Tag Archives: Social Security

“Trumped Up” Social Welfare Crises

There are two utterly incompatible approaches to the maintenance of social safety nets–and beliefs about the obligation of a society to its most vulnerable members.

On one side are those who recognize the obligation, who see the payment of taxes to support social programs and government services as the “dues” we owe to the “club” we call America. On the other side are those who reject that obligation, who insist that individual citizens (including, presumably, children, the elderly and the disabled) must be personally responsible for their own needs, and to the extent they are unable to do so, that private charity should fill the gap (despite copious evidence that charity is grossly insufficient to the task).

Those in the first category have legitimate differences about how we discharge our obligations to each other, about the efficiency of programs put in place, about the evidence we can reasonably require in order to separate out the truly needy from the merely greedy. But they understand that no society that ignores its neediest citizens can be “great” or even good–let alone stable.

Those in the second category tend to be financially comfortable (or better). Their incentive to ignore reality and the plight of others is rooted in their desire to keep more of what they have and their insistence that they have “earned” their good fortune and other folks could too if they really wanted to.

They are the ones who have controlled Congress. And as Robert Reich has written,

Republicans would love to get rid of Social Security and Medicare. But they can’t, because Social Security and Medicare are among the most popular of all federal programs. Besides, most Americans have been paying into them their whole working lives, and depend on them.

Since any overt attack on these programs would be politically suicidal, the Republicans have decided to do nothing–aggressively– to refrain from the “fixes” and accommodations to economic changes that all such programs require from time to time.

The trustees for Medicare and Social Security – of which I used to be one – say Medicare will run out of money by 2026, three years sooner than last projected, and Social Security will run out in 2034.

But this doesn’t have to be the case.

Here are three easy fixes to Social Security and Medicare that Republicans don’t want you to know about.

First: Raise the cap on income subject to Social Security payroll taxes.

This year, that cap is $128,400, meaning that every dollar earned above $128,400 isn’t subject to Social Security taxes.

As Reich points out,  the CEO of a big company making $15 million dollars a year pays Social Security taxes on just $128,400 of that, while the nurse practitioner taking home  $100,000 pays Social Security taxes on every dollar of his or her income.

Reich’s second “fix” addresses a situation that most of us find outrageous:

To help rein in Medicare costs, allow the government to use its huge bargaining power to negotiate lower drug prices.

Every other country negotiates these prices; that we do not is an unconscionable gift to big Pharma, which already benefits from the immense amounts through which taxpayers subsidize research. (Pharma already spends more on advertising, marketing, and lobbying than it does on research, so protests that lower profit margins would curtail research are disingenuous at best.)

Reich’s third “fix” is the least intuitive–and the most intriguing.

Third: To deal with a basic reason why Social Security and Medicare are running out of money, allow more young immigrants into the U.S.

The basic reason why Social Security and Medicare are running out of money is the American population continues to age and live longer – leaving a relatively smaller working population to pay into Social Security and Medicare.

What to do? Allow in more young immigrants. Immigrants and their children are the fastest growing segment of the working population, already contributing billions in payroll taxes every year. Instead of shutting immigrants out, allowing more immigrants into the country will help secure the future of Social Security and Medicare.

I have previously reported on the multiple benefits conferred by immigration; this is another.

If you belonged to a club in which some members refused to pay the dues that maintained the facility and its amenities, you’d terminate their membership. We can’t terminate the citizenship of people who are unwilling to pay their fair share, but we can save Social Security and Medicare. As Reich says,

Raise the cap, negotiate drug prices, and allow in more immigrants. Do these three things and you won’t have to worry about Social Security and Medicare not being there when you need it.

Comments

Let’s Make a Deal

Let’s talk about dealmaking, crony capitalism style. The Atlantic reports

Between 2007 and 2012, GE secured more than $16 billion worth of federal contracts, which might have something to do with the fact that it spent $150 million on lobbying during that period.

According to the article, the Sunlight Foundation recently examined the activities of 200  politically active for-profit corporations between the years 2007 and 2012.  Between lobbying and campaign contributions, those 200 companies spent $5.8 billion to influence government. In return, they got more than $4.4 trillion in federal business and support. (It may have been more; according the the Foundation, federal record-keeping isn’t as precise as we might wish.)

For comparison’s sake, $4.4 trillion is more than the amount that Social Security paid out to roughly 50 million beneficiaries over the same six-year period.

