Posts tagged ‘Social Security’

FOCUS | With Deficit Hawks Circling Overhead


FOCUS | With Deficit Hawks Circling Overhead.

ith deficit hawks circling overhead, the responsibility for creating jobs has fallen by default to Ben Bernanke and the Federal Reserve. Last week the Fed said it expected to keep interest rates near zero through mid 2015 in order to stimulate employment.

Two cheers.

The problem is, low interest rates alone won’t do it. The Fed has held interest rates near zero for several years without that much to show for it. A smaller portion of American adults is now working than at any time in the last thirty years.
So far, the biggest beneficiaries of near-zero interest rates haven’t been average Americans. They’ve been too weighed down with debt to borrow more, and their wages keep dropping. And because they won’t and can’t borrow more, businesses haven’t had more customers. So there’s been no reason for businesses to borrow to expand and hire more people, even at low interest rates.

The biggest winners from the Fed’s near-zero rates have been the big banks, which are now assured of two or more years of almost free money. The big banks haven’t used the money to refinance mortgages – why should they when they can squeeze more money out of homeowners by keeping them at higher rates? Instead, they’ve used the almost free money to make big bets on derivatives. If the bets continue to go well, the bankers will continue to make a bundle. If the bets sour, well, you know what happens then. Watch your wallets.

The truth is, low interest rates won’t boost the economy without an expansive fiscal policy that makes up for the timid spending of consumers and businesses. Until more Americans have more money in their pockets, government spending has to fill the gap.

On this score, the big news isn’t the Fed’s renewed determination to keep interest rates low. The big news is global lender’s desperation to park their savings in Treasury bills. The euro is way too risky, the yen is still a basket case, China is slowing down and no one knows what will happen to its currency, and you’d have to be crazy to park your savings in Russia.

It’s a match made in heaven – or should be. Because foreigners are so willing to buy T-bills, America can borrow money more cheaply than ever. We could use it to put Americans back to work rebuilding our crumbling highways and bridges and schools, cleaning up our national parks and city parks and playgrounds, and doing everything else that needs doing that we’ve neglected for too long.

This would put money in people’s pockets and encourage them to take advantage of the Fed’s low interest rates to borrow even more. And their spending, in turn, would induce businesses to expand and create more jobs. A virtuous cycle.

Yet for purely ideological reasons we’re heading in the opposite direction. The federal government is cutting back spending. It’s not even helping state and local governments – which continue to lay off teachers, fire fighters, social workers, and police officers.

Worst of all, we’re facing a so-called “fiscal cliff” next year when $109 billion in federal spending cuts automatically go into effect. The Congressional Budget Office warns this may push us into recession – which will cause more joblessness and make the federal budget deficit even larger relative to the size of the economy. That’s the austerity trap Europe has fallen into.

Mitt Romney has been criticizing the Obama administration for not doing more to avoid the cliff, but he seems to forget that congressional Republicans brought it on when they refused to raise the debt ceiling. They then created the cliff as a fall-back mechanism. Romney’s vice-presidential pick Paul Ryan, chair of the House budget committee, voted for it.

It’s a mindless gimmick that presumes our biggest problem is the deficit, when even the Fed understands our biggest problem right now is unemployment. Yet even the nation’s credit-rating agencies have bought into the mindlessness. Last week Moody’s said it would likely downgrade U.S. government bonds if Congress and the White House don’t come up with a credible plan to reduce the federal budget deficit. (Standard & Poor’s has already downgraded U.S. debt.)

Hello? Can we please stop obsessing about the federal budget deficit? Repeat after me: America’s #1 economic problem is unemployment. Our #1 goal should be to restore job growth. Period.

The Federal Reserve Board understands this. And at least it’s trying. But it can’t succeed on its own. Global lenders are giving us a way out. Let’s take advantage of the opportunity.

