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Social Security
I would like to call cutting Social Security by adopting the chained CPI the worst idea seriously being considered in Washington, but that title already belongs to raising the Medicare eligibility age. Chained CPI is at least a strong contender for second place.
First, cutting Social Security at this time is incredibly misguided because the private retirement system is clearly failing. Traditional company pensions are quickly becoming a thing of the past. Private retirement savings, like 401(k), have also failed to live up to their promise especially during the great recession. If anything, Social Security benefits should be increased to make up for the failure of the private retirement systems.
Second, adopting a slower inflation index for senior citizens is completely unjustifiable. It is simply not a more accurate measure of inflation for this age group. Much of their spending is on health care and that has grown faster than other sectors. The Bureau of Labor Statistics actual has a separate consumer price index for the elderly based on their purchasing habits. It found inflation for the elder is actually slightly higher than the official measurement the government is currently using. Adopting a slower cost of living adjustment would make this problem even worse.
Finally, if you insist on cutting Social Security benefits, the chained-CPI is one of the worst possible ways to do it. The slow measure of inflation is a series of small cuts that builds with every passing year. That means the burden of cutting benefits this way falls primarily on the oldest individual. This is both idiotic and cruel. The oldest Americans are the one most likely to exhaust their private savings, most likely to need extra help, and are least able to perform a job to augment their income. Even getting the same level of savings with a simple across the board reduction in everyone’s base benefit would at least be better policy.
The sole reason chained-CPI has gotten so much traction, despite being one of the worst possible ways to cut Social Security, is purely about PR. Politicians think they can pull a fast one on the American people by claiming a cut is really just a “technical fix.” Since some politicians are scared of publicly supporting cuts to Social Security but also want to cut the program, they have lined up behind this terribly designed gimmick.
Photo by 401(k) 2013 released under Creative Commons License
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About FDL Action
The end result of “substituting” goods in the chained CPI, is living in a cardboard box in a back alley and eating garbage.
Or is it substituting starvation for food and death for living?
The terrorists hate us for our freedoms. And the demobots are demanding that cuts to the Pentagon be restored as the sequester is replaced with Obama’s “grand bargain.” Combined with the third worst idea in Washington, the ACA, a corporate welfare Rube Goldberg Machine with many sharp moving parts, these creeps are competing to see who can express the most contempt for Americans.
This is a con game and must be stopped! How? Who is listening?
Marxist agitatorfinancial adviser Barry Ritholtz reminds us that the CPI was monkeyed with years ago by Hoover Institute economist Michael Boskin and already understates inflation as encountered by actual human beings. Going to C-CPI would be yet another turn of the screw.What trouble me about these ideas is no one is really complaining (present company excepted). It floats along and everyone seems to just accept the idea that our entitlement programs are broken and need to be fixed. Nothing could be further from the truth. It’s the same with the spending cuts. I heard on the tube this morning that a majority of the people accept the need to cut spending. Hey, look at me, the stock market is roaring, until one day it isn’t and another million people are looking for work. I think I’m trapped in a time warp. Who are these people anyway?
I definitely know live, living, breathing humans who would be screwed over by Chained CPI. They are *barely* making it now. They will not be able to survive under such circumstances, which I believe is the objective.
I stated in a prior post that, in 4 short years, we have gone from Grifter Caribou Barbie shrieking: “Death Panels for Granny = BAAAAAAD,” to ALL politicians & the 1% & their shills yelling: “Death Panels for Granny = GOOOOOOD!!!”
Such is the way of our Orwellian world.
This is terrible, but, other than us ret*rded hippies, who the EFF is paying attention??? Just this weekend, I had a conversation with someone who claimed that this would be “ok.” So: on it goes….
Hi Jon.
Grab this graphic for your post!
Chained cpi is worst for women who live the longest. 3% at ten years, 6% cut at 20 years. 9% at 30 years. If you are a young disabled person/vet, forty years would be a 12% cut.
Almost everyone, except a very small minority who pays attention. Duly noted that, as small of a minority that we are, we often very publically disssed, made fun of, and so on.
Most citizens have drunk the KOOL AID, no matter how they voted… and as we saw in the last general election, the VAST MAJORITY voted against their own self-interest. What was it? Less than 3% who voted putative “third party.” So 97% voted against their own self-interest. As I said: who are these people?? Almost everyone.
Low information Rich people control the media/message that gets to the low information poor people. They will understand how this isn’t good when it happens to them. When the checks stop coming; be they dividend checks from Wal-mart shares or SSI checks from the Gubermint, only then will they be looking to us.
