13 February 2013
Hands Off Social Security!
Caught in their own fiscal underpants, the Republican parties and some naive Democrats must find a way to save their favored federal programs while slashing away at those they deem unnecessary. Some Republicans of the Tea Party say, “Go ahead! Sequestration is the only way to rein in an out-of-control federal spending orgy of 20 years.” Or, words to that effect.
My view on the place to begin reforming our federal budget process for entitlement programs is with the compensation and benefits for elected officials. After all, by definition, these men and women are volunteers! They receive salaries in excess of $100,000 per year, they have franking privileges with their constituents, they have abundant support staffing, they can schedule when they will or will not be at work, i.e., in session, they and their families have excellent health care insurance, they may have exempted themselves from FICO, and after their volunteer positions terminate, they enjoy a defined benefit plan.
No one is forced to be a member of Congress, their jobs are not government jobs for which they apply, each one
decides to volunteer for a time as a representative of their constituencies, district or state. They are not eligible for unemployment insurance if they lose in the primaries or in the general elections. Like all volunteers, each serves
as long as they want to continue to stand for election.
Concerning sequestering federal spending, will their salaries and benefits be exempt? Perhaps they should not receive any salaries or benefits until they agree on a fiscally responsible, federal budget that will satisfy the Americans who elect them and those others who work, reside or visit here.
In its current newsletter, the CAMPAIGN FOR AMERICA’S FUTURE presents a convincing discussion and argument about the idea floating around Congress and the White House for changing the nature of the basis for
annual increases in Social Security payments to entitled beneficiaries. It is published by the Institute for America’s Future.org and its website is: http://institute.ourfuture.org/ I have edited the longer article, truly, I have, to highlight the essence of this political gamesmanship.
“Nonsense of the Chained CPI and Why Should We Oppose It?
. . . [T]he chained CPI is a political trick, not a technical fix. It is a hidden benefit cut that would shackle seniors with lower benefits and thus less security over time. With seniors in the bottom 40 percent of the income scale dependent on Social Security for almost 90 percent of their income, it would dramatically raise poverty levels among the retired, the disabled and the widowed.
. . .
Without a massive mobilization by an informed public, there is a clear and present danger that within the next few months the economic security of the elderly, disabled and surviving children will be needlessly compromised for decades to come by our country's political elites.
. . .
“What is a Chained CPI instead of the regular Consumer Price Index (CPI)?
A "chained CPI" differs from the standard consumer price index we're familiar with because it claims to take into account “substitutions” — the degree to which consumers will change what they buy in response to price increases . . . .
Now we all make substitutions – but many of the things seniors buy are things you just can’t substitute, like medicines, or doctors visits, or basic foods. But the chained CPI wasn’t designed with seniors’ buying habits in mind. (Emphasis added.)
1. It's a huge benefit cut that seniors, veterans and the disabled cannot afford. It
would cut benefits by $135 billion over 10 years and much more in ensuing decades as
its impact is compounded. It would also cut another $24 billion from veterans' and
federal retirement benefits. The Social Security recipient who retired at age 65 in 2012
would be receiving $658 a year less in benefits under the chained CPI calculation by the
time he or she is 75, an almost 4 percent cut; by 85, that person would be getting
$1,147 less a year, a 6.5 percent benefit cut. . . .
2. The chained CPI is patently inaccurate at measuring the cost of living of the
elderly and disabled. This is a political trick, not a technical fix. Since 1975, Social
Security benefits are adjusted annually based on what is now called the consumer price
index for urban wage earners and clerical workers (CPI-W). Ironically, its cost
calculations exclude people outside the workforce, and thus most Social Security
beneficiaries workforce, and thus most Social Security beneficiaries. (Emphasis added.)
3. The chained CPI violates Social Security's promise: that Social Security's cost-of-living adjustments should maintain the purchasing power of benefit levels over time. . . .The value of pensions or 401(k) balances that are not inflation-protected
typically decline by half over 20 years. Virtually no retirement savings vehicles available
in private markets offer inflation protection for life. Social Security does. (Emphasis
4. The chained CPI flagrantly flies in the face of public opinion . . . . The most recent polling by the National Academy of Social Insurance shows that a majority of Americans across the political spectrum think Social Security benefits should be raised, not lowered – and are willing to pay more in taxes to protect those benefits. By far the most popular reform is to raise the cap on the payroll tax, so that the wealthier Americans pay at the same rate as low-wage workers.
5. The chained CPI will hurt more than just the elderly. The groups of Americans that
would also see their benefits cut if the chained CPI were implemented government-wide
include people with disabilities; widows and children who receive survivor's benefits; disabled veterans, particularly those who are totally disabled and therefore eligible for both veterans benefits and Social Security Disability; lifelong public servants who retire from the federal government, and anyone who retires from the military after serving our country for decades.
