elderly” or CPI-E, which reflected out-of-pocket expenses for medical care, drugs, special diets and other costs specific to the elderly.  What the bureau found was that the CPI-E index rose twice as fast as the regular CPI.   So Social Security increases already fall short of the actual cost of living of the elderly, and the Chained CPI would cause them to fall behind even more.

Cutting Social Security benefits would not reduce the national debt one cent.   Social Security has its own revenue stream, and the Social Security Administration is currently drawing down a surplus accumulated in prior years to meet its current payments.  By most estimates, the Social Security Administration will be able to meet its obligations with no change in benefits or taxes for at least 25 years.

If Social Security benefits are cut and Social Security taxes remain the same, the Social Security Trust Fund will continue to buy U.S. Treasury bonds, and these bonds will still be a fiduciary obligation of the government, whatever retirees get or don’t get.