It’s interesting. So-called “deficit hawks” like Paul Ryan are constantly looking for ways to cut “entitlements”– social programs that benefit large numbers of American citizens. There is a lot of discussion of the costs of those programs. There is  far less discussion about the amount of taxes that most Americans have paid toward those costs, about  whether ordinary Americans should be able to expect a reasonable return on that tax “investment,” and what such a “reasonable return” might look like.

There is even less discussion of the appropriate “return on investment” for monies spent on campaign contributions and lobbying, or about the possibility that the tax dollars paid under the government contracts secured by campaign contributors exceed the value of the services being rendered.

When Social Security was established, it was sold as insurance. That “deal” was simple: Workers would pay taxes on their earnings, those taxes would be invested and kept safe, and government would pay them a monthly income in their old age. We can argue about the sufficiency of that income, the fairness of the tax, the mandatory nature of the program, whether social security is really an insurance program or welfare…all sorts of things. But lawmakers chosen by We the People bickered and argued and ultimately voted to make that deal.

I don’t remember a similar vote on the appropriate level of  “quid pro quo” payable for campaign contributions….

Comments

Words and Meanings

I regularly use this space to take right-wingers to task, but those on the Left deserve similar treatment when they engage in similar behaviors.

Ever since reports that Obama’s budget included a “chained CPI” for Social Security, liberals have been screaming about proposed “cuts” to Social Security. My inbox has been flooded with pleas to sign this or that petition, to call my Senators and Congressional Representatives, and generally to make it known that these “cuts” cannot be justified.

As I understand it, what the President has proposed is changing the metric currently used to calculate Social Security cost of living raises. The CPI index being used has been criticized as an inaccurate indicator, resulting in larger raises than are needed to keep up with a rising cost of living. This change in the yardstick for calculating those raises will result in lower Social Security “bumps” or increases going forward.

That is not a “cut”–at least, not in my vocabulary. It is a recalculation that will result in smaller increases in the future–lower expectations for growth.

Now, I am not an economist, and I don’t play one on TV. I have no independent ability to evaluate arguments about the relative merits of the indexes involved, although several people whose judgment and expertise I respect appear to agree that the current index is inaccurate. If they and the President are wrong, then critics have a perfect right to object to the proposed change on that basis. But advocates of the status quo do themselves no favor by mischaracterizing the proposal and mounting a hysterical assault.

When NRA supporters refuse to consider background checks because that is “really” the first step toward a registry that will then be used in an effort to confiscate all the guns, we rightly accuse them of irrational behavior. When progressives respond to a suggestion to change the way we calculate benefits by characterizing it as a hard-hearted assault on old people and the first step in dismantling the social safety net, we engage in similarly overwrought behavior–and risk being dismissed for the same reason.

Argue for or against the use of the new metric, but leave the hyperbole at home.

Comments

This Is Why We Can’t Talk To Each Other Anymore….

Have we gotten to the point where we can’t have an honest political discussion any more?

I’ve used this blog to criticize the crazies (Gail Collins refers to them as ‘rabid ferrets in today’s column) who currently control the GOP. Today, I’m giving equal time to the lefties who characterize any proposed change to social programs as “cuts” to be fought tooth and nail.

As part of the “fiscal cliff” negotiations, President Obama has signaled a willingness to change the formula by which Social Security cost-of-living raises are calculated. In the wake of that suggestion, my inbox has been filled with hysterical warnings about imminent poverty for the elderly, recriminations for the administration for its willingness to “cut benefits,” and calls for Action with a capital A. Don’t bother to read the fine print. Sign this petition! Send this message!

This knee-jerk reaction is no different from that of the right-wing NRA types who equate restrictions on assault weapons with the imminent “confiscation of our guns.”

Can we stipulate that these issues are more complicated than these hysterical charges and counter-charges suggest? For once, can we have an adult conversation about the pros and cons of a suggested policy change?

A change in the formula used for calculating raises is not a cut–at least, not as that word is understood by most sentient humans. That doesn’t mean that there may not be undesirable side-effects from the proposed change, but if those undesirable side-effects exist, they should be specified and discussed.  If the proposed change will operate to harm disadvantaged populations, we should tweak the formula to avoid those consequences. Screaming that the sky will fall if XYZ occurs is rarely a prelude to rational policy debate.

The left justifiably criticizes the Tea Party ideologues for their refusal even to consider alternatives to their positions. That intransigence–that refusal to acknowledge nuance and complexity–is no more attractive or helpful when it comes from the left.

Comments