AARP's Social Security Debt Ceiling Fears

WASHINGTON -- For defenders of the Social Security Act's old-age retirement insurance program, news that the most powerful lobbying force for older Americans had softened its opposition to benefit cuts could not have come at a worse time.

In the midst of Vice President Joe Biden's negotiations with members of Congress about a deal to cut the federal budget in exchange for raising the debt ceiling to avoid a U.S. government default, the Wall Street Journal reported Friday that AARP "is dropping its longstanding opposition to cutting Social Security benefits."

"The timing is very destructive," Nancy Altman, co-director of the Strengthen Social Security Campaign, said in response to the story. "We all know the news is full of the Biden group meetings, and even though they say they don't want [Social Security] to be part of the deficit discussions and raising the debt limit, that's the impact it will have."

Now in damage control mode, AARP says it is completely against including cuts to Social Security benefits in the budget talks.

"We had a pretty big concern that Wall Street Journal article came out at the time it did," AARP legislative policy director David Certner told HuffPost on Tuesday. "The fact that they dropped it at this time gave the suggestion we were somehow open to having Social Security as part of this deficit debate."

While AARP says it is adamantly opposed to having Social Security in the debt ceiling discussion, the group is open to separate negotiations on changes in things like the retirement age or the formula for calculating benefits to maintain the long-term solvency of the Social Security trust fund. Such changes are tantamount to benefit cuts if they reduce the total amount retirees receive.

The $2.6 trillion Social Security trust fund is on pace to run out of money in 2036, at which point incoming payroll contributions will only be able to pay 77 percent of promised benefits. As of April, 35 million seniors received Social Security retirement benefits averaging $1,179 a month, according to the program's latest monthly snapshot.

President Barack Obama dipped his toe into the Social Security solvency debate in 2010 when he created the bipartisan National Commission on Fiscal Responsibility and Reform, which released a proposal in December that called for tweaking Social Security's benefit formula and raising the retirement age. "Reform Social Security for its own sake, and not for deficit reduction," the commission said in its recommendations.

AARP says it is willing to negotiate possible benefit cuts, so long as they are not tied to the larger debt reduction negotiations -- and that it has always been open to reducing benefits. This came as a shock to several other Social Security advocates. Alliance for Retired Americans Executive Director Ed Coyle said if AARP had been open to cuts all along, "to me, that's news."

As evidence, a spokeswoman sent HuffPost a 2005 memo about the need to "strengthen" Social Security. "Whether it involves changes to benefits, to revenue or some combination of both, we must meet the needs of all Americans," the memo said. (It would be possible to eliminate the program's future shortfalls solely by lifting the $106,800 cap on taxable wages, but revenue-only fix is unpopular with politicians.)

Though Social Security has received less attention than Medicare and Medicaid in the ongoing debt limit negotiations, there are budget-cutting proposals from various members of Congress that could affect Social Security.

"We still have all these proposed caps and triggers out there, which probably won't include Social Security because they usually understand that Social Security is a separate program, separately financed," Certner said, referring to the fact that Social Security is paid for out of the trust fund, not the federal budget. "But not all of the proposals out there do exclude Social Security, for instance the CAP Act."

"So there's still the potential Social Security could be included in these arbitrary triggers," he added.

The CAP Act by Sen. Claire McCaskill (D-Mo.) and Sen. Bob Corker (R-Tenn.) would both institute a limit on all federal spending and "eliminate the deceptive 'off-budget' distinction for Social Security," as their statement announcing the bill described it.

Sen. Kay Bailey Hutchison (R-Texas) has also crafted a proposal that makes cuts to the program. "It is my hope that Social Security is included in the bipartisan discussions on raising the debt ceiling, as it is an opportunity to fix this important entitlement for seventy-five years rather than just focusing on a short-term band aid," she said in a statement hailing AARP's apparently new position.

Comments

[Ginger E Fidel]

08:29 AM on 07/07/2011

Seriously, on the backs of our most vulnerable? It just goes to show how little our elders are valued in this screwed up society! Why is it such a big deal for those with more resources to not pay more taxes so that funding desperately needed social (yes, I said the word) programs is maintained? And what about the growing population of baby boomers that have paid into the system for years and years, and now....

[Quinxy von Besiex]

05:52 PM on 06/23/2011

As republican as seniors may be, I don't see them going along with republican plans to seriously alter Medicaire. My dad is a staunch republican and decries Obama's "socialist" goals, but modify Medicaire? He likes it just fine the way it is, thank you very much. And no, he doesn't see any hypocrisy in his position.

[irishred]

12:39 PM on 06/23/2011

This is what I wrote on the 10th AARP membership sign up envelope, "Return to Sender, Wrong Name, Wrong Address and Wrong Policies." Ya, think they will get the message now?

