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Protecting The Vulnerable From the Chained CPI.

11:49 am in Uncategorized by TomThumb

I. 9.4 million low-income Social Security recipients will not be protected from the chained cpi.

There is probably a special level in Hell for Liberal Enablers who offer false reassurance that ‘vulnerable groups’ will be protected from the benefit-eroding consequences of the chained cpi. The idea that the most vulnerable elderly, the disabled and Vets must receive shielding and protection from the cutting effects of the chained cpi, proves that it is destructive and not a ‘mere technical adjustment’.

9.4 million low-income Social Security recipients won’t be protected from the chained cpi and will continue to live on reduced benefits, below or near the Federal poverty line.  They did not qualify to be called a ‘vulnerable group’. Here’s Nancy Altman’s testimony from April 18th on this issue:

“In addition, the benefit cut in the form of the chained CPI creates a substantial burden on the poorest in

society. For that reason, the Administration budget proposes to exempt means-tested programs from the

switch to the chained CPI, but this still leaves many poor and near poor unprotected. The Supplemental

Security Income program (“SSI”) is a program for the aged, blind, and disabled who have extremely

limited income and assets. If an individual receives Social Security, because he or she worked a

sufficient number of quarters to qualify, the SSI benefit is reduced dollar for dollar after disregarding the

first $20. There are 2.8 million people who receive income from both Social Security and SSI – the socalled

dual eligibles – so part of their income will still be subject to the benefit cut. Moreover, because

the SSI income and asset limits are so meager, there are 9.4 million poor or near poor who receive only

Social Security, and so would be subject to the cut imposed by the chained CPI.4″—N. Altman, Co-Director of Social Security Works.

I wrote to the actuaries at Social Security and asked what the median benefit is for retired workers. The median is the halfway point under which 50% of all retired workers’ benefits lie. Above the median is where the other 50% of the beneficiaries lie and receive higher benefits.

Snapshot Soc Sec stats

They kindly wrote back and sent me a chart. The median monthly benefit is $1275.03.   The average benefit is 1265.00 per month, meaning an average yearly benefit of around 15,180. That is not a lot of money to live on, especially if your benefit was one of the low monthly benefit amounts.

I asked how the income groups clump together among Social Security beneficiaries and if there is a scatter graph of all beneficiaries. What I found was a breakdown of beneficiaries by benefit amounts. This chart is for December, 2012.  I cannot reproduce the graph here, but I can pull out some generalities for all ages and retired workers of both sexes:

Retired workers receiving 100-199 per month numbered, 39,889. 200-299 a month, 317,943,; 300-399 a month, 640,520; 400-499 a month, 712,898; 500-599 a month, 1,208,363; 600-699 a month, 1,919,175; 700-799 a month, 2,389,353; 800-899 a month, 2,439,243; 900-999 a month, 2,240,767; 1000-1099 a month, 2,191,373; 1100-1199 a month, 2,287,391; and finally reaching the median benefit zone, 1200-1299 a month, 2,419,385………

Low income retirees get hammered.

Let’s pretend that nine million of those below the median are exempted by virtue of being in a protected group a la Sperling-Obama. That leaves around nine million unprotected and living between almost nothing at 100 to 199 per month and almost something at 1200 to 1299 per month.

The problem I see is that many people who are receiving benefits below the median are vulnerable to impoverishment through the chained cpi since their benefit level is very low to begin with.

Women receive significantly lower benefit amounts.

Another area of concern is the difference between the sexes on two different charts. The largest number of female beneficiaries (you can see this by looking at the millions category) starts in the lower benefits ranges, when compared to the men’s chart. Men’s number jump to millions of beneficiaries in the monthly benefit of 1200-1299. Women’s numbers jump to the millions in the 600-699 monthly benefit. Imagine getting cut by the chained cpi when your benefit started at 600-699 d0llars a month. Slave wages. Slave benefits. The AARP has a nice post about the detrimental impact of the chained cpi on women.

The chart reflects economic classes in our society.

The income/benefits of the lower-middle and middle class clump together at between 500-2100 a month, above a low-benefit  group of lower beneficiaries. Fewer people receive the top benefit amounts as they taper from 2100 to 2900 or more. A good scatter graph would illustrate the clumping of different groups within the larger group of  36.7 million retired worker beneficiaries.

II.  The Social Security portion of Retirement incomes is Crucial To The Three Lowest  Income Quintiles.

In a related article about the importance of Social Security in the New York Times, I found a National Academy of Social Insurance chart of Retirement Incomes  by Income Quintiles: (The related article is titled: Budget Negotiating Chip Has Big Downside For Old and Poor.)

