13 February 2013
Hands Off Social Security!
Our politicians in Washington are playing games as they proclaim their good intentions for reducing the federal budget deficit and for preventing the across-the-board sequestration of federal spending on March 1, 2013.
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.
Sherfdog
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
added.)
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.
Sherfdog
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