Social Security and Medicare

[LFC]

I suspect the solvency these two programs (i.e. need to pay back the "borrowed" trust fund in Social Security's case) will be more and more of a political issue as the percentage of retirees increases. While doing some research for work I stumbled into this analysis by the SSA from 2020 on how different changes to the program would impact the long-term solvency. I put a quick summary below of a few standpoints but there's loads of details and a summary graph for all of the methods analyzed. From the web page.

We group these provisions as follows:

E1: Increase payroll tax rate, with no changes in the taxable maximum.
E2: Tax all earnings above the current-law taxable maximum.
E3: Tax a portion of earnings above the current-law taxable maximum.

From group E1 (increase payroll rate but keep the taxable wage maximum) these are the two that have a major impact. They carry the trust fund out to/past 2100.

E1.1 - Increase the payroll tax rate (currently 12.4 percent) to 15.8 percent in 2021 and later.

E1.2 - Increase the payroll tax rate (currently 12.4 percent) to 15.9 percent in 2033-2062, and to 19.4 percent in years 2063 and later.

Most of the provisions in group E2 (remove the wage ceiling and tax all earnings) add between 10 and 25 years to the solvency. A few don't do much and only add a few years.

E2.6 - Apply a 3 percent payroll tax on earnings above the current-law taxable maximum starting in 2021. Do not provide benefit credit for earnings above the current-law taxable maximum.

E2.8 - Apply a 2 percent payroll tax on earnings above the current-law taxable maximum for years 2023-2070, and a 3 percent rate for years 2071 and later. Do not provide benefit credit for earnings above the current-law taxable maximum.

Group E3 (keep the wage ceiling but increase it) seems to do very little with the best adding maybe 10 years and many barely moving the needle.

[LFC]

Kaiser Family Foundation has a good explanation of where Medicare stands and how much of an impact there might be from the insolvency of its trust fund.

I'd like to make note of Medicare Part D in this graph. Note that the program that Republicans rammed through by having John Boehner suspend the House rules as Republicans openly bribed a Congressman on the floor is over 70% unfunded. It generates an annual cost from the General Fund of about $70B. Republicans never pay for any of their policies. Ever. All hail Jude Wanniski.

[LFC]

RonJohn steps into it again. It's not necessarily a terrible idea to make it easier for retirees to pick up some work but, being somebody who has a track record of trying to destroy the social safety net, he's not exactly a good messenger.

Republican Sen. Ron Johnson this week endorsed a proposal to "coax" seniors out of retirement to address so-called worker shortages, drawing backlash from his Democratic opponent and other critics who noted the GOP lawmaker's long history of attacking Social Security.

"There are a number of innovative ideas I would support," Johnson (R-Wis.) said during a tele-town hall with constituents on Wednesday as he's locked in a close reelection race with Democratic challenger Mandela Barnes in the key battleground state of Wisconsin.

"Former Senator Phil Gramm came to the Senate, we were talking about our labor shortage, and one of his suggestions was to coax seniors that could reenter the workforce—don't charge them payroll tax," Johnson said in remarks first reported by the Heartland Signal. "They're not paying it anyway so if they want to get back and earn a few extra bucks, let them start working."

The Republican senator's comments came weeks after he sparked outrage by suggesting that funding for Social Security and Medicare should be discretionary rather than mandatory, a change that would pave the way for cuts or the complete demise of the popular programs.

Barnes, Wisconsin's lieutenant governor, was quick to respond to Johnson's latest remarks, slamming his opponent for "waging a war on our seniors and the benefits they've worked towards their entire lives."

"Ron Johnson's solution to the labor shortage: send seniors back to work," Barnes said in a statement Thursday, noting that Johnson has voted to raise the retirement age from 65 to 70.

Social Security Works, a progressive advocacy group, also denounced Johnson's comments on social media.

"This is the same senator who wants to turn Social Security into 'discretionary spending,'" the group tweeted Thursday. "Ron Johnson thinks that working-class Americans don't deserve to retire. That's why he's trying to steal our earned benefits."

[LFC]

Republicans are coming for both Social Security and Medicare, and they're not even hiding the fact. This after their massive giveaway to affluent people with the 2017 Tax Cuts and Jobs Act.

Generally, three weeks before midterm elections that could make or break a party’s chances of congressional control, lawmakers emphasize the popular parts of their agenda. But for Republicans this year, not so.