Robert B. Reich, Chancellor’s Professor of Public Policy at the University of California at Berkeley, was Secretary of Labor in the Clinton administration. Time Magazine named him one of the ten most effective cabinet secretaries of the last century. He has written thirteen books, including the best sellers “Aftershock” and “The Work of Nations.” His latest is an e-book, “Beyond Outrage.” He is also a founding editor of the American Prospect magazine and chairman of Common Cause.

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+24 # Barbara K 2012-09-16 09:38
Absolutely, Mr. Reich, I’ve been wondering why the Rs are sulking so about the deficit. It cannot be fixed until people are working and paying taxes. Can’t pay down the debt until more money is coming in. End the tax cuts, that would help to take care of the deficit. It is like a family sitting around the kitchen table trying to pay its bills when it just threw out half their income. Not possible. Of course the Rs are so irresponsible, after all most of the debt was incurred before Obama even got there. We have the Rs to thank for the deficit in the first place. They howl over it now to make it look like they are really worried about it. If they were really worried about it, they would stop so much military spending. Buying things we don’t need.

OBAMA/BIDEN 2012
The alternatives are liars, cheats, thieves and greed. Loss of Medicare, Medicaid, and Social Security, just to name a few.

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The Real Retirement Crisis » Counterpunch: Tells the Facts, Names the Names


 

“The lifespan of any civilization can be measured by the respect and care that is given to its elderly citizens, and those societies which treat their elderly with contempt have the seeds of their own destruction within them.”

—Arnold J. Toynbee

The astounding, and potentially tragic, aspect of Washington’s three-plus-decade Social Security debate is that it carries on with little regard to the challenges facing the program’s participants. Politicians on the right and center-right feel free to decry resistance to even “modest cuts” in Social Security benefits while ignoring the vulnerability of seniors who are living the effects of reductions already mandated in the program’s last major overhaul, in 1983.

But the situation for seniors – and future retirees – is becoming alarming. A new, supplemental poverty measure introduced by the Census Bureau last November nearly doubled the official estimate of Americans over 65 living in poverty, to 15.9%, mainly due to medical costs not counted in the official numbers. More than 34% were either poor or near-poor—defined as having family income less than twice the poverty line. Half of all retirement-age persons who were no longer working—that is, who were receiving Social Security—had total yearly income of less than $16,140—only a fraction more than the federal minimum wage.

Even small reductions in benefits, or slower growth over a period of years, could tip many of these people into poverty. Countless others, who once believed their personal savings, 401(k)s, employer-sponsored pensions, or the equity in their homes made their retirements secure, are finding out that this isn’t the case either. Meanwhile, the White House, Republicans, and centrist Democrats are reportedly negotiating a Grand Bargain built on the deficit-cutting Bowles-Simpson proposals, which would include deep reductions to Social Security. And state and local governments are scrounging for ways to cut back the rest of the safety net for seniors—targeting Medicaid funds for nursing homes and home health care, housing subsidies, and other benefits.

A true retirement crisis is looming in the U.S., but politicians, obsessed with Social Security projections decades into the future, are disinclined to address it. Financially vulnerable older workers will be affected almost as soon as they retire; workers in their 20s, 30s, and 40s today will be hit much harder.

The Social Security “deficit”—the amount by which annual old-age and Disability Insurance benefits are expected to exceed revenues—was projected in 2011 to total about $6.5 trillion over the next 75 years. But for all the political attention focused on it, the economic impact of that shortfall will be quite moderate, equaling just .7% of GDP. Even the Baby Boom retirement wave wouldn’t make a very big dent in the economy, according to the Social Security trustees, whose 2011 Annual Report estimated that the annual cost of benefits will rise gradually to 6.2% of GDP by 2035, decline to about 6% by 2050, then stabilize at about that level.

