"The left," writes former White House Budget Director Peter Orszag, "is stridently opposed to any serious discussion of Social Security reform." What's more, says Orszag, the same nebulous "left" is "adamantly opposed to restoring actuarial balance to Social Security now."
Here's a suggestion, inspired perhaps by this weekend's rally: Can't we stop characterizing one another and discuss the issues in a thoughtful and collegial manner? I'll accept a portion of the blame for being excessively "strident" in the past. So let's start again, collegially and respectfully, by concentrating on the issues and not the personalities.
Here's a good place to begin: There's a proposal on the table that addresses all of Mr. Orszag's concerns about Social Security in a simple, fair manner, by removing the earnings cap on payroll taxes (which is currently about $106,000).
This simple act would make Social Security rock-solid for at least the next 75 years, and probably longer. What's more, polls show that Americans of all political persuasion would prefer it to cutting retirement benefits. Nevertheless, Mr. Orszag didn't mention it in his Times piece. Neither have any of the other people who have advocated cuts to Social Security in the past. So I'd like to pose this question to him -- and to Alice Rivlin, Alan Simpson, Erskine Bowles, John Boehner, and everyone else who has proposed cutting Social Security benefits:
Why are you against this simple, clean, and popular idea?
It's a sincere question. I'd really like to know. For years we've been reading proposals like Mr. Orszag's 2005 plan, which would cut benefits and require some minor tax increases, or Rivlin's, which is likely to be even more Draconian. But none of the people advocating benefit cuts have ever responded to it or refuted it directly and thoroughly, at least to my knowledge. Mr. Orszag didn't even acknowledge its existence this week, even though it disproves his suggestion that benefit defenders are "unserious" or unwilling to "restore actuarial balance" -- a goal that this proposal readily achieves.
Isn't it time that the burden of proof was shifted away from those who want to preserve Social Security benefits, and toward those who would cut them? After all, reducing benefits is a severe step that would hurt a lot of the people who are most in need. Before anyone proposes anything that drastic, the mature and responsible thing to do is to first explain why they're against the proposal that's already on the table.
It's a well-established management principle: Don't do something radical until you've proven conclusively that more judicious solutions won't work.
The other problem with Orszag's statement that "the left is adamantly opposed to restoring actuarial balance" is that criticism of plans to cut Social Security is not restricted to the left. Polls like this one, commissioned by the Campaign for America's Future and the Democracy Corps (1), show that voters of all political preferences would rather see taxes increased than see cuts to Social Security. This isn't just true of Democrats and Independents. Only 11 percent of Republicans polled would "strongly favor" cutting benefits to reduce the deficit, while 52 percent of Republicans strongly oppose cutting them. (2)
And leftists aren't the only ones who think lifting the payroll tax cap is the way to go. Harry J. Ballantyne thinks so too. Ballantyne co-authored a paper on the topic, in fact, that reached this conclusion: "(Social Security's) long term modest shortfall of less than 1% of GDP can be addressed by raising employer and employee payroll tax rates, by raising the cap on taxable earnings, or by some combination of the two." The report continues: "Raising the cap is an appealing option because in recent decades the lion's share of increases in both earnings and life expectancy has gone to those at the top of the income distribution."
Mr. Ballantyne should have some credibility on the topic of actuarial balance. He's an actuary. As a matter of fact, he was the Chief Actuary for Social Security for many years. And far from being a member of the "professional left," he was appointed to that position during the Reagan administration. So we've got a proposal to restore actuarial balance, and it has been endorsed by the most qualified actuary in the country.
So Messrs. Orszag, Simpson, Bowles, et al: What's your objection?
Granted, some people may have legitimate mathematical concerns with the payroll tax solution, despite Harry Ballantyne's credentials. If so, we'd love to hear them. After all, wouldn't it be better if we resolved these concerns by sitting shoulder to shoulder over a spreadsheet (metaphorically speaking, anyway), rather than calling each other names like "strident" or "unserious"?
We predicted that Tuesday's election would immediately be followed by ramped-up efforts to cut Social Security -- and Orszag's piece appeared on Wednesday. To be fair, that piece didn't propose benefit cuts. But Orszag did propose cutting them in 2005, and yesterday he referred to that proposal as "reasonable." What's more, his Times piece contrasts the alleged intransigence of "the left" with complimentary references to the Deficit Commission's co-chairs and Republican leaders who "have previously expressed a willingness to tackle the issue." Both the Commission's co-chairs and new House Speaker John Boehner have said that they want to raise the retirement age and cut retirement benefits in other ways as well.
But none of them has explained why they're opposed (I almost wrote "adamantly opposed," but we're not being strident here) to lifting the payroll tax cap.