For a few weeks now, they’ve been open about their intention to hold the debt ceiling hostage, a tactic they’ve used repeatedly since Tea Party Republicans tried it out in 2011. It works more or less the same way each time: Republican lawmakers say they will not vote to raise or suspend the debt ceiling, threatening to let the United States default on its debts, which would almost certainly trigger a global economic crisis. In exchange, they demand political concessions from the Democratic President.

This time, they’re planning to demand cuts to Medicare and Social Security — a policy position so staggeringly unpopular, one would expect them to keep it shelved until after they’d procured enough votes to enact it.

House Republicans, some of whom are poised to take over major committees in the case of a congressional flip, have been open about this intent both in interviews and, in terms of their desired changes to the programs, in the Republican Study Committee budget released earlier this year.

House Minority Leader Kevin McCarthy (R-CA) said more in an interview with Punchbowl News published Tuesday.

“You can’t just continue down the path to keep spending and adding to the debt. And if people want to make a debt ceiling [for a longer period of time], just like anything else, there comes a point in time where, okay, we’ll provide you more money, but you got to change your current behavior. We’re not just going to keep lifting your credit card limit, right?” he said. “And we should seriously sit together and [figure out] where can we eliminate some waste? Where can we make the economy grow stronger?”

He added that he would not “predetermine” anything in terms of extorting cuts to Social Security and Medicare during a debt ceiling standoff.

House Republican Whip Steve Scalise (R-LA) said on Fox News Sunday that calling what Republicans want to do to the two programs “cuts” is misleading. He said they actually want to “strengthen” and “shore up” the programs.

"Strengthen" by cutting benefits. How positively Republican.

[LFC]

After the failed push to privatize Social Security under George W it appears that Republicans are again preparing to dismantle it. Sure it's likely to be done by erosion but the ultimate goal is to destroy it. Sen. Mike Lee is saying it out loud, at least in what he sees as a friendly venue.

[LFC]

Biden is not allowing Republicans to bury their positions on this topic under a pile of soft lies and denials, nor should he. It's both good policy and good politics. Here the latest swing.

The White House has congratulated Rick Scott for confessing his desire to destroy Social Security and seeking forgiveness.

Andrew Bates, Deputy White House Press Secretary:

We congratulate Senator Scott on joining the post-State of the Union red wave of Republicans acknowledging that they have, in fact, been attempting to put Medicare and Social Security on the chopping block. For the past year he has explained the absence of an exception by saying, ‘If it’s worth keeping, we’re going to keep it.’ But make no mistake, his true colors are undeniable and on the record. Cutting Medicare and Social Security benefits is a longstanding passion of Senator Scott’s, as it is for the majority of House Republicans who comprise the Republican Study Committee and many of his Senate colleagues, ranging from John Thune to Ron Johnson. For example, in the 1990s Senator Scott supported fully privatizing Medicare. And now, by supporting repeal of the Inflation Reduction Act, Senator Scott is pursuing the biggest Medicare benefits cut in a generation just so Big Pharma can receive a debt-worsening bailout. We thank Senator Scott for continuing to share his heart with the world. We always support him doing so.

[LFC]

DeSatanist can expect his own record to be on full display in 2024 when he'll almost surely run.

I just wanted to drop this in here because it’s an important set of facts that I suspect will be a big issue both in the coming GOP primary and — if DeSantis gets the GOP nomination — during the 2024 general election.

A week ago I noted that, contrary to press claims that only a few GOP outliers have called for cutting or phasing out Social Security, the great majority of House Republicans had already endorsed doing so during this fiscal year. There’s a lot of press special pleading surrounding proposals for Social Security cuts: It’s only Rick Scott or Ron Johnson or Mike Lee. In fact, such proposals are GOP orthodoxy and have been for decades. The Republican Study Committee, which is a caucus including about three-quarters of House Republicans, endorsed a proposed budget for this fiscal year calling for Social Security privatization, benefit cuts (through changed COLA formulas), raising the retirement age to 70 and more.

As governor, Ron DeSantis does not make policy on Social Security. But he did get to vote on it when he was in the House of Representatives. He voted for just such a menu of cuts at the time. In 2013, 2014 and 2015 DeSantis voted for the more right-leaning Republican budget resolutions that called for the same cuts.

Indeed, he also supported Paul Ryan’s plan to phase out Medicare in favor of a so-called “premium support” plan, premiums to pay for private health care insurance. If he had had his way that new model already would have gone into effect for new beneficiaries starting in 2019.

