Nel's New Day

November 29, 2012

Stop the GOP in Rolling Back Our ‘Entitlements’

Filed under: Uncategorized — trp2011 @ 8:20 PM
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Let’s solve the whole deficit by rolling back Social Security and Medicare–that’s what the GOP insists. Just do away with the safety net, and the country will have no problems. As always, they’re wrong. Social Security and Medicare are not the cause of the deficit.

Raising the age for Medicare and voucherizing Medicare would shift costs onto needy people, lead to worse health outcomes, and drive people into poverty. Without enough money to pay for their health care, people will postpone treatment, resulting in higher costs because the health situation will require greater expenditures.  People cut from Medicare rolls would just end up on Medicaid or other government safety nets. A study by the Kaiser Family Foundations estimates that the net federal savings in 2014 of $5.7 billion would cost individuals, employers, and states $11.4 billion—twice as much. Also raising the age of Medicare would save very little because younger seniors, those between 65 and 67, require the least health care.

Raising the “full retirement age” for Social Security would be equally useless. About half of the beneficiaries start drawing benefits at age 62; a total of two-thirds begin their benefits before age 65. Full retirement age is already 66 and scheduled to increase to age 67. Deficit hawks use the excuse of increased life expectancy to increase the age for Social Security and Medicare to 67.  Half the people in the United States, however, particularly the poor and working-class people whose earnings are at or below the median, have a life expectancy at 65 that is unchanged since the 1970s.  In the poorer regions of the U.S., specifically the South, black males have a life expectancy of less than 65, sometimes as low as age 59.  

Former Sen. Alan Simpson (R-WY) wants to raise the age for Social Security because it was “never intended as a retirement program” because life expectancy when it was founded was only 63. Yet in 1940, people who got to age 65 still lived for many years. It’s just that more people are living to the age of 65 now, inflating the statistical life expectancy ages. In fact, life expectancy is dropping in the United States.

Rep. Paul Ryan (R-WI) is now negotiating to decrease the deficit. Consider his past plans. He proposed raising the retirement age to 70 and implemented progressive price indexing as well as privatizing the program. Ryan’s plan would effectively cut benefits for all except 30 percent of the beneficiaries.

Social Security has nothing to do with the deficit because it is fully funded. It’s not an “entitlement program” because people pay into that specific program. With the $2.6 trillion surplus, Social Security can pay at 100 percent for the next 25 years and 75 percent after that. There is no deficit in Social Security; Republicans just want to use it for a cash cow to give money to the wealthiest people in the country.

Changes now can make Social Security self-supporting in perpetuity. Payroll taxes are collected only up to $110,100 in 2012, putting the burden on low- and middle-income workers. Eliminating that cap would allow Social Security to pay full benefits for the next 75 years, according to a Congressional Research Service report. Sen. Bernie Sanders (I-VT) tried to raise the cap last year, but both the GOP and the media ignored his attempts preferring to continue the myth of the “bankrupt” Social Security.

Medicare is also in good shape according to the Medicare Trustee’s annual report from April 2012. “The Hospital Insurance (Part A) Trust Fund has sufficient reserves to pay out the full amount of Medicare Part A benefits until 2024—the same projection made in last year’s report.  Should nothing else change, and the Trust Fund reserves be depleted in 2024, the Trust Fund would still receive sufficient income from the payroll taxes and other revenue through which it is funded to pay 87% of anticipated Part A expenses.” The report is based on a poor economy; projections will improve with the economy.

The future of Medicare would be even rosier if the GOP were willing to curb health care costs. Bargaining for drug prices would save billions. The Independent Payment Advisory Board, created as part of Obamacare to help Medicare control costs, could provide a theory of necessary medical treatments. These are not “death panels,” and the GOP wouldn’t care anyway because they are willing to take people off Medicare and let them die.

The problems with Social Security funding began when Bush borrowed heavily from its surplus to hide the fact that federal taxes didn’t accrue enough revenue to pay for his wars and tax cuts. Wall Street’s failures increased Social Security costs while reducing its revenues. The government owes the Social Security Trust Fund the interest for the money that the government borrowed from the $2.6 trillion surplus, but opponents (think GOP) believe that the government is not obligated to pay this interest. The budget deficit was caused by the wars, the lower taxes, and the Wall Street failures, but conservatives want to blame Social Security.

In fact, the government has borrowed more from the Social Security surplus than it has from any other source in the world, including China. As a result, Social Security now “owns” nearly 18 percent of the federal debt, making it the largest single holder of US debt. The government owes almost twice as much to Social Security as it does to China and Hong Kong.

