Bill Knight column for Thurs., Fri., or Sat., April 11, 12 or 13
President Obama’s unprecedented budget blueprint cutting Social Security and Medicare in exchange for restoring taxes on the rich is less a “grand bargain” than grand larceny. It’s not the equivalent of red-baiting Richard Nixon recognizing China as much as it is peace candidate Woodrow Wilson leading the nation into World War I.
It could give up a lot and get little in return.
“The President’s budget is not the balanced plan promised to Americans before November’s election and will leave millions of middle-class families in even worse shape than they are today,” commented Max Richtman, president of the National Committee to Preserve Social Security & Medicare (NCPSSM).
More than 2 million Illinoisans receive Social Security (Old-Age, Disability Insurance or Survivors) benefits, according to the Social Security Administration.
“The war in Afghanistan will continue, the boondoggle F-35 ‘Bankrupter’ fighter plane will continue, the $83 billion annual taxpayer subsidy to the ‘too big to fail’ banks will continue, but the earned benefits of America's working families, including disabled veterans and their survivors, will be cut if President Obama has his way,” said Robert Naiman, policy director at Just Foreign Policy.
Slashing Social Security by $112 billion over the next decade, the proposal for the budget starting October 1 recalculates cost-of-living adjustments not on the Consumer Price Index (CPI) but a “chained CPI,” and raises the retirement age. Both actually reduce benefits, the former by hundreds of dollars a year and the latter by limiting retirees’ access to money distributed AND paying no benefits while citizens keep working.
The plan also would cut Medicare spending by targeting payments to drug companies and health providers, and would require wealthier recipients to pay higher co-pays or premiums.
Contrary to the political spin, this proposal is no “adjustment,” progressives agree.
AFL-CIO president Richard Trumka joined leaders of women's rights groups, veterans, the disabled and Social Security advocates in warning politicians that there will be consequences if they betray the country. Officals who cut Social Security will get cut out of office at the polls, and the labor federation will work for that, Trumka said.
Politically, the proposal is ridiculous. Social Security is so popular and successful that even Republican Paul Ryan’s budget didn't touch it. Before Social Security, more than half of elderly Americans were in poverty, compared to 9.7% now, and the Center on Budget & Policy Priorities estimates that without SS benefits, 45.2% of older Americans would fall into poverty.
The foolish overture to extremist Corporate Conservatives could fracture the growing coalition of workers, women, minorities, youth, progressives and others that sent Obama to the White House by 5 million votes.
The “chained CPI” assumes that consumers resort to smarter shopping when prices go up, minimizing inflation’s effect. That is, if the price of beef increases but chicken doesn’t, people would but more chicken and avoid higher meat prices.
“Adopting the chained CPI is nothing more than a political sleight of hand targeting our nation’s middle class and poor,” said Richtman of NCPSSM.
According to AARP, a typical 80-year-old woman will lose the equivalent of three months worth of food annually under the plan.
Social Security is funded by a dedicated revenue stream of payroll taxes, so it doesn’t add to budget deficits or the national debt. Experts say it’s fully funded through 2033 with no changes, and could pay 75% of benefits indefinitely. Social Security currently levies no payroll taxes on income of more than $113,700; removing that ceiling would close any solvency gap for decades. Including ALL income (interest, dividends, capital gains, etc.) subject to payroll taxes would help, too.
“It is unconscionable to ask seniors, people with disabilities and veterans who are barely making it to be squeezed even tighter at a time when corporations and the wealthiest 2% are not paying their fair share of taxes, despite soaring profits,” said the AFL-CIO’s Damon Silvers. “It’s bad policy to make cuts that will weaken our economic recovery – and it’s wrong, at a time of record income inequality and stagnant wages, to make the gap even worse by undercutting the retirement security of working- and middle-class Americans.”
Dean Baker, co-director of the Center for Economic Policy and Research, agreed.
“While Social Security may enjoy overwhelming support across the political spectrum, it does not poll nearly as well among the wealthy people – who finance political campaigns and own major news outlets,” Baker said. “The predominant philosophy among this group is that a dollar in a workers' pocket is a dollar that could be in a rich person's pocket – and these people see Social Security putting lots of dollars in the pockets of people who are not rich.”
[PICTURED: Mike Luckovich cartoon from the National Committee to Preserve Social Security and Medicare]