(Written by Old Guy w/The Dog. (OGwD))

Undercover Cop (UC): “My girlfriend says she likes what you’re doing, so I decided to check it out myself. I am on the fence, myself.”

He was wearing a V-necked sweater and a crisp, blue shirt and tie. His hair had a slight frontal wave as if he had to wax his crew cut to appear to have more hair. Brill Cream? He stood next to OGwD, side to side, signaling a conversation was intended.

OGwD: “Are you asking me why I am here?  ….. I can only speak for myself and my family.”

UC: “Yeah. (Nods.)”

Old Guy with the Dog takes a deep breath and looks up at the tall buildings, then up at the sky, and says, “Something’s got to give.”

UC: (Smiling.)     Old Guy with the Dog takes this to mean, “Go ahead.”   They are about the same age, the age of all-used-up with grey hair.

“They aren’t leaving us anywhere to go. I am like a cornered animal. I have been unemployed longer than just this economic crash. I did two training programs. I paid for those myself. But the jobs aren’t there.”

“My kids have 160,000 dollars in school loans. They did everything we asked them to. Studied hard. Got into good colleges. Borrowed the money so they could finish when we ran out of help to give them. But the jobs are not there for them. You think those banks up there in those buildings are going to forgive those loans?”

“I could sit up in my house and feed the woodstove. Or I could come down here and try to do something about all this. What would you do?”

UC: (Shrugs evasively.)

OGwD: “Well, something’s got to give.”

You might want to call your Senator or email your Senator when you are done reading this, so here is the LINK for that.

Obama’s budget will be released April 10th. That means you have four days to turn up the heat in the Senate against his legislating a chained CPI for Social Security, and cuts to Medicare. The Chained cpi will cut Social Security benefits at .3%; 3% in ten years; 6% in twenty years; and 9% in thirty years. Everyone will get the cut.

“Mr. Obama’s proposed spending reductions include about $400 billion from health programs and $200 billion from other areas, including farm subsidies, federal employee retirement programs, the Postal Service and the unemployment compensation system.”

The Washington Post:

“The budget proposal slices $200 billion from already tight defense and domestic budgets. It would cut $400 billion from Medicare and other health programs by negotiating better prescription drug prices and asking wealthy seniors to pay more, among other policies. It would also generate $200 billion in savings by scaling back farm subsidies and federal retiree programs, among other proposals.

The proposal to change the formula to calculate Social Security payments, also originally part of the offer to Boehner, would generate $130 billion in savings and $100 billion in revenue, a result of the impact of the formula change on other government programs.”

Bloomberg:

“This would be paid for by raising taxes on cigarettes and other tobacco products, according to the White House. The amount of the new taxes wasn’t specified.

The budget will call for raising about $9 billion over a decade by prohibiting individuals from accumulating more than $3 million in Individual Retirement Accounts and other tax- retirement instruments. A $3 million limit would be about equal to an annuity of as much as $205,000 a year, according to the White House.”

Which side are your Senators On? Call them or write them and ask! Obama won’t run again in 2016, but many Senators will run for election again. Their silence now would be an indictment of their promises to protect social insurance programs from cuts. Let them know where you stand.

Let’s raise the roof! And make some noise!

Congress critters too. 

I. Wolves in Sheep’s Clothing.

The plan put forth by the Chairpersons of the President’s deficit commission held out a bit of hope for low-income elderly. Bowles and Simpson offered relief to those laboring under below-poverty benefit levels. A basic minimum benefit of 125% of the Federal Poverty Line.  O’ those lefty humanitarians!

Bowles & Simpson presented the basic benefit under the most cynical of motivations, because it was meant to be the “hook”, to get the consumer to buy into the severe cuts to the program on the other end, ….in decreased benefits for the middle income and high income recipients. A chart of the B&S plan shows that they flatten benefits so that by the time our children retire in 2070, the new, flattened range of benefits is between 8 and 14 K.

 

A basic benefit is a good idea as long as it does not entail hollowing out benefits for higher earners.

