Tag Archives: social-security

Report: Trump Team Wants to Slash Social Security, Medicare, Medicaid, and Everything Else Except Defense

Mother Jones

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Here’s the latest news on squeezing our bloated government down to size:

Donald Trump is ready to take an ax to government spending. Staffers for the Trump transition team have been meeting with career staff at the White House ahead of Friday’s presidential inauguration to outline their plans for shrinking the federal bureaucracy, The Hill has learned….Overall, the blueprint being used by Trump’s team would reduce federal spending by $10.5 trillion over 10 years.

This is terrifying, of course, but it’s also puzzling. $10.5 trillion over ten years? That’s a trillion dollars a year. If you eliminated the domestic discretionary budget entirely, you’d only save half a trillion bucks. So how do they do it?

Well, we’re told that the proposed budget cuts “hew closely” to a recent Heritage Foundation report, so I went and took a look. The answer, of course, is that the only way to cut that kind of money is to take a meat axe to everything, including Social Security and Medicare. Here’s a chart:

Let’s break this down. How does Heritage manage these whopping cuts? According to a modest little footnote in the appendix on page 165, here’s the answer:

Medicaid: No details. There will be a spending cap, and all mandatory spending will somehow be cut to fit.

Medicare: Increase eligibility age, add a “temporary” premium for Part A, increase premiums for Parts B and D, phase out subsidies for seniors with “significant” income, “reform” cost-sharing arrangements, transition to vouchers premium support starting in 2021.

Domestic Discretionary: Magic spending cap.

Social Security: Increase retirement age, index retirement age so it keeps going up, reduce benefits by adopting chained CPI for inflation adjustments, and “transition the payment to a flat, anti-poverty benefit focused on individuals who need it most,” whatever that means.

In fairness, there’s a bit more detail on the domestic discretionary side. Actually, a mountain of detail: over the course of 140 pages, Heritage recommends cuts to over a hundred programs. These include catfish programs, the Ex-Im bank, climate programs, Amtrak, the National Endowment for the Arts, etc. etc. Cutting all this stuff might be harder than they expect, since some senator somewhere probably thinks very highly of the USDA Catfish Inspection Program, but I guess they can try. In any case, about 80 percent of the savings come from a small number of programs:

Energy subsidies: $28 billion
Land and Water Conservation Fund: $20 billion
Various HHS/HUD jobs program: $10 billion
Davis-Bacon: $9 billion
Federal Transit Administration: $4 billion
Nine climate programs: $4 billion
Military health care: $4 billion

So there you have it. Slash a bunch of hippy-dippy stuff (clean energy, water conservation, transit, climate); some employment stuff (jobs programs, Davis-Bacon); and military health care spending. Then take a meat axe to Medicare, Medicaid, Social Security, and everything else, and you’re done! Piece of cake.

Perhaps someone should start asking our president-elect if he’s on board with this stuff.

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Report: Trump Team Wants to Slash Social Security, Medicare, Medicaid, and Everything Else Except Defense

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Sam Johnson Wants to Cut Your Social Security Benefits By a Third

Mother Jones

For reasons that are a little unclear, Rep. Sam Johnson (R-Texas) has decided to introduce a shiny new plan to reform Social Security when Congress meets next year. Johnson’s idea of “reform” is to slash everyone’s benefits, so this idea seems slightly suicidal—not to mention pointless, since Donald Trump campaigned very loudly on a promise not to touch anyone’s Social Security.

But Johnson is a very conservative guy, and maybe he just wants to lay down a marker. So what would his plan do? It has 15 components, all of them crammed full of Social Security’s usual alphabet soup of acronyms—AWI, PIA, AIME, MAGI, bend points, etc.—but it turns out that only six of them are big enough to be meaningful. Here is the Social Security actuary’s estimate of how much money they’d save:

Basically, there are four big proposals that would cut benefits by 5.76 percent of payroll, and two proposals that would increase benefits by 1.37 percent of payroll. I assure you that this chart is far simpler to understand than the actual analysis, but it probably still leaves you a little baffled. Whose benefits would be cut? And by how much? I’m here to help:

Roughly speaking, people with extremely low average earnings over their working lives would see their benefits rise. That’s good! Unfortunately, everyone with an average lifetime income over $22,000 would see their benefits slashed—in some cases by a lot. An income of $60,000 is not exactly a king’s ransom, but nonetheless Johnson would cut benefits for these folks by a third.

As usual with these plans, a lot of its provisions are phased in gradually over time. But unlike most of these plans, some of them start to kick in right away. This means that even people who are already retired would suffer benefit cuts. For example, Johnson’s plan reduces the annual cost-of-living increase—and eliminates it entirely for anyone earning over $85,000—beginning in 2018.

