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The corporate austerians released their ‘new’ Bowles-Simpson recommendations today. They claim that they are building upon their original plan, not replacing it. They framed their recommendations as the last two steps in a four step process. For Social Security followers, Step Three includes the chained CPI. And Step Four includes all of the previous cuts to Social Security which they recommended in their first plan. Raising the retirement age starting in 2022 slowly to 69, cutting benefits through re-indexing and flattening all future benefits for our recipients in 2050. Our children’s benefits would look like this:
Bowles-Simpson Plan
The corporate austerians go for installing the chained cpi first. Why? It could be that they still think that most Americans do not realize that the chained cpi is a cut which keeps on cutting:
Bowles-Simpson Plan
Note the changes to Medicare and Medicaid in Step Three. “reducing provider payments….reforming cost-sharing…increasing premiums….adjusting benefits to account for population aging….”
The language is a vague euphemism for cuts; code words to their rich buddies that the uploading of wealth will not be threatened with significant new taxes. No pesky new scrap-the-FICA cap income taxes which might be used to pay for under-funded social insurance programs.
Or in their own words: “The problem is real and the solutions are painful, and there is no easy way out.” It is very, very painful for them to think of being responsible Americans and painful for them to think of paying their fair share of the cost of living in a decent society. But all of their solutions ask low income folks, approximately half of all Americans, to shoulder all of the burden of keeping tax rates super low for corporations and rich people. There is a simple, equitable, and fair way out but they do not want to hear about paying their fair share.
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Does the President support this?
from Obama’s speech today:
Is he going to offer to raise Medicare age to 67 like he did in 2011? Does he support the Bowles Simpson, full monty, or just healthcare cuts?
Richard Trumka’s (head of the federation of unions, the AFL-CIO), statement on today’s Bowles-Simpson, zombie revival. LINK HERE.
It appears that the average earner retiring at 65 would collect around $525,000 by age 95 using current policy (in 2012 dollars). And that total would be reduced to $500,000 using the chained-CPI.
If they live to be 100 the number would be even bigger! A person who earns $20K a year and works for 50 years would be a millionaire and wouldn’t need social security at all!/s
Let’s not forget the other rats that are supporting this, including creepy Ed Rendell, billionaire Mike Bloomberg and his money handler Rattner the rat, never-met-a-banker-I didn’t-like Alice Rivlin, Tony the bounder Villaraigosa, Tim not-Wirth much. You can bet they’re not going to be making $16K when they’re 95 years old, unless they tax shelter their loot in a trust fund for the kids first.
Bull!!! It is a lie.
Most impacted would be those with lower incomes, and lower SS benefits, who rely the most on SS checks for their entire income. Remember also that women receive significantly lower benefits than men do, live longer and are more likely to live at the poverty level than other groups. They would be significantly hurt by reductions in benefits which would become larger over time. Here’s an AARP worksheet on why the chained cpi is a bad idea.
Where can we send these guys so they don’t hurt themselves?
We should understand that the ONLY problem that exists is availability of real resources like people, staffs, equipment and facilities. Money is NOT the problem, never was and never will be. That is another reason why unemployment is so bad. In the end it is people who provide the real resources.
Thanks for the report, TomThumb. It’s so painful to watch these dreadful, shameless people who have so much wealth and privilege themselves, and who apparently live only to serve those with even more wealth and privilege, trying to wring the last drop out of sustenance and dignity out of everyone else.
It’s nice to see Trumka’s statement, and House Dems have written a sternly worded letter, but what influence they have any more is questionable.
A NASI worksheet on the chained cpi makes another good point. The longer a person lives in retirement, the fewer financial resources they are able to hold onto. Non social security savings is gradually spent. Income declines. SS benefits assume a larger role in their total income, if other income gradually fades.
Another good point they make is that SS benefits for our eldest recipients appear to be lower compared to recent recipients and would be more affected by any chained cpi cuts.
It is up in the air, is it not? How does one boycott the products of drone manufacturers? Or too big to fail banks and corporations? Gigantic insurance and telecom companies? How does one pickett an international pharmaceutical manufacturer who is looking for U.S. tax breaks through fix-the-debt?
Bowles and Simpson both have Wall Street “looters” credentials, so it is hilarious to listen to those two go on and on about we little people should work longer and save more and blah, blah, blah. The list of Fix the Debt chairpersons in comment #5 ought to be an Onion parody of how our benefactors are really the biggest moochers, living off government money and Wall St. $., aka “other people’s money”.
Good job, TomThumb. So glad to see they’ve promoted your post to the Mother Ship.
Just a drive-by rec and link to Seamus Cooke’s piece on the subject.