Nasi chart-SS% of each income quintile

Updated: The three lowest quintiles demonstrate the large portion of personal income represented by retirement income from Social Security benefits. Any cuts to benefits appear to harm these first three groups more than the top two income quintiles. The chart includes people who are still working (see the grey area for Earnings) and does not describe how many individuals are in each quintile. An expert has written that if earnings are omitted, dependence upon Social Security is high even amongst high income quintiles. Thank you for that correction. Again, a scatter graph of benefit amounts is needed to answer the question of where the beneficiaries are clumped together.

Please note the slideshow of data by techgeek15 linked in his/her comment. The difference between male and female benefits’ patterns is stunning.

 

 

A Pop-Up, Class War, Attack-Doll.

9:17 am in Uncategorized by TomThumb

This fellow shows up for class war in his “all deficit reduction, all of the time” mode in the New York Times Op-Eds. I already wrote about his exaggeration of the current costs of Medicare and Social Security. And, about his minimization of the negative impact of the chained cpi, which I view as a tax just for being old and poor.

Today he’s holding his small plastic class war protest sign again: The ‘we cannot afford Social Security and Medicare’, and its all so ‘unsustainable’. He fails to mention that his gang pays taxes so low that America is ranked below Greece in terms of low income taxes. (24% to Greece’s 30% income taxes paid).

When he pops-up is important too. He’s there to cheer-on the President to make deeper cuts, just after the 2014 budget is presented. He’s just-in-time to suck all of the oxygen out of the media so that they cannot represent the fair budget of the CPC; (the CPC budget is the one that actually taxes capital gains like regular income.)

Where he pops-up is important. A media which pledges allegiance to the agenda of the wealthy and of the powerful. The Wall Street clown car media with its passenger side door for MBAs,lawyers and accountants, and its Drivers’ side door for CEOs.

Who he works for is important: Finance. Wall Street. The 1%. The top 20% who own 80% of America. This Wealth Inequality youtube shows how little the bottom 80% owns. The folks who depend upon Medicare and Social Security the most, the bottom 40%, own almost nothing.

What he does deserves special scrutiny: It’s called a Class war. Class War is where their gang, the haves,  take things that don’t belong to them, from people who have almost nothing but Medicare and Social Security left,  for their gang* to steal.

*hired thugs, corrupt politicians……

The Circle of The Vulnerable Is Wider Than They Think

9:23 am in Uncategorized by TomThumb

This is a reapplication of an earlier piece. You can skip to the Update:The Poor Would Be Forgotten, below if you wish.

We are all inside that circle. If they had thought through the implications of what they planned to do with the Chained-CPI-Social Security cuts and cuts to medical care, they would have realized that everyone is affected in the end. In the final analysis we are all connected (from StrengthenSocialSecurity):

 ”Some policymakers are considering accepting a grand bargain that includes the chained CPI for Social Security. This is no minor technical change – it is a benefit cut that compounds to become very large over time. The chained CPI would cut the annual benefit of the average earner (someone making $43,518) by $658 at age 75, $1,147 at age 85, and $1,622 at age 95.1 The cumulative cut for that individual would be $4,631 – more than three months of benefits – by age 75; $13,910 – nearly a year of benefits – by age 85; and $28,004 – more than a year and a half of benefits – by age 95.2 “

Policymakers (Gene Sperling) promise to exclude “vulnerable groups”. Three groups are most vulnerable: Veterans. The Poor. The Eldest Elderly. In 2011, Social Security paid almost half of its benefits to these groups.

 $58.3 billion to people who are poor or near-poor (excluding those aged 85 and older);15

 $131 billion to those who are aged 85 or above (including veterans);16 and

 $176.4 billion to veterans and their families17 (net of the above two groups).18

This means that if a chained CPI is put into place which leaves out those groups, it can only affect a 50% smaller group. What is the point of making these cuts?

There are two other groups identified in the piece which have not been identified as vulnerable but which are vulnerable. The disabled and those over 55.  Include those two groups and you have completely removed the purpose of making cuts through a chained CPI. There’s no one left. You can read the fact sheet HERE.

UPDATE: The Poor Would Be Forgotten

Now that the President has submitted the 2014 budget the details of the proposed chained cpi (Obama version) are taking shape. People who become 76 will receive a bump payment to compensate for the lost income due to the cuts in benefits which result from long-term exposure to a reduced COLA via the chained cpi. The disabled would be protected. Vets means-tested pensions would be protected too. The poor would be forgotten.