I work with many younger people in their 20-30s. If they have a home they’re buried in it. If they have children they are scared shitless to not be able to feed them and they’re buried in credit card debt. If they are single they have student loans of 60-80K and make 40K before taxes. They see the $17 trillion figure and when, or if, they listen to the news they assume the worst for their future old age. When you start a life and a family envisioning the white picket fence and end up behind a chained link one, not entirely of your own making, the reaction is not totally unjustified. But the political information they get from both parties certainly doesn’t calm their fears in any way, either. Just sayin’.
The biggest problem I have with going to Chained-CPI is that it only meets 18% of the 75 year shortfall. What’s the point of doing this if we still need to do 4 more similar things to make up the shortfall?
As stocks and corporate/bankster profits vault to record highs, new ways must be found to extract more from the serfs. Welcome to BerBanke’s Fed financed feudal estate.
SS is not part of the deficit. Eliminate the cap. Duh.
We are leaving a very ugly world for those coming after us. Sadly they all by into the “we are out of money” crowd. We need a Chavez for America.
Classic shock doctrine is to perpetuate a crisis in order to justify austerity.
Scrapping the FICA cap and closing the SS gap for 75 years out would solve the phony crisis.
The point of perpetual crisis is to provide the leverage for austerity. Hence no solutions. Partial solutions.
& Pursuit of Medicare cuts even though the CBO claims spending slowed by 300 billion in Medicare. & Forcing Medicaid patients into private medical insurance systems using the ACA bill. Obamacare delivers sideplates of wealth for privatizers. Does it solve healthcare problem or the need for universal care? That was never the plan.
Get it? Austerity & Privatization. That’s the plan. /s
Why do you think only SS needs to be calculated out 75 years? Are you worried about how we’re going to be funding wars in the year 2088? I know it’s a popular talking point for social security but why the selective concern?
75 years? Hell we can’t calculate out one year very well. Wall Street has a problem with three months and we have the geniuses who can project 75 years? Pete Petersen is one of them kind. Wish I were that smart.
Exactly. SS should not be part of the current deficit/debt issue at all. It is fully funded for at least 20 years. When we discuss the merits of the C-CPI we are buying into the lie that the SS Trust Fund is a fiction.
The fact that SS is on the table at all, and that it is the Obama Administration that keeps bringing it up, is all you need to know about the real agenda and membership of the Pete Peterson fan club.
Exactimundo. Like Arnold S. ” I’ll be back! ” Because the inverted triangulators will remove the pea from the shell game, yet again, and then force a false choice and the lesser of two evils on the citizens. Do you want to be hit with a hammer or a baseball bat? Yikes!
What is it with FDL? Why is it FDL doesn’t realize its only hope to return to its wonder days is to encourage Jon to let loose like this EVERY time he posts? Obama can’t run again. It makes no sense for FDL to continue to follow in the footsteps of msnbc.
For once, the AARP is actually doing something useful by sending out constant email blasts to their members telling them in no uncertain terms that this “gimmick” is a real cut to benefits for current retirees. They’re also providing quick letters of protest for their members to send to Congress about this. So Congress doesn’t have a prayer of sneaking this past seniors without them knowing what’s happening. This may have even made a difference in the “fiscal cliff” debate at the beginning of the year by scaring enough Democrats to keep this cut off the table then …
Grayson and Atrios are talking about expanding Social Security. That’s the discussion we should be having, not parsing the validity of C-CPI.
http://www.usatoday.com/story/opinion/2013/03/05/seniors-retirement-social-security-column/1965159/
I agree that SS should not be part of the current deficit/debt issue at all. It’s got it’s own problems aside from the debt.
Social Security’s expenditures have exceeded non-interest income since 2008. Trust Fund interest earnings are expected to cover shortfalls through 2020. After 2020, Treasury will redeem trust fund assets in amounts that exceed interest earnings until exhaustion of trust fund reserves in 2033. Thereafter, tax income would be sufficient to pay only about three-quarters of scheduled benefits.
… seems so … got it a while back … I get it is Obama doing “the plan” too.
Stopping Obama seems like damn good politics now. GOPs!! Stop Obama!! Cuz Ds won’t!!
There should be no discussion concerning SS cuts, as the program is not part of the Federal Budget and as stated, does not add to the deficit nor the debt. Presently, SS has a $1.7 trillion surplus and can pay full benefits thru 2035. To solve any future funding problems, remove the cap on taxable earnings and even increase benefits. The country is not going broke, but its wealth is being stolen by the 1%!
All that has to be done is to raise the cap to $140,000 from the present $113,000.Of course the insane tea party dominated Rethughs would never go along with this simple solution.