Americans agree  that taxes should be raised to guarantee the integrity of the Social Security system and desire to see increases in Social Security benefits. They would sympathize with the idea of guaranteeing a decent benefit for those stuck in the low income brackets. A NASI poll showed majority support for the program.

From the most popular packet of changes to Social Security:

“Raise Social Security’s minimum benefit so that a worker who pays into Social Security for 30 years can retire at 62 or later with benefits above the federal poverty line ($10,788 in 2011). Currently, lifetime low-wage workers are at risk of falling into poverty in their old age, even after paying Social Security taxes throughout their working lives.”

The problem with the NASI poll’s suggestion for a minimum guaranteed Social Security benefits is that it is half the size of what it costs for a single individual to live.

III. An expanded Social Security program.

A new plan for an expanded Social Security has just been released. It is a public program and would be paid for through new taxes on unearned income from capital gains and other sources. It creates a second, Social Security B to stack on top of existing SS benefits, which they call Social Security A. From the charts it looks like the plan offers generous benefits and retains many of the features of traditional Social Security at the same time. They fold in SSI recipients and general revenues. They claim that the lowest income group gets a much more progressive replacement rate under their formula. (Twice what Simpson-Bowles are suggesting.) See pages 21-22 for the charts.  If the authors could eliminate the favorable tax treatment of tax deductible retirement savings accounts, they could easily fund an expansion of Social Security. Using the leverage of cancelled tax expenditures (about 6.0% of GDP), they could move the world.

IV. Why not cover everybody? Go Big. Go all the way and cover the unemployed too.

I would support a basic guaranteed Social Security income at the higher 20 to 30K level. That level of income is consistent with salaries suggested for guaranteed employment programs. A decent wage is required when you have children to support and rent or mortgage to pay. Recalling that even on Medicare the elderly pay about half of their medical costs, a decent benefit is required when you have medical bills and medical insurance costs. What does not seem to work are continued high levels of unemployment and high levels of elderly poor. Half of the elderly live on less than $22K a year.  ShadowStats estimates true unemployment at about 23%.

Why not provide income security guarantees throughout the lifespan? Take care of the needs of the unemployed at the same time that you provide income security for the elderly. Why not provide a guarantee of a job/income for those who have none? Other countries provide these. Why don’t we Americans provide these essentials for each other?

V. We need a bigger template than Social Security.

FDR suggested a guaranteed jobs program in his Second Bill of Rights speech.  MLKjr spoke of a guaranteed jobs/income program when he addressed the burning issue of high levels of poverty in 1967.  John Kenneth Galbraith Sr. saw a guaranteed jobs/income as a solution to social and economic inequality.  The Declaration Of Human Rights stated that Everyone has a human right to a job or income so that they can live. (Articles 22 and 23).

Some thoughts about guaranteed income and/or jobs programs can be found here and here.  A guaranteed income might short-circuit some of the haggling over the merits of different age groups and competition for jobs. Here is a proposal for a Swiss program.

Intimidation (“How Dare You Demand Special Consideration!”)

Seems like the enemies of Social Security and Medicare will pull out every trick they know to achieve their goal.  Today an otherwise astute economist told a reporter that disabled Vets had to take a cut in their benefits just “like everyone else”, in a scold, as if they were asking for special consideration. They said that they had already made sacrifices for their country and gave the answer that it is unfair to change the terms of the contract after you have already finished your side of the deal. She was firm, and insisted that there would be no carve outs for special groups. Did she miss the Gene Sperling memo?

A few weeks ago White House economist, Gene Sperling, was all over Reddit promising that the chained cpi would have special protective carve outs for the vulnerable: For Vets and disabled folks, and for the very elderly who would experience the deepest cuts from their Social Security benefits. (Then it turned out that every group is vulnerable because all are going to be hurt by cuts under the chained CPI.) Broken promises?

