Tuesday, April 14, 2015

Republicans Plan To Cut Social Security, Medicare and Medicaid

Speaking in the early 2016 primary state of New Hampshire, want-to-be president New Jersey Governor Chris Christie announced his intention to cut Social Security, Medicare and Medicaid benefits. Christie's plan largely follows the Republican Party's standard script to cut and eventually privatize those social programs. Christie's main points include:
  1. Raising full benefit retirement age from 66 to 69 - Christie wants to raise the retirement age to 69. He would gradually implement this change starting in 2022 and increase the retirement age by 2 months each year until it reaches 69. After that it would be indexed to gains in longevity.
  2. Raising early retirement from 62 to 64 - Christie proposes raising the early retirement age at a similar pace - raising it by 2 months per year beginning in 2022 until it reaches 64 from the current level of 62.
  3. Eliminate all Social Security benefits for those with income over $200,000, with a sliding reduction for those who have income between $80,000-$199,999. This would end Social Security as we know it, effectively converting it from a plan of universal social insurance to a welfare program that would be more vulnerable to further cuts. The strength of Social Security rests on a simple principle: Everyone pays in; everyone receives benefits.
  4. Raising Medicare eligibility age - Christie plans to call for increasing the Medicare eligibility age by one month per year so that by 2040 it would be 67 years old, and by 2064 would be 69 years old.
  5. Reduce payroll taxes for working seniors - Some retired seniors need to continue working to increase their monthly earned benefit amount.  Wages some working seniors earn count toward their Social Security benefits, and often increases them. Reducing the payroll tax would freeze their benefits and give them no credit for additional wages earned in retirement.
  6. Reforms to disability insurance - Christie said he wants to give incentives for people receiving disability insurance to get back to work by speeding up the qualification review process and increase funding for continuing reviews. On the first day of the current Congress, GOP leaders used a covert rules measure to ensure a manufactured funding crisis within the Social Security Disability Insurance program that is separate from Social Security retirement benefits.
The Democratic Party, which created Social Security, now in its 80th year, is unmistakably the strong champion of the program. The Republican Party which, in 1935, voted nearly unanimously to kill the legislation in the House of Representatives, has an unmistakably 80 year record favoring scaling back working Americans' modest earned Social Security benefits.

More than half of Americans (including 40 percent of Millennials) are planning to fund at least a portion of their retirement with Social Security benefits, according to Capital One Share Builder's Financial Freedom recent survey. Polls show voters want Social Security expanded — not cut — by overwhelming margins. On the question of whether to cut Social Security, respondents answered in the negative by more than 70 percent — 86 percent say current benefits aren't sufficient and 72 percent say we should consider increasing benefits. More than that, 77 percent say they support paying higher taxes on average Americans, and 83 percent say we should raise taxes on top earners. The polls demonstrate support across red, blue and purple states and among Independents, Republicans and Democrats. 

For years, Republican and "moderate" Democrat policymakers have been talking about cutting Social Security benefits — to save the program from going broke. The Beltway consensus, unduly shaped by deficit hawks and Wall Street mavens, who want to get their hands on "privatized" Social Security money, has been that the system is broken and must be pared back, and progressives who support Social Security have often had to play defense.

In late March, Massachusetts Sen. Elizabeth Warren challenged the prevailing consensus that the only way to save the program is to cut benefits. In the wee hours of March 27, Warren introduced an amendment to the Senate budget resolution calling for protecting the program's solvency and expanding Social Security benefits. Every Democrat present, but two, voted for the amendment; every Republican opposed it. Sen. Warren won 42 Democratic votes — with just two Democrats voting no — for a nonbinding resolution calling for a "sustainable expansion of benefits.

The progressive argument is that Social Security benefits are meager and people in retirement need more, not less, money. The concerns about the program’s solvency are at best exaggerated and at worst a fear-mongering fabrication.  The reason that Social Security benefits are not about to collapse into nothing anytime soon — or even in the next 75 years — is because the majority of benefits are paid directly from the Social Security payroll contributions by current workers.

Among Democrats, the movement to expand Social Security is gaining traction. Legislation increasing benefits, and boosting payroll taxes to cover the cost, now has 58 co-sponsors in the House, in addition to 42 Senate Democrats.

The movement to increase Social Security benefits began just over a year ago with an online campaign, Boost Social Security Now, which argued that existing benefits were inadequate to the needs of low-income seniors. Even before that, however, the progressives were using the Internet to challenge conservative fear-monger that Social Security was inherently unsustainable.