Grayson and Atrios have the right idea. Also, with over 100% of the productivity gains going to the top 5%, we need to have a serious national discussion about income inequality. Cutting SS benefits will only make that inequality much worse.
One reason they make long term projections is so that small adjustments can be made in advance to off-set big potential problems.
Chained CPI if implemented last year would reduce the COLA increase for SS by $4/month. I’m not sure how much that would help the bottom line, but if we do nothing the Trust Fund is expected to be exhausted by 2033 and we won’t be talking about shaving $4 off the COLA increase, but rather ACTUALLY cutting benefits by $307.50/month (in 2012 dollars).
Not even close.
Let’s see. In 1982 gold was $286 and ounce. Now it’s $1650-1700 an ounce. That’s an increase in value of at least 14.3% per year over 30 years. So, if our gov’t would of just invested Social Security funds in gold we wouldn’t have a problem today, correct? You know, with just a few minor adjustments, then, we’d all retire with fat SS checks now. Right?
Given your investment prowess, I’m glad there will be SS around for you in your retirement.
The Social Security projections are for lifespan to increase at the same rate for the next 70 years as it has for the past 50 years. This in highly unlikely, as every species has some lifespan that can’t be exceeded. Currently, Latinos have the longest lifespan, then whites, then blacks. For white people with less than a high school education, the lifespan has dropped five years for women, and three years for men. Life expectancy, considering obesity and type II diabetes, is probably not going to increase forevermore.
For Medicare, medical costs have come under control since 2008. The idea that medical costs would explode forever is also false.
Never let a crisis go to waste, this crisis has been created to destroy Social Security and Medicare – Heck of a job Obama.
Alan,IMO a 75 year projection is meaningless and not worth the paper it is printed on. What was there 75 years ago in 1938? Who had TVs, the internet, computers, cell phones? Those things and so many more were barely a thought. The keys to the future are research, productivity and innovation.
As to money, that is never a problem other than we choose to buy into it. The federal government can never become insolvent and can always afford to pay for anything denominated in dollars. I’m sure you know that. So in reality the existence of a fund or not is equally as meaningless as the 75 year projection. But people think it is and so we are driven along this path. In fact you cannot even project the balance in the fund without crazy assumptions about mortality, employment, pay scales, inflation, taxes and age of retirement and earnings of the fund. And who can say what Pete Petersen, and Simpson-Bowles and their ilk will have wrought by then.
Our time would be better spent putting people to work to create the future we want than excel spreadsheets that no one will care about in the future. And on defeating the likes of Petersen.
Just my thoughts.
One other thing. I spend many years making five year business plans. Then one day the wizards figured out they were mostly trash and so they cut it to three years. A little later they made the last two years little more than a “vision” and concentrated on the next year’s budget. And that gave way to monthly forecasts of the balance of the year. Good stuff. And we had top notch forecasters. Couldn’t find their ass….
Robert Reich was a Social Security Trust Fund trustee:
“Now that Social Security has started to pay out more than it takes in, Social Security can simply collect what the rest of the government owes it. This will keep it fully solvent for the next 26 years.
But why should there even be a problem 26 years from now? Back in 1983, Alan Greenspan’s Social Security commission was supposed to have fixed the system for good…Greenspan’s commission must have failed to predict something. But what?…what did Greenspan’s commission fail to see coming? Inequality….
Back in 1983, the ceiling was set so the Social Security payroll tax would hit 90 percent of all wages covered by Social Security….Today, though, the Social Security payroll tax hits only about 84 percent of total income….because a larger and larger portion of total income has gone to the top.
If we want to go back to 90 percent, the ceiling on income subject to the Social Security tax would need to be raised to $180,000.
Presto. Social Security’s long-term (beyond 26 years from now) problem would be solved.
So there’s no reason even to consider reducing Social Security benefits (through a chained CPI) or raising the age of eligibility. The logical response to the increasing concentration of income at the top is simply to raise the ceiling.”
Thank you, THANK YOU, THANK YOU!!! Screwing with Social Security has absolutely nothing to do with fixing the deficit.
This is a sound argument but you are wasting it on an unsound arguer. :)
Yes, well that is the question isn’t it? You may or may not adjust the rate of return on a mortgage, ( fixed, adjustable, 5yr refi/ballon ) to gain advantage. But you seem to suggest that all bets are off on something that is guaranteed to be returned, to the individual, untouched by human follies. If they meet the criteria going in and coming out. SS has a guaranteed return, period. It may be argued if it is a good return but it can’t be argued that it is not the gov’ts role to (minor tweaks) change the ” rules of the game ” to suit their needs at any given time. Your defense of the Grand Bargain is no different than a bankers’ smile.
Bob Reich gets credit for the sound argument.