DeSantis has also suggested he supports phasing out Social Security with private accounts, as President Bush proposed and failed with back in 2004–05.

[LFC]

Republicans have long used the "we have to destroy it to save it" tactic.

Republicans have insisted that their efforts to cut or undermine Social Security are in fact necessary efforts to save it. This is nothing new. Those ideologically opposed to Social Security have often used questions around its “solvency” as an entry point to propose cuts, or overhauling the program altogether.

“People who want to cut back on Social Security almost always say the program is broke,” Max Richtman, president and CEO of the National Committee to Preserve Social Security and Medicare, told TPM. “So we have to make big changes.”

Some Republicans, including Mike Pence Thursday, propose massive changes like privatizing the program, an echo of what former President George W. Bush so unsuccessfully tried in 2005.

“The solvency issue is meant to confuse people, used to alarm people,” Timothy McBride, a professor at Washington University in St. Louis and an expert on Medicare, Medicaid and Social Security, added. “The cynic in me thinks they’re trying to drive people into lowering the support for the program.”

Dems are, once again, proposing actual solutions. It's not like this is the first time but Republicans always fight these tooth and nail because they don't actually cut into the usefulness of the programs.

Sens. Elizabeth Warren (D-MA) and Bernie Sanders (I-VT) introduced their bill this week to extend the program’s solvency “effectively until the end of this century,” as Warren put it to TPM.

The bill would expand benefits by $2,400 a year, and would be offset by raising the payroll tax cap. Currently, only income up to $160,000 is taxed; the senators’ bill would tax income over $250,000.

They introduced similar legislation last summer, and are now angling to bring tax increases to the forefront of the conversation while the White House wallops Republicans for their plans to cut the programs.

“When you have a situation where somebody who makes $100 million a year contributes the same amount into the Social Security trust as somebody making $160,000, obviously, an essential part of the solution is to lift that cap,” Sanders told TPM. “No one thinks that that’s fair.”

Warren said it’s always been understood that Social Security would have to be tweaked to keep it solvent, as social patterns in America shift.

“When the Social Security system was established back in the 1930s, we understood as a nation that we would need to make adjustments all along. People would live longer, women would work, different occupations would be covered,” she told TPM. “Between the 1930s and the late 1980s, there were adjustments made dozens of times — small adjustments, no big cliffs, but it kept the program solvent and serving the people who needed it.”

“Then, in the late ‘80s, the Republicans put a stop to that. And so the system began to get a little more economically unstable and a little more economically unstable and a little more economically unstable,” she added. “Now we’re at a place where we need to make a significant change in the revenues, as well as the payouts.”

Biden too is going on the offensive, suggesting that his upcoming budget proposal will extend the solvency of Medicare with tax hikes.

[LFC]

Pence is all in on the destruction of the social safety net. Of course he's claim that he's trying to save it but there has yet to be a Republican plan that actually does so. They want cuts and privatization. And they definitely want to put off repaying the trust funds.

Elsewhere, Republicans are running, with their hands up, shrieking, from the accusation (and for most, bare statement of fact) that they want to cut Social Security and Medicare. But not Mike Pence.

From glossy cable news sets to a relaxed hang with the National Association of Wholesaler-Distributors, Pence has been singularly fixated on airing his (very unpopular) plans to cut the programs all month.

Earlier in February, Yahoo News published video obtained by Democratic opposition research hub American Bridge of Pence addressing the wholesaler-distributors.

“I was a part of it when George W. Bush proposed Social Security reform in 2005,” he said. “The time has come for us to have the kind of leadership that says to everyone that’s got hair the same color as me, nothing’s going to change for you, but to give younger Americans better choices that would also be better for the country.”

That Pence would proudly remind voters of his involvement in Bush’s disastrous quest to privatize Social Security is astonishing on its own.

To the surprise of nearly everyone at the time, Bush began his term in 2005 hellbent on using his supposed “political capital” to overhaul Social Security by transitioning to individual private retirement accounts. He gave the idea prime real estate in his State of the Union speech, and promptly departed to barnstorm around the country to sell his proposal. But he was soon forced to drop the notion as his approval level plummeted and members of Congress ran for higher ground.

While it seems politically dubious to invoke Bush’s utter failure as a model for his ongoing plan, Pence is telling the truth about his past. He was in the House at the time, and part of a right-wing group arguing that Bush’s privatization scheme didn’t go far enough.