Since so few people are protected from the new chained cpi we can start to see how regressive this policy is. There are many people who do not receive SSI who are dependent upon Social Security and who are poor or near poor, who will be affected.

Minorities and women, who are underpaid as workers, and receive lower benefits will be punished under this scheme. Persons of color whose life expectancies are shorter than their white, affluent peers will take the losses on behalf of this policy. Women in particular will be harmed because they live longer on fewer benefits.

A Tax Just For Being Poor

There are no protections for the poor or near poor here. This policy amplifies income inequality at the end of life. Just because every writer cites the median Social Security income as something just above the poverty line, does not prevent a rational person from knowing that 50%, or those below that line,  are living in poverty or damn close by. Who gets hurt?

Those caregivers in our society, who have volunteered to care for children and aging parents and who have fewer years of earnings are poorly compensated by Social Security and Spousal benefits.  Minorities who earned less and receive less Social Security and live fewer years get no mercy under the new chained cpi. Those low-income earners whose final Social Security benefits don’t add up to much and who have few savings are not protected.

Where’s the forward thinking? What consequences will there be? Is there no one who can ask,  ”How will the chained cpi negatively impact society’s most vulnerable citizens?”, and,  ”At a time when rich Americans pay so few taxes, why won’t those receiving Social Security perceive this as a ‘broken promise’ and as a further tax on their meagre incomes?” A tax just for being poor. In the words of Dean Baker, “In this context, it is unfortunate that President Obama has proposed a budget that has substantial cuts to Social Security. The vast majority of seniors are already struggling. The proposed cuts would be a reduction in their income of more than 2 percent. By contrast, his tax increase last fall cut the after-tax income of the typical wealthy household by less than 0.6 percent.”

Chart of the impact of Obama's cuts on incomeWhat’s the point?

Is this policy meant to save money? Social Security does not even contribute to the deficit.  Is this policy meant to strengthen Social Security? If so, why not scrap the cap on FICA and make the Social Security program whole by insisting that affluent workers pay FICA on their income greater than the cap at 113K?

What’s the point?

Or, is this policy in place just to please President Obama’s fiscal friends, Mr. Orszag, Mr. Peterson (Mr.FixTheDebt), Ms. Rivlin, and all of their sock-puppet think tanks like CRFB and their phoney-baloney commissions, like Simpson-Bowles?

Mr. Lew to Berlin: Don’t Do What Obama Is Doing Here

9:31 am in Uncategorized by TomThumb

I. Treasury Secretary Lew Goes to Berlin, NPR interviews him about the budget

Portrait of Treasury Secretary Lew

Secretary of the Treasury Jacob Lew told Germans to cut austerity measures while President Obama pushes them at home.

Treasury Secretary Lew goes to Berlin. Mr. Lew encourages Europeans to reduce their austerity measures because they are ruining their economies. He wants Europeans to spur their demand or spending. That is a good suggestion.

Lew has pressed European officials to moderate austerity measures in order to boost growth, and called on surplus countries like Germany to boost their consumption to help pull the continent out of the doldrums.

Schaeuble and Lew tried to play down any differences in their views, however, with the German arguing that growth and budget consolidation were not mutually exclusive.

NPR’s Mr. Green asks Mr. Lew (in Berlin) what he thinks about President Obama’s budget. Mr. Lew gives the official party response of how Mr. Obama has been offering the same budget policies for years and they are a reasonable mix of cuts to entitlements and increases in tax revenues. Mr. Green works really hard to ask about the similarities between austerity in Europe and austerity at home. But phrases like ‘long term fiscal constraint’, and ‘finding the sensible center’ act like intellectual razor wire and fill the interview with a wordsmith’s version of a room full of those small annoying plastic styrofoam packing pebbles.

II. What Obama Is Doing Here At Home

President Obama is persistently focusing his Presidential policy on deficit reduction and austerity in Federal and State spending. Since 2011, there have been 2 fronts in the Austerity war.

Two Visible Fronts in the Austerity War:

1. The Sequester cuts impact a range of government programs and services. 784 billion dollars in cuts over the next ten years. The cuts reduce spending on the Federal workforce and cause furloughs costing (of up to) 20% of workers’ salaries. Medicare is cut 2% per year under the Sequester rules. At any time the Sequester could be reversed through passing Conyers & Sanders sponsored bill, HR 900. The Sequester is a deliberate tool created to force all parties to pass the Grand Bargain.