[CherMoe]

11:43 AM on 06/23/2011

Sad to say, but a lot of people won't be joining AARP again, since they are throwing us seniors under the bus. Now we will not have a voice to back us up in Washington. Time to start a new organization who will really stick up for America's senior citizens, instead of trying to sell us something all the time, along with a "line of bull."

[larry putman]

11:18 AM on 06/23/2011

Social Security isn't in financial trouble. It's Medicare that is having problems.
People you are really ignorant. The debt ceiling only effects non-essent­ial government services. Please get an education.

[Randy1949]

02:31 PM on 06/24/2011

Which people are you calling ignorant? Medicare is having projected problems because medical costs are going up across the board. But it's patently obvious that anyone over the age of 65 and relying on Social Security benefits for income is not in a good position to purchase private insurance. If we have to use money from general tax revenues to partially fund Medicare, then that's a better use for it than three useless wars overseas.

Of course Social Security isn't in financial trouble yet. There will be a temporary crunch as the Boomers move through the system. That was already supposed to have been addressed by the reforms of 1983, but that money has been borrowed and they're hoping not to have to pay it back, and they're also hoping we won't remember what has been going on.

Social Security should not even be considered part of the budget deficit crisis, but the GOP has never liked and sort of social program, and they're using this to further their ideology.

[Ginger E Fidel]

08:32 AM on 07/07/2011

And part of the problem with rising medical costs is the ideology of medicine to 'save lives' with no regard for quality of life. The most $$ spent on Medicare is in the last year of life. If an older individual has a terminal disease, do we really need to 'save lives' or make them as comfortable as possible so the remainder of their days can be spent with loved ones with some measure of dignity?

[Rixar13]

07:31 PM on 06/22/2011

I'm burning my AARP Card.....

[Gottlieb]

10:43 AM on 06/23/2011

I ended my membership with AARP a few years ago but they keep sending me junk mail. They are a relentless marketing machine. I wish they would show this same relentlessness in defending Social Security.

[CherMoe]

11:43 AM on 06/23/2011

Now that I know the truth, I'm not renewing my membership which is now due.

[Periwinkle]

07:33 AM on 06/22/2011

The Social Security brouhaha drives me nuts because the solution is so simple and could be accomplished in one vote: raise the cap on contributions. Currently, only the "small people" pay on 100% of their income and that's not fair or, at this point, logical. Raise the cap.

[CherMoe]

11:44 AM on 06/23/2011

Totally correct.

[Bringbackmanufacturing]

05:57 PM on 06/30/2011

Yes, it is a simple solution, but look at some of these elected gov. officials. They only care about themselves and how much is in it for them.

[jobscabin]

07:11 AM on 06/22/2011

The powerful AARP lobby must be fighting in the back rooms....with themselves. Back in 2004 they endorsed the $500B Big Pharma boondoggle and perhaps put the vote total over the top. They promptly lost nearly 100,000 members who saw the unfunded program as flawed. Now they spoil their timing by announcing this bad decision at a time when the Republicans are looking for cover over their debt ceiling position. Here is what reforms should be enacted: RAISE SS BENEFITS BY 10%, pay for it by eliminating the $90,000 cap. In other words make every earned dollar subject to the FICA tax. Then means test to determine who needs to collect on their SS insurance benefits.

[dennidus1680]

09:57 AM on 06/22/2011

Excellent idea. Unfortunately, it benefits most retirees at the expense of "special interests," so I don't see our politicians from either side of the isle, legislating or even debating this.

[ljwaks]

10:59 AM on 06/22/2011

This is a poor solution to a mostly fake problem. If we raise the cap, and then means-test the benefit, where will the support come from. It will smack too much of a transfer payment. I am for getting rid of the cap. That by itself will solve the problem. Means-testing the benefit just adds insult to injury.

[maruski]

11:16 AM on 06/22/2011

you are right--if our argument is that SS is a retirement insurance program and you pay a premium to get a defined benefit--then you can't make people pay for it who can't get that defined benefit. If we go there we lose the argument that SS is something we paid for.

[MovieGuy2010]

12:07 PM on 06/23/2011

You therefore agree essentially with FDR, when some of his advisors wanted a form of means testing.

"The rich don't need SS" was their argument.

FDR said' Everyone pays in, everyone gets paid"

Otherwise SS is just a welfare program and those are much easier to rail against from the right.

[SisterAnn]

06:28 AM on 06/22/2011

From the article:

"The CAP Act by Sen. Claire McCaskill (D-Mo.) and Sen. Bob Corker (R-Tenn.) would both institute a limit on all federal spending and "eliminate the deceptive 'off-budget' distinction for Social Security," as their statement announcing the bill described it."