Anyway, since I tortured myself by reading this plan, I figured I should torture all the rest of you by blogging about it. Happy Holidays!

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Sam Johnson Wants to Cut Your Social Security Benefits By a Third

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The House GOP Just Revealed Its Plan To Cut Social Security

Mother Jones

Late Thursday, Congressman Sam Johnson (R-TX), the Chairman of the House Social Security subcommittee, introduced a bill to “reform” (i.e. cut) Social Security.

Josh Marshall warns, “Republicans apparently aren’t going to be satisfied with phasing out Medicare. They’re going to try to pass huge cuts to Social Security this year too. Not Bush-style partial phaseout but just big, big cuts. And you’re out of luck even if you’re a current beneficiary. “

The Washington Examiner describes it thusly:

The bill…would reduce costs by changing the benefits formula to reduce payments progressively for high earners. It would also gradually raise the full retirement age from 67 to 69 for people who are today 49 or younger. Lastly, it would change the inflation metric used to calculate benefits to one that shows lower inflation, essentially slowing the growth in benefits, and eliminate cost of living adjustments for high earners.

You can read the full bill below. Democrats are not pleased.

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The House GOP Just Revealed Its Plan To Cut Social Security

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My Social Security Reform Plan: One-Third-One-Third-One-Third

Mother Jones

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Atrios says that 401(k) retirement plans have been a disaster:

The current system has failed, and the exciting plan to “fix” the failed system is run the same experiment, with minor tweaks, over for another 40 years and see how that works. Of course if you just grab your trusty envelope back and do The Math, the pittance people will save in these exciting new plans will be just that, a pittance.

This is a common view on the left, usually delivered with no evidence because it’s considered so obvious that no evidence is needed. On the occasions when there is evidence, it’s usually something about the stock market being in bad shape circa 2010.

So let’s take a look at the evidence. I’ve put all of this up before, but not in one place. So let’s collect it. Here’s chart #1:

Retirement-age folks have done better than any other age group since 1974, and way better since 2000. So far so good. Here’s chart #2:

This is Social Security’s projection of median elderly income over the next 25 years. It looks pretty good too. There’s no evident crisis in these numbers. And this is not from some think tank with an axe to grind. It’s from the Social Security Administration’s MINT projection, which is probably the most comprehensive look we have at all sources of income among retired folks. Here’s chart #3:

This comes from the Center for Retirement Research, a decidedly liberal outfit. They’ve been a longtime proponent of the view that 401(k) plans are worse than old-style defined benefit pensions, but last year they revisited this question using better data. What they found is that for the past 30 years, pension wealth has stayed steady even as 401(k) plans have become more popular and DB plans have gone the way of the dodo (except in the public sector, where they’re still common). In other words 401(k)s aren’t a failure.

My final bit of data, sadly, doesn’t lend itself to chart format, so we shall have to use words instead. In 2006, Congress passed the Pension Protection Act, something that most critics of 401(k) plans seem to ignore—or perhaps are blissfully unaware of. In the past 10 years, it’s accomplished the following:

Allowed companies to automatically enroll workers (subject to an opt-out), thus increasing the number of people with 401(k)s.
Made 401(k)s more accessible to small businesses.
Increased 401(k) participation considerably among young workers and low-income workers, who need them the most.
Encouraged the use of lifecycle funds, the best type for retirement plans.

Put all these things together, and there’s very little evidence for any kind of broad retirement crisis. Retirement readiness in America seems to be about the same as it’s always been.

Does that mean everything is hunky-dory? Of course not. 401(k) fees are still too high, something that I’d dearly love to see Hillary Clinton address with new federal regulation. It’s probably also true that old-style pensions were a little more generous for low-income workers than 401(k)s, though the evidence on this score is fuzzy. What’s more, although retirement readiness is no worse than it’s been in the past, it’s not really any better either. In particular, folks at the bottom of the income ladder still don’t participate much in 401(k) programs and rely entirely on Social Security, which is pretty stingy for low earners.

My answer to this is Kevin’s One-Third-One-Third plan. That is, Social Security payments for the bottom third should be increased by a third. This would make a huge difference to the lowest-income workers, but at a pretty reasonable price. My back-of-the-envelope chicken scratchings suggest it would cost about $20-30 billion. That’s politically within reason.

There’s one other change I’d like to see, but I’ll leave that for another time. In a nutshell, there really doesn’t appear to be any kind of broad-based retirement crisis. 401(k) plans have performed decently and are likely to perform even better in the future. Our biggest retirement problem is with the lowest-income workers, and that could be fixed at a pretty modest cost if we could only muster the political will to do it.