Minimization

In an non-fact based Op-Ed in the NYTimes, Rattner claimed that a 1,ooo dollar benefit would hardly be hurt at all by the chained cpi. His graph showed the increasing impact of the chained cpi cut over a ten year period. So what’s the problem? The graph did not show how the cuts would  aggregate to 3% of benefits at ten years, 6% at twenty years and 9% at thirty years. And, the Social Security benefit cut needed to be multiplied by 12 to present the total of the cuts per year, and then compounded, over a specific period. That is what is wrong. And account for inflation through COLA. He made the numbers look small by only looking at a small looking number. The real impact of the chained cpi is larger. More like this:

Magnification (Exaggeration)

In the same non-fact based Op-Ed in the NYTimes, Rattner claimed that unfunded liabilities owed by this generation extended to “almost 60″ Trillion dollars.  He alleged that cumulative debts including the current deficit and future Social Security and Medicare unpaid for benefits meant that cuts had to be made: “now! now! now!” His numbers reflect the multiplication of a coefficient representing a guessed-at, actuarial gap in future projected revenues and benefit payments, over the almost infinite horizon of 75 years. No wonder his graph shot skyward at a 45 degree angle. He wrote as if there were no future revenues, production gains, wage increases, and maybe even a scrapped FICA cap so people like him can pay their fair share of taxes. Social Security would be perfecto if deadbeats earning more than 113K per year had to contribute their fair share to the Trust fund.

Medicare will require price controls to bring healthcare costs down, but beneficiaries of Medicare are not the problem, high prices are.

This is a graph of medical spending on retirees. Not bad. Most of the rise is due to “other factors.” And recent spending is down:

Is the Obama administration getting ready to increase costs for medicare beneficiaries?

In the New York Times, anonymous sources representing the White House offered the following trial-balloons:

But administration officials say the 1988 law affected current beneficiaries, while Mr. Obama would apply any changes only to people becoming eligible for Medicare after 2016. So far, the changes the president has proposed do not go as far as a single deductible and a cap on catastrophic costs. Instead, Mr. Obama has called for increasing the Part B deductible, which has risen much less than medical costs. He also proposed that beneficiaries pay something for home health care, which is among Medicare’s fastest-growing and most fraud-prone expenses; people just released from the hospital would be exempted. Third, Mr. Obama proposed a 15 percent surcharge on Medigap plans that cover all or nearly all of a beneficiary’s initial annual expenses. Economists say that such coverage leaves beneficiaries insensitive to costs, increasing Medicare’s spending and the premiums beneficiaries pay.”

We have seen these recommendations before in 2011, but with more description of why these changes were considered.

1.     Increasing Cost-sharing for home health care. In September of 2011, Obama had offered to make changes to cost-sharing:

“Starting in 2017, Mr. Obama would require certain new beneficiaries to pay co-payments for home health care, which is now exempt from such charges. The co-payment would be $100 per episode, defined as a series of five or more home health visits not preceded by a stay in a hospital or a skilled nursing home.”

2.     Increasing Deductibles for Part B Medicare services. From an article in the NYTs Sept. 19th, 2011:

“The proposal would require new beneficiaries to pay higher deductibles before Medicare coverage of doctors’ services and other outpatient care kicks in. The deductible, now $162 a year, is already adjusted for inflation. Mr. Obama would increase it further by $25 in 2017, 2019 and 2021″.

3.     A fifteen per cent surcharge on Medigap plans. In the article from the NYTs (Sept. 19th, 2011) Obama offered the following explanation for this increase in cost:

In addition, the White House would increase Medicare premiums by about 30 percent for new beneficiaries who buy generous private insurance to help fill gaps in Medicare. Many beneficiaries choose these private Medigap policies because they want the financial security they get from the extra insurance. But the White House said this protection “gives individuals less incentive to consider the costs of health care and thus raises Medicare costs.”

4.     Waiting until 2016 to implement the changes. Both in 2011 and now in 2013, delay until 2016 or later was recommended.