Six Progressive Ideas Congress Can Adopt to Fund and Boost Social Security Benefits Now
  1. Eliminate the Social Security payroll contributions cap. Currently, only wages up to $117,000 are subject to the Social Security payroll deduction. Lifting the cap will subject all wages to the payroll contribution which would help address the majority of Social Security’s projected funding shortfall. 
  2. Slowly increase the payroll contribution rate by 1/20th of one percent over 20 years. This gradual increase in the rate will significantly strengthen Social Security’s financial condition well into the future.
  3. Treat all salary reduction plans like 401Ks. All workers pay Social Security and Medicare taxes on their contributions to retirement accounts but no payroll taxes are collected from workers flexible spending accounts such as HSAs, transit and dependent care plans.
  4. Increase the basic benefit for all current and future retirees by $70 per month. This modest but meaningful benefit improvement is a long overdue boost, especially for low-to-middle income beneficiaries who rely upon their Social Security benefit for the majority of their income. 
  5. Provide Social Security credits for caregivers. When computing the Social Security benefit, grant up to five family service years to workers who leave paid employment to provide care to children under the age of 6 or to elderly or disabled family members. This enhancement will help provide greater parity for women’s benefits which are typically less than men’s due to interruptions to paid employment caused by family care giving needs.
  6. Improve the way Social Security’s annual cost of living adjustment is calculated by switching to a more accurate formula, the CPI-E, which is based on elderly spending habits instead of the current CPI-W formula which is based on spending habits of urban wage earners and clerical workers. This will help seniors, especially elderly women, keep pace with the rising cost of their healthcare and help them to be able to make ends meet
Where the 2016 Presidential Candidates Stand on Cutting Social Security:

Jeb Bush - Republican

The former Florida governor made privatization of many programs a key part of his administration. "I would look at any outsource opportunity," he said in 2009. But he has not specifically said he supports privatizing Social Security. Bush also introduced a pilot program as governor to privatize Medicaid in Florida and to allow recipients to choose from a range of commercial health care plans.

Ted Cruz - Republican

The U.S. senator from Texas said in 2012 the country should gradually increase the Social Security retirement age and "to allow taxpayers to have a portion of the Social Security funds go to a personal (privatized investment) account  that they own and control." In 2013, he said it should be a "bipartisan priority to strengthen Social Security and Medicare to preserve the benefits for existing seniors and to enact fundamental reform to ensure that those programs remain strong and vital for generations to come."
The "reforms" Cruz advocates run along the same lines as those outlined by New Jersey Governor Chris Christie, also includes privatizing Social Security. Privatization is not a plan to save Social Security; it is a plan to dismantle Social Security. Privatization means increased retirement risks, severe cuts in Social Security benefits, and a multi-trillion dollar increase in the federal debt.

Privatization diverts money out of Social Security into individual accounts leaving an even larger solvency problem. Privatizers fill this funding gap by dramatically cutting Social Security benefits. They cover the rest by borrowing money, thereby increasing the debt burden on all taxpayers by trillions of dollars over the next half century. With market-based accounts, the risk of an adequate retirement is placed entirely on the individual.

Wall Street brokers and fund managers would stand to make billions of dollars a year thanks to privatization, so it's no surprise that they strongly support the privatization movement!

Rand Paul - Republican

The U.S. senator from Kentucky has called Social Security "a Ponzi scheme." In 2011, he co-sponsored a bill to gradually increase the Social Security retirement age to 70 by 2031 and gradually increase early retirement to 64 by 2028. "We must reform the program for younger Americans," he said at the time. In 2013, he sponsored a bill to allow those eligible for Medicare starting in 2015 join the Federal Employees Health Benefit Program and proposed raising the eligibility age to 70 by 2034.

Marco Rubio - Republican

The U.S. senator from Florida said in 2011 that government programs to address poverty have "actually weakened us as a people." Last year, he proposed gradually increasing the retirement age for younger workers and keeping the retirement age the same for workers over 55.

Rick Perry - Republican

The former Texas governor released a plan during his 2012 presidential campaign that proposed protecting the Social Security fund from being used for other purposes and to allow younger residents to create personal retirement accounts. He has also recommended allowing states to opt out of Social Security.

Hillary Clinton - Democrat
The former U.S. Senator, Secretary of State, and first lady — the Democratic frontrunner for the White House — said in 2007 that cutting Social Security benefits, privatizing the program, or raising its retirements age were "off the table." 

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