Look, I'll even take the rap for the "strident" part personally, if it helps. I've written about Orszag before, and I thought in retrospect I was a little harsh last time. So consider this an apology. But the question still stands. There's a concrete proposal on the table: Are you for it or against it? If not, why not?
Once the would-be benefit cutters answer this question directly, soberly, and honestly, without name calling or evasion, we can all get started on an important and very serious discussion about the future.
__________________________
(1) With support from MoveOn.org; the American Federation of State, County and Municipal Employees, and the Service Employees International Union.
(2) The survey's questions addressed cutting Social Security to reduce the deficit, rather than to restore its own long-term financial integrity. But how would Republicans react if the reasons given were those Mr. Orszag offered on Wednesday? Those included "establishing some credibility on out-year fiscal problems... (that) could open up admittedly limited running room to pass necessary additional stimulus legislation in the long run." That statement's not just implausible -- Republicans aren't going to vote for "stimulus legislation" no matter what else happens -- it's guaranteed to ensure that Republican voters are even more opposed to benefit cuts than they were in this poll.
What's more, it's not necessary to cut benefits in order to "save Social Security." And it's political suicide for any president or member of Congress who supports it, although that's a different topic.
Richard (RJ) Eskow, a consultant and writer (and former insurance/finance executive), is a Senior Fellow with the Campaign for America's Future. This post was produced as part of the Strengthen Social Security campaign. Richard also blogs at A Night Light.
He can be reached at "rjeskow@ourfuture.org."
Website: Eskow and Associates
Follow Richard (RJ) Eskow on Twitter: www.twitter.com/rjeskow
First, let me confirm that that approach does solve the problem. See
http://www.ssa.gov/OACT/solvency/provisions/charts/chart_run191.html
Second, I actually do support increasing the cap some as part of a package of fixes. But not as the only solution.
Here are my objections:
1) Negative effects on U.S. employment. It will drive more companies away from the U.S since the people who make those decisions and their associates would be hit by payroll tax increases.
With 9.6% unemployment, the government should be running emergency programs to get people into useful jobs, not driving companies away.
2) It would change the nature of social security from a self-funded program to a charity.
3) It transfers money from younger working high income people to preserve the benefits of older retired high income people. (Becuase we could just as easily lower the benefits of high income people.) Currently we don't even tax all social security income. The argument "reducing benefits is a severe step that would hurt a lot of the people who are most in need." just ignores proposals that reduce benefits more for higher income people and exempts those with the lowest incomes.
4) I'm opposed to bailouts: of banks, of AIG, Fannie/Freddie, and of pension plans with benefits that exceed their contributions.
They individually surround themselves with people who hope to inherit their money or advance from them. These hopeful people do not cross them so they become cruel and unthinking.
Simpson may still be in shock from the reaction he got from people.
Seriously, this is the simplest and best solution for SS, and it beggars the imagination that it apparently is not even on the radar. The "recommendations" of the Catfood Commission were preordained before it was even established.
Reagan doubled the SS/Med tax so that we not only paid for our parents, we paid for OURSELVES. The whole idea then was that the Boomers would create a bubble in the system that needed to be remedied beforehand. After the Boomers die out, the tax is actually supposed to go DOWN. We never hear that story because it would be in direct opposition to the spin being put out now.
We could raise the cap, we could raise the minimum wage to a living wage and start paying our workers appropriately - that alone would put more money into the system.
We could require that all those trust fund babies pay an appropriate amount into ss/med since they don't have a paycheck. Same with all those Wall Street investors who manage to pay 15% capital gains tax on their ill-gotten gains when we can catch them.
There are any number of remedies without cutting benefits. If anything, benefits should be increased because Wall Street and the corporations have either trashed people's 401K's or renigged on their pension commitments. We now have a Federal Agency that takes over pension plans from bankrupt companies and manages what is left - most retirees find themselves getting 15-20% of the pensions that they had worked years for and thought were guaranteed.
Boy is that ever the best line in the entire piece. THAT is what needs to happen, loud and long and repeatedly. I'll be carrying that message into every conversation I have on Social Security.
Prove that the cuts you say are required are the best and only way to fix Social Security. Lay out clearly and concisely why Social Security is insolvent, and what ALL the options to fix it are. Defend your choice, and be willing to accept other alternatives. The choice lies with the American People, and the burden of proof is on YOU who want to reduce benefits to show why this is the best and only way.
It is like insurance. With life insurance you don't worry about others who draw money from the same life insurance you pay premiums in to. You know the money is pooled and your family will get yours when your time comes.