By contrast, the U.S. faces a “retirement income deficit” of $6.6 trillion—larger than Social Security’s projected 75-year shortfall and five times the size of the current-year federal deficit. The Retirement Income Deficit is a new measure unveiled in fall 2010 by the Center for Retirement Research at Boston College. It lumps together all the resources that Americans in their peak earning years will have to retire on: Social Security and pension benefits, retirement savings, home equity, and other assets. It calculates the income people will need in retirement, based on tax scenarios as well as the income replacement targets that Americans at different income levels will likely need to meet.

Social Security and Medicare are perhaps the only ingredients in the Retirement Income Deficit calculation that the elderly can still rely upon. Nearly two-thirds depend on Social Security for more than half their income, and roughly one in five for all of it. Without Social Security, nearly half of Americans over 65 would be living in poverty. If anything, dependence on Social Security has increasing since the latest economic slump, thanks to the collapsed housing market, the recession, decades of stagnating wages, and the disintegration of other elements of the social safety net, among other factors.

Not that it’s a lot to lean on. Social Security only replaces 37% of the average worker’s pre-retirement income at 65. More than 95% of recipients get less than $2,000 a month from the program. Women average less than $12,000 a year in benefits, compared to $14,000 for retirees overall, thanks to the gender pay gap—partially explaining why 75% of old people living in poverty in the U.S. are women. While this seems to merit little discussion in deficit-obsessed Washington or on Wall Street, it draws an alarming picture for anyone familiar with what’s happening in the rest of the country, where a Gallup poll found 90% of people aged 44 to 75 agreeing that the country faces a retirement crisis.

Even before the economic slump, however, there were reasons to worry about the erosion of Social Security.

The Real Retirement Crisis » Counterpunch: Tells the Facts, Names the Names

How to Fix Health Care Without the Mandate: Put Single-Payer On the Table by Sarah van Gelder


What happens if the Supreme Court strikes down the “individual mandate” in the health care reform law?

Commentators ranging from former Labor Secretary Robert Reich to Forbes Magazine columnist Rick Ungar agree: Such a decision could open the door to single-payer health care—perhaps even make it inevitable.

We don’t need to assume that our health care policy must be designed to maintain the health-industrial complex.

This may be the best news about health care in years. Because ever since Republicans convinced the Obama administration to drop the “public option” in the Affordable Care Act, health reform has been in trouble. True, most Americans favor many of the provisions of Affordable Care Act. But the overall plan rests on forcing you and me to buy insurance from the same companies that have been driving up the costs of health care all along—the same companies that have been finding creative ways to avoid covering needed care, shifting costs on to patients, and endlessly increasing premiums and out-of-pocket expenses for all of us.

Forcing all Americans into a failed system is bad policy, and it’s not just President Obama’s opponents who say so.

What the Doctors Ordered

When the Supreme Court agreed to hear a challenge to the Affordable Care Act brought by 26 state attorneys general, one of the supporting briefs came from an unexpected source—a group of 50 doctors who believe that single-payer health care is the way to cover everyone and contain costs. As a model for a revamped health care system, they point to Medicare, which covers millions of seniors while devoting just 2 percent of expenditures to overhead (compared to as much as 16 percent for private insurers).

In spite of all the fear about government involvement in health care, Medicare is enormously popular; in a recent poll, two-thirds of Americans oppose changing Medicare to something more like private insurance. In the Medicare model, as in Canada’s single-payer system, health care providers are in private practice, but the government acts as insurer, covering everyone. The money for the program comes from payroll taxes.

This model is just one of a variety of ways that industrialized countries provide universal coverage; only the United States does not yet offer universal coverage at all, and the impact of our fragmented, privatized approach ripples throughout the economy and into the lives of families that face bankruptcy and exclusion from needed treatment.

While we in the United States spend far more on health care, per person, than any other nation, we’re way behind other wealthy countries when it comes to our actual health. The residents of 25 other countries—all of which spend less on health care than we do—can expect to live longer, on average, than U.S. residents. In a recent study of 19 industrialized countries, the United States came in last when it came to averting preventable death. Researchers say that amounts to more than a 100,000 avoidable deaths each year.