6. Social Security benefits are modest and should be increased, not cut. Social
Security retirement benefits average just $14,900 a year, and nearly 5 million retirees live below 125 percent of the federal poverty level. . . .The Center for Retirement Research at Boston College has estimated that more than half of the nation's households would be unable to maintain their standards of living during their retirement years, given the damage the 2008 financial crash did to housing values, stock portfolios and worker earnings.
7. The advocates of the chained CPI implicitly admit that it is not an accurate
measure of inflation faced by seniors. . . .For example, even with the most commonly
proposed compensatory measure – a bump-up in benefits after 20 years, starting at age 82 – an 85-year-old would still lose more than $12,000 in benefits over a 20-year period. . . . For the average worker retiring at age 65 in 2012, the chained CPI would cut benefits by more than $1,000 a month by the time that worker is 85. The cumulative effect of the cut gets worse over time.
8. Social Security has not and cannot by law contribute to the federal debt. And the program is too important to be used as a bargaining chip in negotiations about deficits that Social Security has not contributed to.
9. [Social Security’s financial future is fairly solid.] In fact, Social Security is in goodNote: if the Treasury were prohibited from further borrowings from the Social Security Fund, as it has under Presidents Bush I, Clinton and Bush II, to pay for (off-budget) unfunded items, the Fund would be able to sustain Social Security as it was designed to do in 1936.
shape, with current assets covering benefits for the next 22 years.”
Learn More» National Academy of Social Insurance brief on Chained CPIThere are sufficient, additional agenda items and opinions for the Administration and the Congress that I shall share in future posts. As always, I appreciate your comments.
» OurFuture.org Chained CPI blog page
» The New York Times: "Misguided Social Security ‘Reform'" (Editorial)
» Economic Policy Institute's Retirement research page
» Center for Economic and Policy Research's Social Security and retirement issue page
» Smart Talk on Protecting Social Security.
08 February 2013
Oil and Water Do Mix!
To date, opposition to fracking in various communities focuses on the potential for polluting the underground water supplies, in addition to our rivers and lake resources, from which we obtain potable water for drinking and cooking. In the current newsletter ProPublica, Abraham Lustgarten reports that Mexico City is planning to access drinking water from an aquifer that is being polluted by US drilling companies. See http://www.propublica.org/series/injection-wells for extensive reporting on this subject. Lustgarten points out that the dumping of toxic liquids into very deep wells was intended to go deeper than any water resources we would ever use. Our state and federal regulators have not been inspecting these wells for several years, which I attribute to industry and Congressional resistance to funding sufficient inspectors and auditors within the environmental protection agencies.
While the fracking process has raised local concerns about polluting local water supplies, no one seems to focus on the importance of water to the petroleum industry. When policy discussions about our energy needs fill the halls of state and federal governments each party emphasizes the petroleum part of the oil production process.
Consider how much the current, extensive drought is affecting our nation's agriculture. Even the oil industry has been asked by the federal government to use less corn in refining gasoline products. Demands on corn production by the oil industry cause price increases in food products that use corn syrup, corn flour, plus feed for animals upon which we depend for our meat and dairy supplies. In a large part of the central US, the current drought is forcing farmers to selling off their animal stock because they cannot afford to feed them and grazing animals cannot find sufficient nutrients in their dry pastures.
California has to address these issues of oil production and refining, water for agriculture and for its 36 million residents' drinking and residential use. In the mid-1970's, the City Manager of Torrance, California, said that the three refineries within city limits consumed one-third of Torrance's water supplies each year. Water rights political battles between northern and southern parts of the state have existed as long as the state has developed. The agricultural interests in the central San Joaquin Valley, King County and the Salinas Valley that generate such a large part of our nation's food supply need water for crops. The state's population and industrial growth, especially in Southern California, adds to already stretched demands on the state's water resources. Without better, coordinated regulation mitigating market pricing and supply, the oil companies will to consume more water for drilling and refining, farmers will pay more for their water and crop prices will rise making commercial feed and consumer agricultural products more expensive across the nation.
Water wars have been part of California's history forever, affecting population settlement and relocation since before the Spanish arrived. Unlike other, primarily desert or water-scarce regions of the world, the only government capital initiatives in California, Nevada and Arizona involved water distribution and natural resource exploitation without any resources devoted to water resource creation from the Pacific Ocean. Only recently has the City of San Diego begun a desalinization development to produce potable water from sea water, but much more will be needed throughout the region.
Three groups of vested commercial interests: 1) the oil industry, 2) the agriculture industry, and 3) the commercial and residential developers will vie for tying up water rights throughout California.
If the oil industry extraction and refining practices pollute the aquifer, it ill cause devastating effects on drinking water and other residential water uses, on agriculture's dependence on water for growing its three crops per year, and on developers' ability to build new residences and commercial buildings necessary for job growth and retention of the labor force.
Old adages die hard, but saying that water and oil do not mix masks an imminent threat of smoke stack policy dynamics within our state and federal government policy offices. Without using a comprehensive model of our water, petroleum and natural gas resources from discovery to waste, we will fail to provide the infrastructure and output needed for our anticipated standards of living beyond the next generation coming of age in 2050,