McCaskill and Corker want to eliminate the deceptive 'off budget' distinction for Social Security.

They are so wrong. Social Security is money saved by everyone who drew a pay check and matched by their boss just like the 401ks use to do. It is 'off budget'.

McCaskill has acted like a republican since she was caught not paying taxes.

We shouldn't let them slip CAP past us as a bill.

[Randy1949]

11:44 AM on 06/23/2011

Wait a moment --it's 'deceptive'? It's only deceptive because the government has used Social Security surplus funds (paid for out of FICA rather than income tax or other revenues) as a piggy bank. That money can be considered as 'invested', which is well and good, as long as no one complains about paying it pack.

McCaskill and Corker are the ones being deceptive. If FICA funds are to be considered general revenues, then they must be seen as some of the most regressive taxes possible -- paid only on earned income from the very first dollar and capped at $106K currently. Way to sock the little guy and then pull out the rug!

[MovieGuy2010]

12:08 PM on 06/23/2011

http://dissidentvoice.org/2010/04/how-ronald-reagan-and-alan-greenspan-pulled-off-the-greatest-fraud-ever-perpetrated-against-the-american-people/

[irishred]

12:42 PM on 06/23/2011

Yep and the last president Bush raided SS and wrote a bunch of IOUs' and then bailed out on the check.

[yellowdognc]

06:27 AM on 06/22/2011

I cancelled our memberships by email and cited the WSJ article as the reason. Received an email from them stating our accounts were closed, no sorry to lose you or any other attempt at recovery. I really think they don't really care about anything except a ready made prospect list for their products. I think if SS is put on the debt ceiling table a big fat show of people against this at the Lincoln Memorial should put it to rest.

[ljwaks]

11:03 AM on 06/22/2011

Hear Ye Hear Ye. There were hints during the 2008 campaign that Mr. Obama would remain in campaign mode and bring 'we the people' out when basic rights were threatened. What a disappointment.

We might start camping out at AARP, and move to the Memorial to let it be known that we are free men and women.

[noaxe397]

02:06 AM on 06/22/2011

If revenue fixes are unpopular with politicians (in terms of fixing SS) then why did they CUT the payroll tax by a third and fix it by adding revenue from the general fund thereby increasing the defecit? sounds like a lose-lose idea all around. It hurts SS while it raises the defecit.

[SisterAnn]

06:29 AM on 06/22/2011

They are all playing games with our lives.

[ConsensusReality]

01:17 AM on 06/22/2011

aarp is first and foremost a front to sell insurance

[structurequity]

01:12 AM on 06/22/2011

Those members of AARP who are opposed to the stance taken by this association on Social Security should ask for a prorated return of their membership fee and not only "Walk the Walk but Talk the Talk" That's what I did for the second time in ten years the first time when the AARP stood behind the Bush Gov and AARP endorsed NOT negotiating for lower pharmaceutical prices by the Federal Gov. Time to look at who really runs this organization, they are not acting in the interest of the majority of their members.

[terry63]

12:56 AM on 06/22/2011

Social security and medicare will have to be dealt with. We are at our limits and these programs will double in cost within the next ten years. Dem's should stop scareing Grandma. Some one will have to be the adult soon. We are on our way out folks. We must deal with it now. Not 20 years from now as our for fathers have done. The buck stops with us.

[RMForbes]

01:17 AM on 06/22/2011

No we are not at our limits. The social safety net programs could easily be maintained as they current exist if income for average Americans increases at the same rate as the growth in GNP as it did during the 3 decades following WWII which began with a national debt of 120% of GNP. It only requires those that earn the most must pay more effective overall tax rates than the small business owner pays on their profits. If the Wall Street corporations continue to receive tax breaks then the middle class will continue to shrink. All these breaks the big corporations currently enjoy gives them unfair advantage in the marketplace and makes it even harder for small businesses to grow and thrive.

[JayWilliams]

01:46 AM on 06/22/2011

Social security and medicare is in the Black, and will stay in the black for many years to come---if we do nothing! FICA tax was actually lowered in 2010. FICA needs be restored to pre-2010 levels, and the cap (over $106, 800.00 income pays nothing!) needs be lifted!
Are our precious, grand and glorious wars in the black? No, we borrow money for that!

[CherMoe]

11:48 AM on 06/23/2011

You're right. And I'm quite certain the lowering of the FICA tax was to cause a greater deficit in Social Security receipts so that Washington could turn around and SCREAM that it ran out of money. The very same thing that Scott Walker did in Wisconsin when he took the surplus and handed out the TAX CUTS to the rich, then screamed there was a deficit, and started busting Unions and firing teachers, etc.

[roccekt]

12:54 AM on 06/22/2011

I sent a blistering email to AARP. They'll never get a nickle from me. I hope other people do the same.