We devote 15 percent of our economy (by GDP) to paying for health care (or $6,402 per person each year), and still leave millions without coverage. In contrast, the French spend 11 percent of GDP on health care (or $3,374 per person) and cover everyone; the French live two years longer, on average, than Americans, and have better health by all key measures.

Follow the Money

If we’re spending so much for poor results, where is all the extra money going? Private, for-profit health insurance companies spend big on overhead: covering the paperwork and arguments about who will cover what, finding ways to avoid covering people who might require costly services, disputing charges from health care providers. They spend money on marketing and on lobbying Congress, federal regulators, and state lawmakers. They pay dividends to shareholders and they pay executives six- or seven-figure compensation packages. No wonder premiums keep rising.

None of these costs are incurred by Medicare or other national insurance programs.

Asking each of us to choose among competing plans is like playing against the house in a casino—it might seem as though you’re getting choices among slot machines, but really, the odds are stacked against you.

Some argue that patients are better off with competing insurance companies because that gives them a choice. Perhaps this is true of a patient who spends many hours required to read the small print in competing insurance plans, producing spreadsheets to track the multiple variables, guessing what sort of coverage they and their family will need in years to come, and hoping that they made the right choice when an unexpected accident or illness means their life depends on the bet they made. On the other side, insurance companies have battalions of lawyers and adjusters making bets about coverage, co-pays, and deductibles—coming up with ways to cover less.

Asking each of us to choose among competing plans is like playing against the house in a casino—it might seem as though you’re getting choices among slot machines, but really, the odds are stacked against you whatever choice you make.

Where choice really matters to most people is in choosing health care providers. In France, where public financing of health care is the rule, patients actually have more choices among doctors than do Americans, who must choose among health care providers preferred by their insurance company.

So the doctors who are calling on the Supreme Court to strike down the individual mandate are on to something. Instead of locking us in even more tightly to an inefficient private insurance system, which has built-in incentives to take more of our money and do less for us, they argue we should switch gears. We’re spending $200 billion more per year than we would need to under a single-payer system, they say. We pay more out-of-pocket than other countries, and the Obama Affordable Care Act wouldn’t fix that.

What do Americans Want?

In poll after poll, a majority of Americans have expressed support for single-payer health care or national health insurance. This is true in spite of the near media blackout on this topic, and the failure of most national politicians to even consider single-payer as an option (the Obama administration and Democratic leadership in Congress excluded single-payer advocates from the key summits and hearings leading up to the passage of the health care bill).

In Massachusetts, which has had time to try out policies very similar to those in the Affordable Care Act, over 5 percent of the population remains uninsured. And, according to the doctors’ brief, local initiatives calling for single-payer health care passed by wide majorities in all the Massachusetts districts where they were on the ballot.

Vermont has adopted a single-payer health care plan, and the California Assembly twice passed single-payer, only to have it vetoed by the governor.

Single-payer health care, in short, is far more popular than the political establishment likes to admit—while requiring individuals to purchase health coverage from private insurance companies is wildly unpopular across the political spectrum. According to a recent poll, only a third of Americans favor the individual mandate, but 70 percent favor expanding the existing Medicaid program to cover more low-income, uninsured adults.

Here’s something to ask yourself: If you’re on Medicare now, would you give it up to move to a private insurance plan? If you’re not now covered and you could sign up for Medicare today, would you?

Medicare for All

That contrast offers a good starting point. We don’t need to assume that our health care policy must be designed to maintain the health-industrial complex and their lobbyists in the manner to which they have become accustomed. Instead, we can expand Medicare to cover more and more age groups, until everyone is covered. We could all then have access to a program that keeps overhead low, is wildly popular among its clients, and is similar to programs in Europe, Canada, Japan, and elsewhere that have excellent records of cost containment, universal coverage, and great health outcomes.