That is how Social Security works. We pay in until it is our time to retire.
Usually the workers pay enough for the retired workers before them, but there was a lot of boomers. They paid double so they would not be a burden on their young workers. The extra money has been put into bonds.
You won't pay any more than we have for our elderly. Social Security started in 1940.
The young should not fight us on this. You will become old too and will be glad you have Social Security. If you want to invest, use the 401k.
100% of SS is paid for by workers, through payroll tax. Investment income is not taxed. Trust-fund kids pay no SS tax, or Medicare tax unless they get more than $200,000 annually from fund. At least they will not get SS, but they will get Medicare at 65.
I'm 60, retired, live off investments. I pay no payroll tax on my income, pay 15% investment tax.
END THE PAYROLL TAX, and tax all income equally. Buffett and Gates pay about 15% total Fed tax, their income is dividends and capital gains. Gates makes some $600M annually in dividends, pays 15%. Buffett notes his secretary pays a higher tax rate than he does. Most workers pay about 40%, counting payroll tax including employer contribution, which ultimately comes out of workers pay.
The Medicare Prescription drug plan has helped drugs go up 400% or more. Now the generics sometimes cost as much as the brand names.
I will be paying $550, monthly in the donut hole. I asked my doctor to write me less expensive prescriptions. He said there wasn't any generics so he couldn't.
Plus my husband and I pay over $500 monthly for our Medicare, Medigap and the Drug plans.
It seems the drug plan was designed to rip off and weaken Medicare.
Sometimes you get more benefits if you take Medicare Advantage which is operated by private insurance companies. Medicare is paying part of their expenses. That seems designed to weaken Medicare, too.
I'm 60, have no insurance, don't care. They should raise SS and eliminate Medicare. Let us seniors decide whether to use the money for food and shelter, or on useless tests and drugs. Don't patronize and tell us we don't know how to best use our money.
Drop all your optional plans, on the average you will save money by paying your expenses yourself. You avoid the overhead and profit of the insurer, should save you 30% on the average, more if you are healthy.
Better yet, go Google and read research done outside the US. Chances are the drugs you are taking are ineffective and probably bad for you. Statins for example do not save lives. Osteoporosis drugs don't work, take 2000 IU vitamin D daily instead, lack of it is the real cause.
The US is 4% of world's population, takes 60% of prescription drugs (by $), is 40th in the world in health and longevity. That should tell you something: drugs in the US are over-prescribed.
Google "cinnamon diabetes" and "curcumin prostate cancer Alzheimer". Read, save money, save your life.
I am over insured. I have the best insurance supplements I can buy in my area. It is expensive but I have been sick and so has my husband.
The chances of one of us going to the hospital within a year are high. There may be a need for home health care too.
They checked my bones last week and gave me calcium to take once a week. My sister told me not to take it because it causes cancer so I haven't. She thinks hormones or radiation is added to the calcium. She said several people she knew developed cancer after starting to take it.
I don't know about dropping Medicare and getting more Social Security. Medicare was designed for affordable healthcare for the elderly. But now that there are so many pigs at the trough most medicine and hospitalizations will bankrupt a person if they become ill unless they have good insurance.
Medicare only pays 80% and that 20% could be bankrupting.
I do think the young would be better off not to buy insurance if they are on their own with no help from their employer. They could invest it instead. But it is risky.
The problem is not that it hasn't collected enough funds. Its that the government has borrowed against these funds, and would like to get out of paying them back. If we borrowed money from China and then decided we didn't want to pay them back, how would that work? Not too well. But our leaders have been trying to coerce the American People into accepting a default on Social Security as inevevitable. I promise you we won't do that easily.
There is no other good answer. If so...what?
Simple, easy and something even republicans can understand. We need END THE CAP bumper stickers, shirts, buttons etc.
Social Security is set to go up with inflation. You have to realize the money contributed 20 years ago would have bought a lot more than it does now.
New Social Security money has to be collected from payroll. One reason the planners don't want to raise the earnings cap for Social Security and Medicare is because it makes the employer's payroll match higher. That makes them less competitive overseas. The government could raise the cap on these programs and then give it all back with federal tax breaks to the employers who match the worker's contribution over $106,000.
Another reason they want to cut benefits by making people work 3 years longer is the worker will pay in for 3 more years and won't draw those 3 years. Working 3 years longer is a 15% or 20% cut in Social Security benefits.
Ben Bernanke printing money is making that $2.6 trillion worth a lot less than it when we saved it. I have to bite my fingers to keep from typing what I feel about that.
Also, they don't want to pay Social Security back the $2.6 they owe because federal income taxes would go up for the rich.