5.     Both documents demonstrate an opinion that medical care is overused.  In the latest article, seniors on Medigap insurance were described as insensitive to cost of care. In the 2011 article, seniors having Medigap insurance were described as having less incentive to consider the costs of healthcare and as being the cause of rising Medicare costs. No mention of the rising cost of healthcare, hospital services, inflation. No mention was made of the failure to regulate and make medical prices conform reasonably in relation to their actual costs. Doctors prescribe tests, not patients!

At least the current trial balloon did not include all of the other cuts to Medicare related services which describe the current Senior Protection Plan produced by Center for American Progress. Apparently this administration is determined to shrink Medicare by making it so expensive that patients will not desire to use it.

6.     Here is one new recommendation which was not in the news in 2011: Unidentified participants in meetings with President Obama, claim that he also endorsed a merger of deductibles for part A and part B:

“In particular, participants say, the president told House Republicans that he was open to combining Medicare’s coverage for hospitals and doctor services. That would create a single deductible that could increase out-of-pocket costs for many future beneficiaries, but also could pay for a cap on their total expenses and reduce the need to buy Medigap supplementary insurance.” 

Since it is difficult to know whether or not this latter merger of deductibles was part of the deliberate leak prior to the presentation of the budget in April, it is probably only worth saying that this will definitely increase costs for those whose primary need are doctors visits (paid for in Part B). This is consistent with the entire group of ‘reforms’ which seem focused on shifting the burden of paying for Medicare services onto beneficiaries. Here are the current deductibles:

The deductible for Part A hospital care is relatively high ($1,184 this year), while that for Part B doctor care is relatively low ($147). Patients also have co-payments for many services.

It is helpful to get a bead on austerity, its impact on poor people, its overall pattern of poverty creation, and its degradations by looking across the pond to where austerity unbounded has had time to metastasize into law, and actual changes in people’s lives. Polly Toynbee of The Guardian warns about these cuts, set to start on April 1st, or Monday, because the media have not publicized them.

Taxing the spare room?

Food stamps, or food vouchers, are being introduced as a substitution for emergency grants. A 230 million L. program is being reduced to 178 million L. through this change. No one will miss the the missing  52 million pounds./s  Many interpret this change as a distrustful projection, ….. that beneficiaries of emergency grants are not actually asking for help for things that they truly need, i.e., food.  This will have secondary effects of people not being able to buy other necessities such as transportation to job interviews (bus fare). These emergency grants were supposed to function as a safety net under the safety net. What will take their place when other necessities are needed in an emergency?

The Bedroom tax is being introduced. Low income folks who receive help with a housing subsidy are having that subsidy reduced by a tax for each spare bedroom they might have. (I am not joking.)  Starting Monday, housing grants will be reduced by an amount in accordance with whether one has a spare bedroom based upon the number of occupants. This may affect 660,000 tenants. Should they have to move? Would that even be possible?

Responsibility will shift away from national bureaucracy to local councils who will be responsible for administering shrinking assistance grants and who will be hearing all of the complaints because help is being reduced. Legal aid for low-income folks will be reduced from 22 million to 3 million Pounds, so good luck with your lawsuits and legal complaints. Then there are cuts to assistance paying for child-care.

Disability claims are all up for reconsideration with the express purpose of denying as many as possible. Privatization of evaluations to non-professionals (non medical staff) who routinely ask disturbing questions to the mentally ill claimants and generally act like robots, will be in play. Their goal will be to deny as many claims as they can come up with reasons to do so. A recent Guardian piece found Denial of unemployment or job seekers claims if any reason can be found to deny an application. If an unemployed person misses an appointment or fails to make a contact, that will be an excuse to drop their application, placing them back at the beginning of the application process and denying assistance to their family for that much longer. The Guardian caught the job-centre folks deliberately sanctioning applicants. The disabled stand to lose 28 billion pounds from up to six kinds of cuts over five years,  according to a Demos report sourced in the Guardian.