2. The Grand Bargain consists of proposed cuts to the social insurance programs. Social Security, Medicare, and Medicaid are in the crosshairs. Gaius Publius outlined seven areas which have historically been under attack in the Grand Bargain offers. You should read his article as he explains how each one of the seven cuts would impact Americans.

Less visible fronts in the austerity wars:

Cutting the Federal Work Force. Indirectly creating pressures to cut worker’s wages. Advocating against government job creation. Expansion of military commitments and spending in Africa, Asia, The middle East. Offering government subsidies to oil and energy companies. Permitting further, ongoing inflation of commodities like food and energy through financial speculation. Privatizing public services such as health care through the ACA, & changes to Medicare and Medicaid, subsidizing health insurance companies. Blank check spending on Security Theatre programs such HS, CIA, FBI, NSA. Propping up Wall Street & Banks through the $85 billion dollars/month Fed buying program. Starving savers through keeping interest rates at near zero. Absence of any Works Progress Administration, guaranteed jobs programs. Strangulation of TANF, Food Stamps, Housing Subsidies for low-income families. No advocacy for a guaranteed income for low-income families. Continuation of public assistance work requirements for homeless people. The ongoing privatization of the public education system.

Read the rest of this entry →

Softer, Kinder, Simpson-Bowles, “The Lefty Humanitarians.” // Not!

10:42 am in Uncategorized by TomThumb

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 chart 
II. A basic benefit is a good idea. People like the idea.

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.

Arts of Magnification, Minimization, And Intimidation

7:25 pm in Uncategorized by TomThumb

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:


Chart of SSI under CPI

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:

Read the rest of this entry →

The Visible Watermark of A Confiscatory Threshold.

11:04 am in Uncategorized by TomThumb

The Cyprus ‘bail-in’ is merely to settle the casino banking debts of large investors, bankers, financiers…..who have seen a 121 % increase in their incomes while ordinary worker’s wages stagnated. Greek bonds that went bad in the recent past, have been placed on the shoulders of the ordinary Cypriot.  The IMF and Euro ministers were happy to make oligarch’s debts into Cyprus’s national debts.

The  designated Russian ‘bad guys’ and their money left the Cyprus island long before the draconian IMF and EU punishments arrived in Brussels last night. I recommend the Iceland rebellion solution. Tell the folks in Brussels where they can stuff it.

I would be complicit with banks stealing from small uninsured savers, entrepreneurs, small businesspersons in Cyprus…….. mortgage holders, and those about to be dispossessed of houses, jobs and well-being, if I chose to sit around, to keep mum, and watch passively as this theft occurs.

The panic began ten days ago when the Brussel’s crew demanded a percentage of bank depositors accounts, less for insureds and more for those in the uninsured (>100K Euros).  The final deal places the burden on pensioners and small businesses with uninsured amounts of more than 100,000 Euros.

For a pattern-maker, a sudden change in the pattern adds a new dimension:  The Cyprian cuts for uninsured depositors is now the visible watermark of a confiscatory threshold: that of arbitrarily taking small depositors’ monies from their bank accounts. This is important because if it stands, it will signal that any person’s savings account is no longer fully safe.

I see no difference between taking money from savers and from small business accounts, and stealing from earned benefit social insurance programs, such as Social Security, Medicare, and Medicaid. Both were created from personal income, from payroll taxes, from general income taxes, and both were supposed to be protected by governments responsible for the security of such resources.

The pattern of austerity now adds a new facet: confiscation rationalized as a rescue.  But the pattern is not merely composed of shrinking government and  through allowing anti-worker and anti-union forces to succeed, off-shoring manufacturing jobs, and attacks on social insurance programs and civil liberties. Unfair tax policies allow revenue to escape untaxed. Neither US 2014 budget (R or D) makes capital gains taxable as normal income. Neither budget demands a Wall Street financial transactions tax. Neither budget raises income tax rates to fair levels.

For retired persons who rely on savings accounts for security, the ZIRP (low interest) policies of the Fed have reduced their income severely. Coupled with President Obama’s stated interest in reducing the size of social insurance programs, (his emphasis on making cuts to Social Security and Medicare), retired persons have been subjected to political stress too. Who is on their side? Certainly not the beltway folks who manufacture their own statistics so that they can  conflate old people with a Federal deficit.  There is plenty of money and influence for rich people. But in the new confiscatory  part of the pattern there apparently is no safety for retired persons with Social Security benefits and savings accounts.

 

The Circle of The Vulnerable Is Much Larger Than They Thought.

