As we approach budget time we can look forward to another burst of hand wringing by the Washington elites, who will once again tell us about the need to cut Social Security and Medicare. News stories and opinion columns will be filled with solemn pronouncements about how these programs must be curtailed before they drive the nation to bankruptcy.
We can look forward to that famously deceptive graph showing how the cost of Social Security, Medicare and Medicaid are projected to soar as a share of the economy over the next two or three decades. Those with good eyes will notice that it is the cost of Medicare and Medicaid that are soaring, not Social Security.
This is primarily due to the projected explosion of private sector health care costs, not the impact of aging on the cost of the programs. That would lead honest people to focus on the need to get U.S. health care costs in line with costs in every other country in the world, but no one ever said that the Washington elites were honest.
But this is old hat. We know that the elites tell stories to advance their agenda. What is worth noting -- and celebrating -- is that thus far they have failed.
They have been pushing this line for the last twenty years, yet during this period there have been no substantial cuts to either Social Security or Medicare. This is a great victory for the vast majority of the country, the 99 percent, over the One Percent.
This fact is truly an impressive accomplishment. It is not only the Republicans who want to cut these programs; top leaders in the Democratic Party have repeatedly indicated their willingness to cut these programs.
President Clinton was all set to go along with a plan that would have reduced the annual cost of living adjustment for Social Security by as much as 1.1 percentage points. Had he gotten his way back in 1997, many seniors would be getting checks that are more than 10 percent smaller today. This sort of cut could have been devastating for people struggling to survive in the wreckage created by the incredible economic mismanagement of the last 15 years.
More recently, President Obama indicated his willingness to support an increase in the age of eligibility for Medicare and a cut of 0.3 percentage points in the annual cost of living adjustment for Social Security. These cuts would be a great hardship to tens of millions of near retirees who have seen much or all of their wealth destroyed by the collapse of the housing bubble.
In addition to those openly advocating cuts to these programs, Washington is also filled with a large number of "good cops." These are people who ostensibly support these programs. The good cops tell us that we are better off taking a deal in the long-run, because otherwise the bad guys will come back with even more powerful ammunition and push through larger cuts to Social Security and Medicare.
No one can know the motives among this group of good cops, but the fact is that they have repeatedly been proven wrong. If we had taken their advice back in the 90s, seniors today would already be receiving much lower benefits.
And, there is no reason to think that once cuts were put in place that the elites won't come back for more. After all, those of us who remember the 2000 presidential race know that any improvement in the budget situation is an argument for more tax cuts. And tax cuts will inevitably mean that we will have more pressure in the future for budget cuts.
The other important part of the argument for delay is the demographic fact that we hear repeated endlessly. The country is aging. The huge baby boom cohort is reaching the eligibility ages for Social Security and Medicare.
This means that the percentage of the electorate directly affected by these programs is rising every year. As hard as it was politically to make cuts in these 15 years ago, it will be much harder in 2014 or 2016, when the percentage of the adult population eligible for Social Security will be almost 20 percent larger. Better yet, if we can delay to 2020 the Social Security eligible population will be close to 30 percent larger as a share of the adult population.
With older people voting in much higher ratios than young people, there are not likely to be many politicians anxious to support cuts to the programs they depend upon. And, contrary to the stories of the Washington elite, the support of seniors for these programs is not driven by greed. It is driven by the fact that they recognize the importance of these programs in their own lives. They want to ensure that their children and grandchildren will enjoy the same security in their own age.
The moral of this story is that we should celebrate the work of hundreds of thousands of people across the country who have blocked the Washington elite to cut Social Security and Medicare. And remember, the future is on our side.
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it's easier than that. raise the payroll tax one half of one tenth of one percent per year... that's forty cents per week per year.
your fixes would cut benefits below the survival level. or force people to work who could have paid for their own retirement if you let them. why would you not let them?
It was *never* intended to be a primary source of retirement funds. It was put forth to serve a need for people who have lived longer than their expectancy and generally pay benefits for only a few years because of the average age vs time of death.
Now, we have people on social security for 30 years. That's not what was intended.
checked.
next question.
In 1983, when the new Social Security law was passed, a target was set to fund Social Security for 75 years, a ridiculous notion, one that has provided enforced savings that have provided the Treasury Department with a steady, reliable source of borrowed funds. At this time, the trust fund holds 2.5 trillion dollars of Treasury debt. It is just one of 155 federal funds and it is the very best financed.