Cameron et al have deliberately created a divide between alleged “skivers” and “strivers” in a demonize the jobless and poor campaign. Cameron and his ilk have been openly disparaging those who have lost jobs and are out of work, describing them as “the neighbors from hell” and as lazy cheats. This demonization has been going on ever since turncoat Cameron became ensconced like a poison spewing barnacle on the body politic after his election. His lordship has done more to advance class warfare in the U.K. than other leaders all the way back to Thatcher. He’s actually complained out loud on behalf of those with paying jobs, about having to know that their neighbor is at home and not at work or on their way to work like they are. Only 3% of U.K. social assistance benefits go to folks who are out of a job!

The most toxic policy change has been something called workfare. Workfare has been in the news because….Workfare consists of hours of unpaid labor required of those receiving unemployment benefits in the U.K.. It  is supposed to be for training so a jobless person can get a paying job. Workfare has worked out handsomely for the rich corporate store owners who have used workfare workers to stock shelves in their grocery stores for no pay. Workfare’s impact has been to increase unemployment among job seekers by reducing openings now filled by workfare workers, working for no pay and no benefits. Workfare has also used up the time which jobseekers could have used to actually have gone to school to actually have been retrained. Without any visible positive effects for job seekers, other than to enrich store owners,  workfare has functioned only to fill the smug vengeance complex of those seeking to punish the jobless in some way.

Symbols of distrust (food vouchers), 22.6% cut in emergency grants, cuts in housing grants if one has a spare bedroom, deflection of responsibility to local councils, cuts to child care, cuts to Legal Aid, privatization of disability evaluations to nonprofessionals and denial of claims, denial of jobseeker claims whenever possible, demonization of assistance recipients, working for nothing under WorkFare to enrich private companies. That’s the pattern of austerity’s war on the poor; U.K. Edition.

II. Health and Social Care Act Begins Monday.

After 25 years of attacks to the NHS,  the death dealing changes made at the NHS, have severely impacted patient care.  But that is a deliberate impact which will be legally ratified on Monday when this new law takes effect. The Health Act will speed the demise of the NHS by increasing the privatization of many of its functions. Hospitals will be at risk of closing. The most impacted will be those in the lowest income groups for whom there is no access to private medical clinics and to private health insurance. “People will die.”:

“The government consistently claims the NHS budget is protected. In reality, the NHS is being forced to make cuts dressed up as efficiency savings of £15bn-£20bn by 2015. Across the country, A&Es, maternity and other services are being closed, with thousands of jobs lost. Patients with chronic and complex diseases will continue to lose services essential for their care. In north-west London, four A&Es have been downgraded, with none for the boroughs of Hammersmith & Fulham, Ealing and Brent – a population of 750,000 or a city the size of Leeds. As a result of these changes, people will die.

Once you combine the consequences of the Health and Social Care Act with PFI debts, NHS trusts going bust, efficiency savings and cherry-picking, the NHS withers away. Rationing of care will become more widespread until we have a two-tier system in which the haves will take out private insurance and the have-nots will be looked after by a third-class health service.”

 

N.B. 4.1.13: The Bedroom Tax is going to be reviewed in High Court in May, thanks to a petition from this organization. It is called WeAreSparticus!

Bad News: 4.1.13: Guardian (Polly Toynbee) reports on the NHS decommissioning.

Photo by Laura under Creative Commons license

In a piece meant to be a summary of six months of studying a spike in disability claims, NPR has ostensibly written a media white paper to expose moral turpitude among the recently disabled. The piece is titled “Unfit For Work.”

A new NPR white paper claims disability costs are increasing because of claims by the able-bodied but underemployed.

The kind of conclusions the writer for NPR arrives at are specious at best, and malignant at worst. The implicit assumptions are that many abled persons are applying for and receiving disability insurance benefits and that this is due to loss of jobs in a recessionary economy. The paper’s analysis is argued through and in the presented charts. Applications for disability have risen from 1.5 to 2.0 persons/ per 100 people since the Crash of 2008 and unemployment has doubled. So the implication is that disability has functioned to support those with less education for whom there are now fewer jobs.

While those assumptions have “face validity” and seem emotionally firm, they lack accuracy.