So what happens if the Supreme Court overturns the individual mandate or—as now seems possible—rejects the entire package? Such a move could turn out to be a great boon to those who doubt the wisdom of relying on private, profit-focused insurance companies to cover us when we get sick. It could offer us the opportunity to get the sort of proven universal coverage we can count on.


Sarah van Gelder wrote this article for YES! Magazine, a national, nonproifit media organization that fuses powerful ideas with practical actions. Sarah is co-founder and executive editor of YES!.

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Reader Comments

Universal Health Care

Posted by Dilys Collier at Apr 06, 2012 08:14 PM
We Canadians love it even if it isn’t perfect. USA Republicans seem to consider Canadians “socialists.” We aren’t; our country is still run on a capitalist economic system (unfortunately). Socialism is an entirely different economic system. That’s not us. Our geographical circumstances determine our culture. During our extreme Canadian temperatures, we literally can live or die depending on whether we co-operate with one another. We don’t believe in leaving an injured Samaritan on the side of the road and passing by on the other side. Instead, we believe in offering assistance to everyone (regardless of colour, gender, or religion) by ensuring basic available health care to all.

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How to Fix Health Care Without the Mandate: Put Single-Payer On the Table by Sarah van Gelder.

Don’t Tell Me That Social Security Is Going Broke


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The Insanity Of Texas Gov. Rich Perry That Social Security And Medicare Violate The 10th Amendment Of US Constitution


“Governor of Texas Rick Perry writing new legislation to amend the 10th Amendment of the Constitution to end Social Security, and Medicare as we know it for none other than Newt Gingrich; Rick Perry beliefs that it violates the US CONSTITUTION. That how deranged these REPUBLICANS are. This is an insurance policy to protect workers from a serious illness, a serious accident, that can disable you for the rest of your life, or retirement due to old age. Without this protection you would live in poverty, in misery, and very ill until your death unless you were very rich.” Life without Social Security was extremely difficult for the disabled and seniors to survive and especially for those who were seriously ill that, that they often committed suicide.

The Older Americans Act


Attacks on Social Security, Medicare borrow a strategy from Lenin – latimes.com


By Michael Hiltzik

January 13, 2012, 9:04 p.m.
About the last thing you’d ever expect is for conservatives to draw procedural lessons from the founder of the Soviet state. So it’s fascinating to ponder the persistence of an attack on Social Security that was explicitly billed as a “Leninist” strategy three decades ago by analysts at the Heritage Foundation and is still in use today.

This is the notion, which is part of pretty much every proposal today to “fix” Social Security and Medicare, that benefits for the retired and near-retired should be guaranteed, while those for everyone else must be cut.

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The usual rationale given for distinguishing among generations is that it’s unfair to renege on a promise people have counted on for their entire working lives. But the real rationale is political. If you understand that, you might see almost all current proposals aimed at reducing the costs of Social Security and Medicare — whether they involve cutting benefits for most people across the board, raising eligibility ages, or means-testing the programs to cut or deny benefits to wealthier retirees — in a new light.

Let’s go back to the original strategy brief by Stuart Butler and Peter Germanis. Their piece, “Achieving a ‘Leninist’ Strategy,” appeared in the Cato Institute’s Cato Journal for fall 1983. Anguished over President Reagan’s failure to exploit Social Security’s 1982 fiscal crisis to privatize the program, they concluded that the reason was the program’s strong support among the powerful voting bloc of seniors.

The answer, they concluded, was to “neutralize” elderly voters while continuing to undermine confidence in Social Security among the young. Their model was the Leninist movement’s “success in isolating and weakening its opponents.”

Any plan to change Social Security, they wrote, “must therefore be neutral or (better still) clearly advantageous to senior citizens … the most powerful element of the coalition that opposes structural reform.”

The young, by contrast, were not organized to support privatization, and uninformed about its virtues. The task of filling the knowledge gap, they argued, could best be performed by “the business community and financial institutions in particular … both through their commercial advertising and through public relations.”