The method with which COLA is determined was already changed to a method unfavorable to us! Prior to 1975, Social Security benefit increases were set by legislation. Per the SSA:
Before the 1970s, wage indices exceeded changes in price. In 1977 Congress passed, and President Carter signed, legislation altering the tax formulas to raise more money, increasing withholding from 2% to 6.15%. No prblem for some to give away this money! Want to talk about the Government “Stealing” your money? Well, here you go!
All this bullshit is about the PTB’s desire for the Nation to make a historical default on the bonds held by the Trust Fund. Under current law, the securities in the fund represent a legal obligation the government must honor. Another theft from the little people. Glad to know this is okay with some us. Must be nice to be independently wealthy!
Of course: The trust funds are “off-budget” and treated separately from other Federal spending. By law:
EXCLUSION OF SOCIAL SECURITY FROM ALL BUDGETS
Pub. L. 101-508, title XIII, Sec. 13301(a), Nov. 5, 1990, 104Stat. 1388-623,
Always amazing to see supposed law & order people supporting slipping the fid to us!
President Obama is the one who created the Catfood Commission and he’s the one who hired Bowles and Simpson. Obama is ground zero for austerity, sequester, etc. Obama does a good job of creating crisises that didn’t exist and also doing things and then not taking the blame for what his administration does.
I think there are two things that they could do that would be improvements without raising the retirement age:
1. If one does not retire when they reach retirement age, they will continue to pay FICA, but will get no further SS credit. Penalize those who don’t physically work but continue to occupy a paying job. It would help improve employment as well.
2. Go back to the last time the FICA cap was set, and index the cap to inflation. If the wages of the top 10% can continue to rise, why shouldn’t their FICA contribution continue to rise. Stagnant wages and a fixed cap are the main contributors to SS woes.
the B-S catfood commission is back (on steroids) with the “chained-to-increasing-poverty” cpi: steak to chicken to hotdogs to catfood to dogfood to grubs ‘n worms for the folks that have paid their socsec and medicare insurance premiums all their working lives. the insurance premiums are currently 12%+ with the concealed lower wage that covers the employer’s “matching payment.”
Yes, and before that method with which COLA is determined was changed to a method favorable to us. From 1940 to 1950 there was no COLA at all. Things do change.
The last time the FICA cap was set was this year.
For the last 30 years it’s been set by wage indexing.
Thanks wendydavis!
they are all rotten bastards! Obama is the worst how can anyone supports these pricks.yet I know Dems supporters who still tink Obama is great
Thanks TT good work!
The most anyone could have paid into SS is $136k (actual, not inflation adjusted).
… thank you TT … commended
SS touches many USians in ways Bowles-Simpson does not want to discuss … Obama put these guys in action and Obama seems to not mind them staying in action…has not shut these scolds up / out.
B.H.Obama put Bowles and Simpson in SS attack business and did not/does not stop them doing what they do … O/D zealots wanted Obama elected again … this is the outcome.
B.H. Obama was not chastened … but enabled.
well isn’t this good news and with obmummer care coming lives are going to get worse for more citizens that built this nation only to be told to Hurry Up and Die. Japan is doing that right now.
My take is that they’re going to do whatever the fuck they want no matter how many petitions I sign or how many phone calls I make. That’s how it is–we have no say in the matter as long as the two-corporate owned parties remain in power. But if they’re going to do it, and obviously they are, I want to be spared the bipartisan/tough decisions/shared sacrifice bullshit. Please give us a little honesty, Washington; if you’re determined to be soulless, merciless assholes, then fucking own your soulless, merciless assholery. Don’t feed us pure poison and tell us it’s medicine.
According to Fig. 2 above, it looks like under the B-S plan benefits would get much more progressive, with maximum and high earners getting a greatly reduced benefit (which they probably don’t even need) and lower wage earners maintaining their existing benefit.
For those who want to raise the max cap, the maximum wage earner (light blue) line above would be going up instead of down.
When it comes to “paying their fair share” I don’t see any difference between the rich paying more and getting their same benefits, or the rich paying the same and getting reduced benefits.
But only for high wage earners.
The benefit formula for low and very low wage earners is the same either way.
What happened to the humanitarian elements that were presented in Bowles-Simpson Option # 2 ???
– The big one was to reduce Full Retirement Age for minimum-wage manual workers to 62 (from today’s 66.) That matters. Actually, 58 would be more like it; these people rarely live very long.
– An up-pitch to the maximum contribution limit would also at least “half-solve” the demographic problem.
Blaming Obama for the falling out-year payments is patently dishonest. The facts go to recognition that these declines were negotiated more than a decade ago — nothing new — in recognition of the combination of aging population and falling birth rate.
Fewer new workers cannot possibly support more older workers for ever. there are limits. And Obama has nothing to do with it.