House Republican Majority Leader Eric Cantor (R-VA) provided some insight to the GOP Social Security views in a recent NPR interview: “We are going to have to come to grips with the fact that these programs cannot exist if we want America to be what we want it to be.” In other words, the GOP doesn’t want to help people.

Another program that expires if Congress does nothing about it is the unemployment insurance extension. Conservatives don’t want to give one cent to all the people that they call “slackers,” but there’s an important reason for continuing this extension. Extending the current level of jobless benefits from states and federal government throughout the next year will add 300,000 jobs, according to the nonpartisan Congressional Budget Office.  Cutting off this extension will leave 2 million people without any benefits on January 1 and another 900,000 within the next three months.

The demise of Hostess Brands is a prime example of why we need to keep Medicare, Medicaid, Social Security, and the unemployment insurance extension. The company is doing just fine, thank you. They have 110 potential buyers salivating to take over the company, complete with Ho Hos and Ding Dongs—not to mention the infamous Twinkies. The court has given permission to give bonuses up to $1.8 million to the company’s top executives while all 19 corporate officers and “high level managers” must be employed for the next year. If all goes well, two of the officers will get even more bonuses in addition to their high salaries. CEO Gregory Rayburn, the “restructuring expert,” receives $125,000 a month.

While these corporate leaders, who drove the business into the ground, are making millions, 15,000 workers have lost their jobs, and none of the workers will get retiree benefits that they were promised. These people paid into the safety net; they deserve to receive them now. All of us deserve these benefits instead of giving the money to the wealthy.

4 Comments »

  1. The article and posts seem to not fully understand the fiscal realities facing the country and the budget. The BULK of our spending is on entitlement programs… Programs that DO NOT help the people entended, but only serve to assuage the conscience of the people voting for these programs by spending other peoples money instead of their own on charitable giving. People, when will the lessons of Greece and the Uro zone hit home? The US has spent Trillions on these entitlement programs and they are bigger than ever and also we have millions more people receiving them… How is that progress? Its time to stop and think how many people would be able to save for retirement, pay for their healthcare, give to charities and start new business ventures if we could keep 90% of what we earned instead of less than 50%??? This was how the country was constituted in the first place…

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    Comment by RB — December 19, 2012 @ 6:44 AM | Reply

    • You must not know that the people in the United States have paid into the so-called “entitlement programs” such as Social Security and Medicare. The government has taken $2.7 trillion out of Social Security that was intended for this program and refuses to even pay interest on its loan. Those fighting entitlement want to give the wealthy the bulk of the money with the resulting destruction of the middle class. And the programs do help people from starving; it’s only the privileged who believe that they don’t. The U.S. would not have the problem without the two wars, the tax cuts, and the lack of regulations on mortgages during Bush’s two terms. The defense budget has more than doubled in the last decade, and no one complains about that. It is going up even more now despite the fact that there is less need. Bush went into office with a surplus instead of a deficit and came out with a disaster. The middle-class and the poor didn’t cause these problems, and they shouldn’t have to pay for them. There would not have been an increase in the need for Medicaid and food stamps if not for Bush’s policies. It’s his eight years that took the country into the hole that we’re climbing out of now. People should be able to have pensions, but the corporations have a strangle-hold on the government and cut all these off. No one’s taxes are over 50 percent; the wealthy are even below the middle-class. Think of Mitt Romney, a man worth over $250 million who makes over $20 million and has a tax rate of 14 percent–on the money that he hasn’t managed to shelter around the world. If you don’t want to be like Greece, then you’ll vote to raise the taxes for the wealthy, taxes that are now the lowest, much less than half, than they have been for the last half century. It seems to be you who does not understand the fiscal realities facing the country and the budget.

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      Comment by trp2011 — December 22, 2012 @ 8:02 PM | Reply

  2. Reblogged this on Central Oregon Coast NOW.

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    Comment by Central Oregon Coast NOW — December 3, 2012 @ 10:43 AM | Reply

  3. And interestingly, the GOP’s new plan for raising revenue does not include raising taxes on the top 2%. It also tries to avoid any cuts to defense–those wars we’ve spent so much money on and weapons even the military itself doesn’t want. So yeah, we cannot get any money from those sources, but we just *have* to take funds away from the sick and the elderly. We have to do it to save America. Mmmm-hmmmm.

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    Comment by eurobrat — November 30, 2012 @ 7:40 PM | Reply


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