Whoa! That's a shock. Pence told the truth! It should be noted that Democrats created a compromise package that included multiple small adjustments. Republicans shot it down because it would have actually strengthened the programs rather than set up their destruction.

[goldenvalley]

Feb 23, 2023 16:54:40 GMT LFC said:

Pence is all in on the destruction of the social safety net. Of course he's claim that he's trying to save it but there has yet to be a Republican plan that actually does so. They want cuts and privatization. And they definitely want to put off repaying the trust funds.

Elsewhere, Republicans are running, with their hands up, shrieking, from the accusation (and for most, bare statement of fact) that they want to cut Social Security and Medicare. But not Mike Pence.

From glossy cable news sets to a relaxed hang with the National Association of Wholesaler-Distributors, Pence has been singularly fixated on airing his (very unpopular) plans to cut the programs all month.

Earlier in February, Yahoo News published video obtained by Democratic opposition research hub American Bridge of Pence addressing the wholesaler-distributors.

“I was a part of it when George W. Bush proposed Social Security reform in 2005,” he said. “The time has come for us to have the kind of leadership that says to everyone that’s got hair the same color as me, nothing’s going to change for you, but to give younger Americans better choices that would also be better for the country.”

That Pence would proudly remind voters of his involvement in Bush’s disastrous quest to privatize Social Security is astonishing on its own.

To the surprise of nearly everyone at the time, Bush began his term in 2005 hellbent on using his supposed “political capital” to overhaul Social Security by transitioning to individual private retirement accounts. He gave the idea prime real estate in his State of the Union speech, and promptly departed to barnstorm around the country to sell his proposal. But he was soon forced to drop the notion as his approval level plummeted and members of Congress ran for higher ground.

While it seems politically dubious to invoke Bush’s utter failure as a model for his ongoing plan, Pence is telling the truth about his past. He was in the House at the time, and part of a right-wing group arguing that Bush’s privatization scheme didn’t go far enough.

Whoa! That's a shock. Pence told the truth! It should be noted that Democrats created a compromise package that included multiple small adjustments. Republicans shot it down because it would have actually strengthened the programs rather than set up their destruction.

It's 2005 all over again.  Bush ran on a sort of culture war theme...gay marriage and abortion, the usual.  When re-elected the first order of business was privatization of Social Security...let the people decide where to put their money...in the stock market in one way or another. 

[goldenvalley]

France is seeing huge protests over the suggestion of raising the retirement age from 62 to 64. Wonder if the US would see some sort of protest in the streets over this.  The unions here aren't nearly as powerful as they are in France.

Idle trains, closed ports, empty schools, canceled flights, uncollected trash, shuttered refineries.

That was life in France on Tuesday as labor unions attempted to bring the country “to a standstill” and flooded streets in towns and cities around the country with more than a million marchers, protesting President Emmanuel Macron’s plans to raise the legal age of retirement to 64 from 62.

After two months of an uneasy confrontation and five previous demonstrations that have unfurled across the country, neither side has shown any sign of backing down.

Many wonder if Tuesday will be the beginning of a reinvigorated movement that could force the government’s hand, or instead become a final yell of frustration — lingering in the air before fading, as Mr. Macron pushes through his change.

How many?

Unions and authorities provided wildly different estimates of the number of marchers on Tuesday — a record 1.28 million, according to the Interior Ministry, versus a record 3.5 million for the unions, a gap large even for France, where discrepancies between their estimates are common.

[pnwguy]

I say this as someone 64, but raising retirement ages to deal with the beneficial increase in human age seems valid. Most countries based their budgets from life expectancies that were far lower. There is no free lunch here, and we can't expect everyone in my daughter's age to carry an every increasing burden for the elderly. Besides that, none but the religious fundamentalists of all stripes are having the offspring that generations ago did, that made the ratios possible.

I expect to keep working into my 70s. But of course, I'm in software. I can understand the differences with jobs that are physically hard.

[jackd]

Raising taxes on the affluent will also do it.

[LFC]

Mar 9, 2023 14:29:12 GMT pnwguy said:

I say this as someone 64, but raising retirement ages to deal with the beneficial increase in human age seems valid.

Speaking to the situation here in the U.S., we've already raised retirement ages. And keep in mind that much of the cited life expectancy increases since 1935 include the plummeting rate of childhood death due to vaccines. Those deaths dragged down earlier life expectancy averages, but these were people who neither paid into or took out of the programs.

Most countries based their budgets from life expectancies that were far lower. 