Obama has everything to do with the solutions he and his commission have proposed. There are numerous solutions (PDF) to the projected shortfall. Obama has never championed any of the progressive solutions, only regressive solutions.
Is it humanitarian or Orwellian language? Once you realize that they are shooting for turning an insurance program with benefits in proportions to taxes paid into a welfare program where benefits are kept lower than the poverty line for lowest paid and lower income workers, B & S show their true colors. But their language sure is the best advertising can buy:
Their program raises the early retirement age to 64. Obama is in fact the one resurrecting Bowles and Simpson in each one of his speeches, so this belongs to him now.
The difference is that your false equivalence argument excludes the “fair solution” of everyone paying a fair share of their own incomes. The issue is one of fairness and is solved through paying the same percentage of each person’s income.
Thanks Mary. The linked article incorporates some of the more regressive Diamond-Orzag solutions, but I appreciate the overview.
Commenters who think that keeping all future beneficiaries at or below future poverty levels is progressive under the B.S. plan remind me of Cameron’s new poverty measurement scheme for Britain. Cameron has decided that anyone with a paying job is no longer classifiable as poor, and by applying this Procrustean bed to all of the poor, has reduced poverty in Britain to a mere statistical fraction of its actual, ugly self.
I should probably take a minute to be more descriptive when using that link, because it does contain terrible approaches as well as progressive ones, but it seems useful to have the contrast all in one place.
Thanks for your response. Not sure what you mean by false equivalence argument, but everyone does pay a fair share of their own incomes.
Everyone does pay the same percentage of income (12.4%) up to a dollar limit. Then everyone gets a benefit based on what they’ve paid in. With low wage earners getting back a somewhat higher percentage of what they pay in than high wage earners btw (see bend points).
Sorry Mary, I liked the link: it is encyclopedic!
The rest of my comment was aimed at others, who think that it is reasonable to turn SS into welfare.
I disagree with you 100%.
Social Security related taxation has been extremely unequal and unfair.
Capital gains income (investment income) is not subject to FICA. Income above the FICA cap which stands at about 113K is not taxed. Income going to untaxed spending accounts is not subject to FiCA taxes. For years, wealth has been uploaded upward, escaping FICA tax because it is capped. Because wages have stagnated and because wealth has escaped taxation through FICA, the program is projected to be underfunded.
You could actually call the area above the FICA cap, the virtual Cayman Islands of Social Security tax evasion for the rich. Except that they would have to include a series of other islands to represent the evasion of FICA taxes created by capital gains.
The above arguments are why it is preposterous when B & S call for people to work longer and save more……. to pay for rich people’s tax evasions????
We don’t have to agree 100%, but maybe we can find something to agree on.
I agree that this is true since you limit it to taxation. However, if you take into account the benefit formula, it’s more equal and fair.
It’s also not factored into the benefit.
According to the SSA, the average monthly benefit is $1230. I’m guessing that’s based on average wages of about $50k/yr. So yearly FICA tax of 12.4% comes to $6200.
One who always earned the maximum amount would receive $2,172 per month, based on wages of $106k (now $113k). Yearly FICA tax of 12.4% comes to $13,100.
If you earn a million dollars a year you still pay $13,100 and get a monthly benefit of $2,172. It’s not evading taxes if you’re not getting an increased benefit.
Marym’s link at #29 – Option 8b shows what happens if you raise the cap.
Those who pay no taxes above the FICA cap are evading taxes because Social Security is not a voluntary social insurance program. Since everyone is required to pay into it, everyone ought to pay their fair share.
The benefit caps, top and bottom reflect that this is a social insurance program which we all agree to participate in, which offers benefits which cannot exceed the resources devoted to the program. Social Security is not a fixxed annuity reflecting the amount of money which you invested and the number of years you contracted to received payments. It is a form of social insurance against financial disaster in old age.
My take away from Mary’s link is how we could close the current gap (almost) if the cap were scrapped:
Your concept of fairness has people of lower income paying a percentage of their entire income, and people of higher income paying a much smaller percentage, if any, of their entire income toward something that benefits individuals and society.
Most proposals for removing or raising the cap, and/or applying the tax to all forms of income include maintaining the tie between contributions and benefits.
Where can we send these fools so they won’t hurt us?
BTW, thanks for the link @#29.
It’s an update of something I’ve seen before, very informative I believe.
And as I’ve said many times before, my choice would be 7a:
Raise payroll taxes from 6.2% to 7.3%, problem solved.
Yes, I’m aware that your preferred solution is higher taxes for those who earn the least.
:-)
Don’t worry, 1.1% of the least isn’t much at all.
I can’t imagine anyone so selfish that they would refuses to consider paying 1.1% of their income to ensure solvency of social insurance against financial disaster in old age that benefits individuals and society.