10:05 am in Uncategorized by TomThumb

Gene Sperling

Who is left after CPI Social Security Cuts supported by Gene Sperling and friends?

We are all inside that circle. If they had thought through the implications of what they planned to do with the Chained-CPI-Social Security cuts and cuts to medical care, they would have realized that everyone is affected in the end. In the final analysis we are all connected (from StrengthenSocialSecurity):

 ”Some policymakers are considering accepting a grand bargain that includes the chained CPI for Social Security. This is no minor technical change – it is a benefit cut that compounds to become very large over time. The chained CPI would cut the annual benefit of the average earner (someone making $43,518) by $658 at age 75, $1,147 at age 85, and $1,622 at age 95.1 The cumulative cut for that individual would be $4,631 – more than three months of benefits – by age 75; $13,910 – nearly a year of benefits – by age 85; and $28,004 – more than a year and a half of benefits – by age 95.2 “

Policymakers (Gene Sperling) promise to exclude “vulnerable groups”. Three groups are most vulnerable: Veterans. The Poor. The Eldest Elderly. In 2011, Social Security paid almost half of its benefits to these groups.

 $58.3 billion to people who are poor or near-poor (excluding those aged 85 and older);15

 $131 billion to those who are aged 85 or above (including veterans);16 and

 $176.4 billion to veterans and their families17 (net of the above two groups).18

This means that if a chained CPI is put into place which leaves out those groups, it can only affect a 50% smaller group. What is the point of making these cuts?

There are two other groups identified in the piece which have not been identified as vulnerable but which are vulnerable. The disabled and those over 55.  Include those two groups and you have completely removed the purpose of making cuts through a chained CPI. There’s no one left.

Read the rest of this entry →

Two Myths.

7:14 pm in Uncategorized by TomThumb

We spend too much on the elderly.

Below find a graphic demonstration of poverty among seniors in different countries in addition to a side-by-side comparison of amounts spent on seniors in different countries within the OECD. (courtesy of IPS).

Snapshot- 65 living in Poverty

The U.S. is closest to Mexico on the elder poverty level scale. (We spend a whopping 6% compared to 12% in France and 10.7% in Germany.)  Given that so many seniors live in and near to poverty, should we really consider cutting their Social Security benefits with a chained CPI?

The “extra cost” of the retiring elderly is the reason medical costs will“bankrupt” us.

Below find a graphic demonstration of the minimal influence of more people retiring when compared to the influence of increases in the other costs and prices of medical care. (From the President’s Economic Plan.)

Medical spending on Retirees

The green line represents the impact of the aging population.  The orange band represents population growth. The blue area represents the “other reasons” for the cost of healthcare. The trend is toward lower expenditures in recent history, but since year 2000, it looks like the blue area has increased by 200+billion dollars. Could that increase just be CEOs’ salaries, shareholder dividends and excessive profit?

Below find a graph showing the expected growth in Medicare spending with two possible trajectories:

Projected Medicare Spending

If Medicare spending follows the ‘red’ bottom line, instead of following the blue line with its automatic link to GDP growth, the situation does not appear to be a ‘crisis’.

Obama is talking about more means-testing for Medicare. Medicare is already means-tested. Should we start means-testing folks at a lower, small family, poverty-line income  level?  The Obama plan talks about increasing cost-sharing from patients. Why? How cheap can you get?

The President’s Economic Report (Chapter 5) does not mention instituting price controls (so that the MRI which only costs 99.00 to operate does not cost the patient 995.00). Medical price controls would be a better place to start rather than cutting Social Security and asking people to pay more for Medicare insurance and medical services.

 

Notes for an imaginary margin:  A friend reports that on a recent visit his small city hospital was empty, “like a tomb”….  My local hospital doctor told me that they had ‘a great year’.  Really? ….. An uninsured man who injured himself while fixing his car went to the discount store and bought antibiotic cream and gauze and sterile tape. It is 600.00 flat to show up at the local ER and to request crisis care. ……In a nearby city, an auto repair garage is charging 108.00 an hour for mechanic work: its repair bays are empty and its parking lot is empty, and the guys are sitting around like crows on a wire….. I know many unemployed people including my own person. There are many my age who are sheltering and supporting their adult children…….. I don’t have any graphs for the realities in my imaginary margin. There is a yawning, seemingly insurmountable, big gap between my world and the Beltway mythologies. End of parallel reality statement.

Not New and Certainly Not Improved: Bowles-Simpson: V. 2.0

11:47 am in Uncategorized by TomThumb

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

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

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.