Most countries also don't have the GDP per capita that the U.S. does, and most of those above it are tax havens like Bermuda, Luxembourg, Monaco, Singapore, Cayman Islands...

There is no free lunch here, and we can't expect everyone in my daughter's age to carry an every increasing burden for the elderly. Besides that, none but the religious fundamentalists of all stripes are having the offspring that generations ago did, that made the ratios possible.

Agreed that there's no free lunch but read the initial post. There are multiple ways to do this, with the best approach being some of this and some of that. In fact Obama and Boehner knocked out quite a bit of it. Of course Boehner immediately fell apart in front of his Tea Party pinheads and that was that.

I expect to keep working into my 70s. But of course, I'm in software. I can understand the differences with jobs that are physically hard.

I actually have to look at these types of data points each year for my job. This is from the industry respected "EBRI RI/Greenwald Research Retirement Confidence Survey" for 2022 - Fact Sheet #2.

The Retirement Confidence Survey (RCS) has consistently found that a large percentage of retirees leave the work force earlier than planned (47 percent) (Figure 2). In the 2022 RCS, many who say they retired earlier than planned did so because of a hardship, such as a health problem or disability, not related to COVID-19 (32 percent).

So about 15% of workers already have to leave the workforce earlier than planned to to medical issues. Also 70% of workers believe they'll work some during retirement while the truth is that about 27% actually do. Some of that is for positive reasons but that's still a huge gap. I think that once you start talking about increasing the retirement age closer towards 70 you're pushing the ability for a lot of people to hold onto gainful employment.

One final interesting data point is that Americans are claiming Social Security benefits later. Actuarially this should be a wash but I think it shows that people are already working later.

[AnBr]

I was going to make many of the same points yesterday, but was on the go and then forgot. In addition to the point that life expectancy increases have been mostly from lowered infant mortality rates, of late expectancy has been dropping. Acknowledging more physically demanding jobs incapacitating the body earlier is one thing, but remember that it is not only the retiring iron worker that will experience physical and health issues, many white collar workers may have issues from more demanding jobs in their youth that will come back to haunt them. In your mid fifties if you get laid off you might find it hard to find employment in your old field as they often look only for younger, "dynamic" candidates. So many of these people have had to fall back on service sector jobs just to live. This happened en masse after the lock down. Initial improvements in unemployment rate data were skewed by many older workers that faced the grim employment prospects of menial labor opted to retire early instead.

I would note that the SS cap has not kept pace with inflation. The contributions by the wealthy has been dropping over the years by this alone. Also so for many of the wealthy, the part of their income subject to the payroll tax is often just a small part of their actual income (capital gains, anyone?). Combine this with wage theft by the very same people and the shockingly growing inequality robs SS from the revenue that it would have had if wages had kept pace with inflation and increased productivity.

And do I even have to mention how Repugs have been raiding the SS coffers only to not pay it back?

Capitulating to the reich-wing narrative of how SS is just a ponzi scheme that is inevitably going broke and there is nothing that we can do about it is like buying into trickle down actually works. There are several non-radical proposals that would extend the solvency of SS by decades. Add to this forcing payback of the money stolen from the fund and addressing inequality extend it even further.

We need to reexamine ALL of the false narratives pushed by the right that has framed our national dialog for decades and help push the Overton Window further and further to the right And there are many of them, all to twist the electorate's perspective on so many matters to fit the right's objective.

[pnwguy]

I think you are wrong about SS caps and inflation. I work with payroll systems and these are adjusted annually, based on the same CPI values that federal
tax withholding brackets are adjusted on. That was one benevolent thing that Congress passed years ago, to do this automatically, so that it didn’t have to be voted on every year.

It’s a shame that the Federal minimum wage law does have a similar adjustment.

[LFC]

Mar 12, 2023 16:18:24 GMT pnwguy said:

I think you are wrong about SS caps and inflation. I work with payroll systems and these are adjusted annually, based on the same CPI values that federal tax withholding brackets are adjusted on.

Not quite. Social Security uses CPI-W (Urban Wage Earners and Clerical Workers). Until the 2017 Tax Cuts & Jobs Act, a multitude of federal income and estate values were indexed by CPI-U (All Urban Consumers), but now it is Chained CPI (C-CPI-U if I remember correctly). This has caused some differences in indexing but cumulatively over, say, the last 20 years I don't know how much and don't feel like digging through bls.gov though all the data is there.