I take blame for wasting it.
OTOH, never let the trolls get the last word?
On this I think we mostly agree. Raising the ceiling (or eliminating it all together) would solve the problem for a long time.
Something else that would solve the problem for the 75 year projection is to raise the payroll tax by 1.1%.
Sorry I jumped in there with the last word. Especially since I agreed with you.
I know right? The same geniuses that “never could have predicted” the housing bubble are now going to try and predict 75 years out. What could ever go wrong with that scenario?
They did such a great job with the prediction model for the Post Office and all. We should totally give them a larger scale program to screw up.
Did you stay at a Holiday Inn Express last night???
NOt that I deny you credit, but that deems like an incredibly simple solution to me.
Raising the payroll tax is a regressive tax, which will hurt those at the lowest end of the income scale the most.
Considering the extreme and growing wealth and income disparity in our country, and its impact on our economy, our civic life, and our democracy, I find it impossible to share, or even understand, the notion any of our problems can be resolved by additional taxes or decreased benefits for those at the bottom of the wealth and income scale.
That seems more like a recipe for making things worse.
The payroll tax was raised 22 times from 1937 to 1990 (53 years), from 1% to 6.2%.
It hasn’t been raised at all in the last 23 years.
http://www.reuters.com/article/2013/01/31/us-column-miller-socialsecurity-idUSBRE90U0PK20130131
The Republican support for chained CPI to cut spending in the future is as strong as Republican support for the SGR to cut Medicare spending in the 21st century.
So, when have Republicans let their Medicare SGR cost cutting to go into effect? Instead, Republicans scream about the harm that will result if the SGR were finally allowed to take effect, most recently delaying it again January 1 in that “cliff” deal.
If chained-CPI results in cuts to the Republican voting block that keeps the Republican Party in control of the Senate and House, you bet the Republicans will boost Social Security benefits.
What I find so amazing about progressives is they devote so much effort to protecting Republican majority voters who vote to have their benefits cut by voting Republican based on Republicans being fiscal conservatives who will cut their entitlements.
I recommend a better alternative: cut Social Security benefits NOW to pay for the tax cuts.
Let’s call a 5% cut in SS benefits the “Pay for tax cuts on the backs of the old and disabled”.
Here sign my petition: http://wh.gov/wLed
Agreed!!!!
If the ceiling was raised, it would increase benefits for middle class earners, because the cutoff bend point would be a higher number.
You want to raise taxes on the lowest earners.
I want to raise them on the higher earners, by removing the cap. I also want to tax all personal income, not just wages.
It wasn’t Republicans who put Medicare and Social Security on the table.
Say what you will about the NRA “bringing the crazy” on any proposal – no matter how minute – to strengthen gun regulation. I wish AARP would show just a fraction of that resolve in regards to the continued assault on Social Security and Medicare benefits.
I don’t use facebook nor Twitter. No wonder u have no one signing u r petition.?
it’s not “chained CPI” anymore; in the president’s plan to replace the sequester it’s now called “Superlative CPI”..
http://www.whitehouse.gov/sites/default/files/docs/deficit_reduction_table_bucketed_r8.pdf
Increasing the payroll tax 1% affects ALL wage earners, not just the lowest earners.
You want to raise taxes on “other people”. How convenient for you.
I’m willing to sacrifice an extra penny out of my dollar to ensure solvency of social insurance against financial disaster in old age that benefits individuals and society.
That’s ridiculous. The % impact on the top 1% of increasing the payroll tax by 1% would be negligible. The impact on minimum wage workers would be very significant. It simply makes the very regressive FICA tax even more regressive.
Please educate yourself:
http://opinionator.blogs.nytimes.com/2013/03/06/the-war-on-entitlements/?hp
BTW, your view is very unpopular, but that doesn’t stop you and Pete Peterson from wanting to impose more social Darwinism on an already beaten down sector of our citizens:
“When asked by the National Academy of Social Insurance whether Social Security taxes for better-off Americans should be increased, 71 percent of Republicans and 97 percent of Democrats agreed. In a 2012 Gallup Poll, 62 percent of respondents thought upper-income Americans paid too little in taxes.”
Will of the people indeed.
97% voted against their interests of those who voted. Around 50% of Americans don’t see the point of voting. So who are the low information people?
Read a little farther. My view is equally popular to raising the cap.
I went to your link where the opinion writer Tom Edsall provided a link to the National Academy of Social Insurance:
I read the whole think before I wrote.
Raising the tax by 1% over 20 yr., combined with removing the cap, is a lot different from raising it by 1% now. And it’s completely different from the C-CPI.
You can fool most of the people most of the time, but….