In a response to the NPR report, The Consortium for Citizens With Disabilities has written a rebuttal to the NPR report. They found the NPR report to be incomplete, misleading, and perpetuating dangerous myths about the disabled.

Dean Baker also wrote a rebuttal to the NPR report. He appears to accept the thesis that losing nine million jobs in the economic downturn accounts for the increase in disability claims.  Yet he notes that because of the changing demographics, even the Social Security Administration projected in 1996 that claims would significantly increase through to 2005. There has been a sudden rise in per cent of payroll dedicated to disability since the economic downturn. (Dean Baker’s now added a graph which shows these fluctuations over time.)

The Consortium paper wrote this about the impact of changing demographics:

“The Social Security disability programs have grown significantly since they were signed into law, as well as in recent years. While Ms. Joffe-Walt points to a rise in applications during the recent economic recession, she fails to mention that during the same period the percentage of applicants denied benefits also increased significantly, as individuals who did not meet Social Security’s strict disability standard were screened out. So what explains the rise in people receiving disability benefits?

According to Social Security’s Chief Actuary Steve Goss, the growth in SSDI was expected and is mostly the result of two factors: baby boomers entering their high-disability years, and women entering the workforce in large numbers in the 1970s and 1980s so that more are now “insured” for SSDI based on their own prior contributions.”

The Consortium’s criticisms are based not in opinion. Instead, the Consortium looks at facts. There does not seem to be evidence of an equivalent shift from welfare claims to DI claims.

“The increase in the number of children receiving SSI benefits in the past decade is similarly explained by demographic factors, namely the increase in the number of poor and low-income children. From 2000 to 2011, the number of poor children skyrocketed from about 11 million to over 16 million, and more than 1 in 5 U.S. children live in poverty today. 44 percent of U.S. children now live in low-income households. Since SSI is a means-tested program, more poor and low-income children means more children with disabilities are financially eligible for benefits. Importantly, the share of low-income children who receive SSI benefits has remained constant at about 3 to 4 percent.7

Meanwhile, there is no evidence of a large-scale shift from Temporary Assistance for Needy Families (TANF)—the block grant cash assistance program that replaced Aid for Families with Dependent Children (AFDC) in 1996—to the Social Security disability programs. The decline in TANF enrollment from 1996 to 2011 is more than 20 times the magnitude of the increase in SSI child enrollment during that period.8 And the share of SSDI disabled worker beneficiaries with dependent children has actually fallen since 1996, from nearly one-third to about 20% in 2011.9 While loss of TANF might lead a person to apply for SSI or SSDI, being poor is not enough to qualify for disability benefits—an applicant must also meet the strict disability standard.”

Two other points made by the Consortium: Disability beneficiaries numbers are on the decline, and rather than going belly-up as described in the NPR report, the program can put back on sound footing with a routine reallocation of the payroll tax rate –something Congress has done nearly a dozen times in the past, every time it’s been needed.

“Another significant point that Ms. Joffe-Walt leaves out entirely is that the number of disability beneficiaries is projected to decline. As the baby boomers age into retirement, the number of SSDI beneficiaries has already begun to level off and is projected to decline further in the coming years.10 The number of children receiving SSI has also decreased from 2011-2013 and is projected to decline further over the coming decade.11

Instead, Ms. Joffe-Walt mischaracterizes the SSDI trust fund’s projected shortfall. History tells a less dramatic story. Since Social Security was enacted, Congress has “reallocated” payroll tax revenues across the OASI and DI trust funds – about equally in both directions – about 11 times to account for demographic shifts. In 1994, the last time such reallocation occurred, SSA actuaries projected that similar action would next be required in 2016. They were right on target. Experts at the Center on Budget and Policy Priorities, the National Academy of Social Insurance, and SSA’s Chief Actuary have urged Congress to take action to ensure long-term solvency, as it has on several prior occasions.12 “

Is it really so much easier to tell only one side of the story? NPR?  This is a big group, whose fate should not be decided by careless reporting from NPR: