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Posts Tagged ‘fiscal commission’

“Reasonable” adjustments to Social Security to cut the deficit?

In Economics on May 5, 2010 at 9:02 am

With the advent of the president’s National Fiscal Commission (AKA the “deficit commission”) last Tuesday and the Peter G. Peterson Foundation‘s star-studded conference the following day, there’s been a fair amount of talk about the federal deficit and ideas for “compassionate, fair, and reasonable” cuts to Social Security to help diminish that deficit.

First, let’s get one fact out of the way: Social Security in no way contributes to the current deficit. Social Security has run a surplus for decades, and that surplus has been invested in U.S. Treasury bonds.

Second, let’s recognize that demographic trends are not surprises. Social Security’s actuaries have known about the baby boom for the last 50+ years and have noted the increase in expected lifespans. These changes have been factored into the trustees’ projections. The only surprise events that do impact those projections are massive ups and downs in the U.S. economy.

Ok, time to examine those “compassionate, fair, and reasonable” cuts:

1) Increase the age of retirement — raising the retirement age to 70 seems like a no-brainer, right? Think of all those bronzed seniors dotting the nation’s fairways. An American man born today can expect to live to be 75.6 and women almost 81. But if you delve more deeply into the data, you learn that the life expectancy for African Americans is approximately five years less than the average. In fact, among different population groups, there may be as much as a 20 year difference in life expectancy. Would it be “fair” to raise that age of retirement above the current 67?

In addition, as the current unemployment situation illustrates, it’s difficult for people over 60 to find employment. And with high unemployment rates for young workers entering the workforce, it doesn’t seem “reasonable” to force older workers to keep working.

And don’t forget that, while an office-bound executive with a pass to the gym may be in fine physical shape at age 70, someone who has spent decades working as a carpenter, a short-order cook, or a hotel housekeeper may be physically worn out by age 60. Would it be “compassionate” to ask that worker to wait to age 70 to collect retirement benefits?

2) Index benefits according to income — Look back again at those bronzed golf club-winging seniors. Does it seem fair that they collect full Social Security benefits while at the same time clipping coupons from their stock investments and perhaps even receiving private pension benefits? Why not cut their Social Security benefits to free that money up for those who really need it?

Here’s where you run up against the philosophy upon which Frances Perkins, FDR, and their associates originally founded the program. Social Security is a social insurance program, not a welfare program. If the Smith family’s house burns, the insurance company doesn’t say to them, “Since your family income and net worth are high, we’ll pay only 70 percent of the amount for which your home is insured.” No, as with any insurance program, you pay in an agreed upon amount and you receive what you’re due. Social insurance is a contract. To diminish payouts based on income would diminish support for the program; higher income workers would balk at subsidizing the program for the less wealthy. They would not see such a change as “fair” or “reasonable.”

3) Privatize Social Security — This 2005 impetus by the Bush Administration should be dead; too many people have lost thousands in their IRAs and 401(K) accounts since 2008. For many of them, Social Security is a more important part of their retirement income than they ever imagined it would be.

So, if Social Security cuts aren’t the answer to erasing the deficit, what should the president’s commission be talking about?

According to labor leader Andy Stern, one the president’s appointees to the Commission, there are six avenues to fiscal responsibility. In a letter that he wrote to his fellow Commission members, Stern listed: improving the budget process; reforming defense spending and the tax code; reviewing all entitlements including tax entitlements; strengthening retirement security; and reforming immigration policy.

His comprehensive holistic approach is a welcome change from those who have been beating the drum for cutting Social Security and Medicare and instituting a Value Added Tax (VAT), all of which would disproportionately hurt lower income Americans. And that’s definitely not “compassionate.”

Beware the stacked deck of the Peterson “Fiscal Conference”

In Legislation Today, Political world on April 5, 2010 at 1:59 pm

You’ll undoubtedly be hearing all about it; the Peter G. Peterson Foundation has a tremendous press operation with a huge budget to support it. Here’s how the April 28th event is being touted:

What do they mean by "our"?

On behalf of the Peter G. Peterson Foundation, I cordially invite you to attend the 2010 Fiscal Summit:  America’s Challenge and a Way Forward.   This event will take place in Washington, DC on April 28, 2010, featuring a moderated discussion of the issues with President Bill Clinton.   We will send a more detailed agenda shortly, but we hope that you will save the date and plan to join us for this important forum.

The date of the event is significant–one day after the opening of the president’s Fiscal Commission. And the keynote speaker is a former Democratic president. It seems as though this conference will at least give voice to the liberal and progressive side of the debate.

But read further and you’ll find that the deck is firmly stacked on the Peter G. Peterson side (well, this is his party; he’s paying for it, after all). Here are the other people listed: Alan Greenspan, Judd Gregg, Bob Rubin, Alice Rivlin, John Castellani, Paul Volcker, and John Podesta. There’s only one liberal in that group. (Also only one woman, but that’s another story.)

Robert Kuttner, in today’s Huffington Post, has some acerbic comments about the conference:

If the orgy of financial deregulation that led to the crash had two prime sponsors, the Democratic one was Rubin and the Republican one was Greenspan. Inviting these characters to a fiscal summit to devise a way out of the crisis is like inviting arsonists to design a seminar on fire prevention.

Peterson himself, who underwrites the work of the foundation with a billion dollar gift, made his money as one of America’s private-equity moguls. Private equity companies have been among main offenders in the world of shadow banking that helped cause the collapse, and are now lobbing against tough financial reform and regulation.

This is billed as a “national dialogue on solving America’s fiscal challenges,” but spare me. This is a propaganda event. For the most part, the featured speakers follow the Peterson line. John Podesta, the closest thing to a liberal playing a headliner role, accepts that there is a serious deficit problem, but would entertain a value-added tax as part of the remedy. But the speakers’ list is clearly stacked and there is no one to Podesta’s left.

The Peterson Foundation and its president, David Walker, already know exactly what they want — strict budget caps on social outlay, enforced by a rigid formula, with cuts in Medicare and Social Security leading the way.

Will the mainstream media continue to swallow the Peterson story? Kuttner suggests two sources for the other side:

Take a look yourself, and help correct the almost ubiquitous but incorrect impression in the press and the public that Social Security and Medicare are to blame for the deficit and must be cut.

Who will speak for women?

In Political world on March 28, 2010 at 1:01 pm

Here’s a shout out to Lynn Parramore of New Deal 2.0, whose Saturday post, Our Grandmothers, Ourselves: Social Security Under Fire, eloquently spoke to a matter of concern regarding the president’s Fiscal Commission:

Amid the myths and fear-mongering, women have a particular reason to be on high alert. We rely on Social Security more than men, but are getting sidelined in decision-making.

Obama’s Fiscal Commission has been created to propose ways to reduce the current deficit, including possible cuts to Social Security. But there is only one woman among his five appointees, Alice Rivlin. And there is only one woman, Congresswoman Jan Schakowsky, among all the other appointments made by McConnell, Reid, Boehner, and Pelosi. Two women out of 18 appointees? That’s 11 percent. It’s an outrage, considering that women represent 57 percent of all Social Security beneficiaries age 62 and older, and 69 percent of beneficiaries age 85 and older.

Why aren’t women invited to the table when our economic security is being decided?

Women’s participation in the workforce has skyrocketed since the 1950s, but it seems to have settled at around 70 percent for married women of working age (higher for single women), still far below the rates for working age men (over 90 percent). The incontrovertible fact is that women alone have babies, and they still bear the primary burden of childcare. Most women still leave the workforce after having children for at least a short time, and many leave for years. This means that women usually get lower Social Security benefits than they would have received if they had worked steadily, as most men do. And yet we live longer, and often have special burdens caring for children and grandchildren.

The lack of women on the Fiscal Commission is particularly insulting given that it was a woman who worked tirelessly to bring us Social Security in the first place. It was Frances Perkins, President Roosevelt’s indomitable Secretary of Labor, who was responsible for encouraging FDR to include Social Security as part of the New Deal and benefit us all with one of the greatest pieces of social reform in American history. We can’t allow deficit hawks and Wall Street greed to shred the critical social safety net that this inspirational woman, often called “FDR’s conscience,” managed to weave amid fear-mongering just as fierce in her day as it is in ours. Obama, are you listening?

Congress, are you listening? Country, are you listening?

Social Security foes named to president’s Fiscal Commission

In Legislation Today, Political world on March 12, 2010 at 5:38 pm

As feared, the Republican picks for the deficit commission are avowed opponents of Social Security. House Minority Leader Boehner has named Reps. Dave Camp (MI), Paul Ryan (WI) and Jeb Hensarling (TX) to join the 18-member commission. Ryan has already made his position clear with his earlier-released  “Budget Roadmap,” which Jonathan Chait in the New Republic characterized this way:

Ryan’s plan would make the federal tax code regressive, especially at the top, on top of an already-regressive state and local tax base. According to the Tax Policy Center, the richest 1% of all taxpayers, who earn more than 21% of the national income and currently pay about 25% of federal taxes, would pay 13% of federal taxes under Ryan’s plan. (Ryan’s response argues that the corporate income tax he’d eliminate is already born by consumers anyway, a contention most economists including the CBO reject, and even if true would only chip away slightly at the overall critique of his plan’s regressive nature.) Ryan’s tax plan alone would amount to the greatest shift of resources from the non-rich to the rich in the history of the United States, by far.

And that is just the beginning. Ryan would impose a series of dramatic social policy changes that would all push in the same direction. He would blow up the employer-based health care system, pushing workers into an under-regulated individual market. Instead of sharing medical risk with their fellow employees, they’d bear it entirely by themselves, which would be good for the healthy but bad for the sick. He would convert Social Security into primarily a network of individual investment accounts [my emphasis]–meaning that some workers would do well and others poorly. And he would convert Medicare into a voucher system, capping the value of each voucher at well below the rate of medical inflation, which would make the elderly bear a far greater share of medical risk.

It seemed as though Ryan’s Republican colleagues were distancing themselves from his plan, but now it has been fully legitimized by his appointment to the commission.

On the Senate side, Minority Leader Mitch McConnell has named Senators Gregg (NH), Crapo (ID) and Coburn (OK) to the commission. Gregg and Crapo are known fiscal hawks.

We await the word on Speaker Pelosi’s three appointees.Here’s what USAToday said at 3:15 this afternoon:

Pelosi spokesman Nadeam Elshami said the speaker “is discussing with a number of members who have expressed interest in serving on the commission because of their commitment to fiscal responsibility. The speaker will make those appointments when she has completed those discussions.”

Commitment to fiscal responsibility? What about commitment to social responsibility? So far, out of the 15 named to the commission, only one is a woman and none are non-white. More than half of Social Security recipients are women, and certainly more than zero of recipients are non-white. Only two of those commission members named so far are known to be strong supporters of Social Security. It looks like the fate of this hugely important and successful program is in the hands of a group of officials who hold it in disdain.

The program’s defenders, like us, have a big fight on our hands. Who will be today’s Frances Perkins to lead the battle for our side?

Pressure on Pelosi regarding her commission picks

In Uncategorized on March 11, 2010 at 2:34 pm

On Monday we sent out an email to friends of the Frances Perkins Center asking people to write to Speaker Pelosi and urge her to choose three staunch supporters of Social Security for the president’s fiscal [deficit] commission. You can read why here.

There’s some news on that front–evidently the Blue Dogs are trying to pressure her to give them a seat on the commission. In return for what? A yes vote on the healthcare bill, perhaps?

So, if you were thinking of writing to Speaker Pelosi about her choices, please do it today. There isn’t a minute to waste!

March 10, 2010 – 1:33 p.m.

Blue Dogs Push for Seat on Fiscal Commission

Leaders of the fiscally conservative House Democratic Blue Dog Coalition have asked Speaker Nancy Pelosi to appoint at least one member of their group to the president’s fiscal commission.

“As Blue Dogs, we strongly supported this commission as a necessary mechanism to tackle the fiscal challenges we face,” leaders of the 54-member group said in a letter to Pelosi. “We believe a member of the Blue Dog Coalition would bring the invaluable contributions and a critical perspective to the recommendations sent to Congress before the end of the year.”

The coalition is made up of centrist Democrats who have made deficit reduction and balanced budgets their organizing principle. Many represent districts that are prime targets for Republicans this fall, and they are bracing for GOP attacks on their party.

Pelosi has so far kept close counsel on whom she will select for the panel. There is a lot of interest among the rank-and-file in serving on the panel, aides said.

Read the entire article here.

It’s up to you and Speaker Pelosi

In Uncategorized on March 8, 2010 at 2:25 pm

It’s up to you and Speaker Pelosi to protect Social Security.

If you signed our petition against the Conrad-Gregg Deficit Commission, or attended our January 14th conference in New York, or have watched the videos of the panel discussions on our web site, you know that there is a move afoot in Washington to blame the current federal deficit on Social Security. The program’s foes are using this as an excuse to suggest raising the retirement age, changing the program from an insurance program for all to a welfare program for the indigent, or cutting benefits in other ways.

While our petition signers and thousands of other private citizens, along with more than 60 national groups, managed to defeat the Conrad-Gregg proposal, President Obama has created a similar commission through executive order. Its co-chairs are retired Republican Senator Alan Simpson, a longtime foe of Social Security who called the program’s beneficiaries “greedy geezers” back in 1995, and former Clinton Chief of Staff Erskine Bowles. You can read more about the commission on this blog.

Based on the commission’s rules, Social Security will need to have at least five strong advocates on the commission (out of the total of 18 members) to block benefit cuts and potential dismemberment of the program. Of the nine members named so far, only two, Senator Dick Durbin and SEIU President Andy Stern, are known to be staunch defenders of Social Security. Of the nine remaining to be named, six will come from the ranks of Congressional Republicans, not likely to be supporters. It’s up to House Speaker Nancy Pelosi to make her three choices from those who will fight to maintain Social Security benefits.

We have written a letter to Speaker Pelosi, urging her to choose carefully and wisely:

Dear Speaker Pelosi:

In the year of the 75th anniversary of Social Security–the centerpiece in the array of transformative social programs instituted by President Roosevelt and Labor Secretary Frances Perkins–we are concerned that this most successful government program is under attack.

Deficit hawks in Congress and inside the Beltway have found that Social Security is a fine scapegoat for the deficit, even though the program has contributed nothing to the current deficit. To the contrary, Social Security has helped to keep our country from falling into a Depression by providing income to millions of people who would otherwise be destitute. As you surely know, more than one-third of all people 65 and older rely on Social Security for 90 percent or more of their income.

The fiscal commission formed by President Obama’s executive order contains a number of known foes of Social Security. Some of them have stated, even before the commission has convened, that their goal is to reduce Social Security benefits or cut the program in some substantial way.

As House Speaker, you will choose three of the committee’s members. We urge you to select three representatives who understand and care deeply about the needs of working and retired Americans and their families, three members who will fight any efforts to raise the retirement age, lower benefits, drop benefits for children and spouses, enact an income cut-off, privatize, or in any other way diminish this great American program that has improved life for millions of Americans and been such a shining example of American values.

We know you hold these values and the program that embodies them as a sacred trust with the American people. Please ensure that your three choices will be a bulwark against the efforts of those who don’t share that trust or those values.

Respectfully yours,

Barbara Burt, Executive Director

The Frances Perkins Center

Let Speaker Pelosi know how you feel about protecting Social Security today. Please write your own letter or feel free to adapt and personalize this one. You can send it to Speaker Pelosi at

Thank you for your help. Your voice makes a difference.

AARP joins the protest against a “deficit commission”

In Legislation Today, Political world on December 11, 2009 at 2:14 pm

This note just in from Roger Hickey of America’s Future:

“The AARP just released the attached 2-page letter from Nancy LeaMond, AARP Executive VP outlining their serious concerns about a Budget Commission.  Great work by one of America’s most powerful citizen organizations.    Here’s how it ends:

Given the significance of these programs to the well-being of nearly all Americans, AARP believes a full and open debate is essential to ensuring the development of equitable solutions.  As such, we oppose legislation that would bypass or short circuit the protections afforded by regular order.

Read the entire letter here: AARP Fiscal Taskforce Letter