There is absolutely no reason to increase the retirement age or to change the benefit formula to cut payments to recipients. There are many reasonable ways to increase funding for Social Security. The first, most logical is to increase the payroll cap.
you are mostly right. but why raise the cap and risk turning SS into welfare when workers can pay for their own increased needs (they are going to live longer) with a tax increase if one half of one tenth of one percent per year. that's forty cents per week for today's average worker.
I do not disagree that raising the payroll contribution by a small percentage would help to strengthen the trust fund, but it would be an additonal burden to low and middle income workers who with the payroll tax contribution along with their income taxes would put many if not most people in a higher overall tax bracket than many of the super rich. Also, income such as capital gains are not subject to the FICA tax. Interest income and dividends are not subject to the tax. The rich have many ways to obtain income at reduced federal income tax rates and they pay nothing to Social Security on those sources.
Please explain logically why younger high income citizens should take 100% of the hit, and let older high income people get away scot-free?
Why should VP Biden not pay taxes on all of his social security income?
p.s.
The SS trustee report of 1998 estimated 2032, not 2027 for the exhaustion of the trust funds.
"Under the intermediate assumptions, the excess of OASDI tax revenues over expenditures until 2013, together with interest earnings on the trust funds, will result in a rapid accumulation of assets for the combined OASI and DI Trust Funds during this
period. However, total income is estimated to fall short of expenditures beginning in 2021 and in each year thereafter. In this circumstance, trust fund assets would be redeemed to cover the difference until the assets of the combined funds are exhausted in 2032."
http://www.ssa.gov/OACT/TR/ and then select 1998, and look on page 20.
This is the mother of all bubbles, and yet we have to listen to conservative politicians pretend that if we just stop government from paying any of the medical bills, something has been accomplished. What was ushered in under Obama stands a good chance of dampening the steady surge in costs, but again, the conservatives want to obliterate that meager achievement.
Just look at the math, please. If conservatives are allowed to continue to support the health care industries' robbing us at an ever greater rate, then it will blow up in such a frightening manner that I can hardly imagine -- something worse than the Bubonic Plague raging unchecked across the country, I would guess.
Either way you inflict financial harm unto the same group.
there is no reason for the system to go bankrupt. in fact it can't. as long as americans want a safe way to save for their own retirement, SS is the best deal they can get.
all that bankrupt crap comes from the Petersons yelling every year that "we are running out of those worthless iou's".
meanwhile SS is paid for by a pay as you go payroll tax which is adequate to cover all future benefits. if the next generation is going to live longer than the last and wants to keep the same replacement rate all they need to do is raise their own tax... really their own savings... one half of one tenth of one percent per year... forty cents per week for the average worker today.
but hey, why would they want to do that when they can cut their heads off to save the cost of tomorrow's dinner?
you mean when the bank extends you a line of credit?
but there is no need to "just print it". we could pay our taxes for the stuff we already bought.
Terrorism kills fewer people than bee stings.
Well put.
"The good cops tell us that we are better off taking a deal in the long-run, because otherwise the bad guys will come back with even more powerful ammunition and push through larger cuts to Social Security and Medicare."
More fear mongering.
Is it possible that those in Congress ready to retire and a president who is on his second term or certain he will not win a second term will stoke fear, play the bad cops (with nothing to lose as they are leaving) and hack at Social Security before they leave office?
Patterns everywhere these days:
"Just give us your trillions and we'll save you from Saddam's WMDs."
"Just give those who committed fraud your trillions with no strings and we'll save you from depression." (lol, we have one anyway)
"Just give us some of your Social Security that you paid for your entire lives and we won't take all of it."
COMING NEXT as water is worth more than oil --and the country, cities and towns are being bankrupted: "Just sell your town water rights to us ---which sustain life and a healthy environment--and you'll have money for your schools and roads" (that is, until you have nothing left to sell!)
Once we get everyone on a government transfer program we won't have to worry about them at all. And we can easily get the votes to increase the payments.
SS is not a government transfer program. you pay for your own benefits. yes pay as you go is the mechanism, but just because you can't understand that doesn't turn it into government welfare.
1. that people getting benefits from the government are likely to want more government so increasing the people at the trough tends to protect the trough.
2. that if, as is being proposed by many, you remove the cap on SS, removing the connection between what you pay in and get out completely, then it will be a welfare system.