Ever since then, proposals for dramatic changes in Social Security and Medicare have reflected this divide-and-conquer strategy. Some have scarcely any other practical rationale. Consider, for example, the argument for means-testing Social Security. This often appears as the question of why the system should be burdened by paying a monthly benefit to Warren Buffett or Bill Gates (insert name of your favorite billionaire here).

Yet to reduce Social Security’s costs significantly, any means test would have to reach far beyond billionaires. One reason is that there simply aren’t enough taxpayers in the Buffett/Gates class to make a difference, especially when the maximum initial annual Social Security benefit, whatever your wealth, will be $30,156 this year. Only about 8,200 of the 140 million personal income tax returns filed with the IRS in 2009 reported adjusted gross income of $10 million or more.

Moreover, Social Security benefits are already sharply skewed toward the working class and middle class: 76% of all benefits paid in 2009 went to recipients with less than $20,000 in non-Social Security income, according to calculations by Dean Baker and Hye Jin Rho of the nonprofit Center for Economic and Policy Research. Those reporting $180,000 or more got 1% of the total. In other words, means testing makes no sense in terms of Social Security’s fiscal condition; its only result would be to make the program less relevant to the lives of middle-class Americans — and that’s a political strategy.

The same goes for increasing the full retirement age for Social Security (currently 67 for those born in 1960 or later) and the eligibility age for Medicare (65). An analysis of this commonly discussed nostrum for both programs was just released by the bipartisan Congressional Budget Office.

The CBO found that gradually raising the full retirement age to 70 for those born in 1973 and later would indeed cut Social Security outlays — by 2060 they would be 13% lower than if the law remained unchanged. But the burden would fall especially heavily on low-income seniors, who typically have few alternative income sources, and those for whom staying in the workforce isn’t an option. The CBO says the change would “lower average income and increase poverty rates” among the elderly; does everyone understand the trade-off of a policy change so casually bruited about?

As for raising the Medicare age, that looks like a classic case of being penny wise and just plain foolish. Raising the age to 67 would reduce government expenditures on Medicare by 5%, the CBO says. But the agency acknowledges that it would do nothing to stem overall healthcare costs; indeed, its own analysis and those of other experts suggest those costs would rise overall. Those who lose Medicare access (those ages 65 and 66) “would pay higher premiums for health insurance, pay more out of pocket, or both.” And some would have no insurance.

As the CBO observes, those effects would be moderated by the 2010 healthcare reform act, which many of those advocating cutbacks in Medicare also say they want to repeal. The Kaiser Family Foundation has concluded that pushing disenfranchised Medicare enrollees into private insurance, either through the reform act’s insurance exchanges or by forcing them to stay on their employers’ plans as workers or retirees, would push up the costs of those plans by increasing the numbers of elderly and less-healthy members in the private market. Medicare premiums would also rise, because deferring the enrollment of relatively younger beneficiaries makes the Medicare pool older and sicker on average.

If the change were implemented all at once in 2014, the Kaiser study found, the government would enjoy a net savings of $5.7 billion that year — but at a total cost of $11.4 billion divided among 65- and 66-year-olds ($3.7 billion), employers ($4.5 billion), other Medicare and private insurance members ($2.5 billion) and states paying their Medicaid share ($700 million).

In other words, here as in so many other categories the savings from making a dramatic change in an established program are illusory. Some bargain. Lenin would be pleased.

Michael Hiltzik’s column appears Sundays and Wednesdays. His latest book is “The New Deal: A Modern History.” Reach him at mhiltzik@latimes.com, read past columns at latimes.com/hiltzik, check out facebook.com/hiltzik and follow @latimeshiltzik on Twitter.

Copyright © 2012, Los Angeles Times

Attacks on Social Security, Medicare borrow a strategy from Lenin – latimes.com.