UPDATE: I really wanted my plan to be called “One-Third-One-Third-One-Third,” but I couldn’t think of a third “One-Third.” However, @Noman suggested raising the Social Security earnings cap to pay for my plan, and it turns out that an increase in the cap of one-third would raise roughly $30 billion. Isn’t it great when a plan comes together?

So now it’s the One-Third-One-Third-One-Third plan: payments to the bottom third should be boosted one-third by raising the earnings cap one-third. Take that, Herman Cain.

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My Social Security Reform Plan: One-Third-One-Third-One-Third

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Raw Data: How Does Social Security Compare to Retirement Programs in Other Countries?

Mother Jones

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Earlier today I wrote about retirement income in the United States, and that got me curious about how we compare to other countries. The obvious source for this is an international organization that does its best to make apples-to-apples comparisons, so I headed to the website of the OECD, the “rich countries club.” (I don’t really care how we compare to Chad. I want to know how we compare to peer countries like France and Japan.)

This in turn led me to “Pensions at a Glance,” which turned out to be an enormous misnomer: the 2015 edition is 374 pages long. I haven’t read the whole thing, of course, but I did find plenty of interesting stuff. I’m going to highlight one chart today, and maybe I’ll do others throughout the week.

So how do we compare? The answer, unsurprisingly, is: It’s complicated. There are lots of ways of comparing retirement income, and they produce different results. But there’s a single broad measure that gives a rough idea of how generous each country is: the percentage of GDP spent on pension programs. In the United States, that’s Social Security (public) plus 401(k)s, IRAs, etc. (private). Other countries give their programs different names, but they all employ a combination of public and private spending.

By itself, though, that’s not enough. Countries with more elderly people are obviously going to spend more. So you want to adjust the GDP number by how many people are retired. The OECD report doesn’t do this directly, but it does provide the old-age dependency ratio for each country, which is a good proxy. The higher the number, the more retired people a country has.

So all we have to do is divide the GDP number by the OADR number for each country. This provides a “retirement index” that indicates how generous each country’s retirement is. Here it is for public pensions only:

And here it is for all pension income, both public and private:

As with many other things, the United States relies more heavily on private spending than most rich countries. If you compare Social Security to public pensions in other countries, we’re about average. If you compare all pension income, our retirees are better off than nearly everywhere else.

Now, these are only average numbers. They don’t tell us anything about how rich retirees compare to poor ones. Social Security, for example, tends to favor poorer retirees, while private pensions favor richer ones, and it’s not easy to combine them to get a comprehensive distribution of retirement benefits. However, the OECD report has some other charts that come close to doing this, and I’ll see if I can extract one for tomorrow. In the meantime, make what you will of this raw data.

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Raw Data: How Does Social Security Compare to Retirement Programs in Other Countries?

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Elizabeth Warren Slams Donald Trump’s Lies About Being a Business Success

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Fresh off of her delightful Twitter takedown listing all the ways she believes Donald Trump is a “loser,” Sen. Elizabeth Warren appeared on the Late Show on Wednesday to shred the Republican front-runner’s self-touted reputation as a successful businessman.

“The truth is that he inherited a fortune from his father, he kept it going by cheating and defrauding people, and then he takes his creditors through Chapter 11,” Warren told host Stephen Colbert.

“We have an economy that is in real trouble,” she added. “But when the economy is in this kind of trouble, calling on Donald Trump for help is like if your house is on fire, calling an arsonist to come help out.”

In contrast, the Massachusetts senator said the Democratic presidential candidates are discussing real issues that actually matter to Americans.

“The Democrats are doing exactly what we should be doing,” she said. “We’re out talking about the issues that affect hardworking families: student loans, Social Security, more cops on Wall Street, trade.”

She concluded by encouraging Democrats to vote for whoever picks up the party’s nomination, whether it be Bernie Sanders or Hillary Clinton.

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Elizabeth Warren Slams Donald Trump’s Lies About Being a Business Success

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Donald Trump Is Just a Garden Variety Right-Winger These Days

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In a blog post about an entirely different subject, Jay Nordlinger says this about Donald Trump:

I am reminded of how the Left and Right can blend — although it’s pretty much impossible to locate Trump politically. Is he Left or Right or in between?

This has long been a common observation, but is it really true anymore? A few months ago, for example, I wrote that Trump didn’t favor a flat tax. But that’s true of most Republicans. And now that Trump has actually released a tax plan, we know his tax notions are entirely orthodox these days. Ditto for Planned Parenthood, which Trump is now on board with defunding completely. Ditto again for his short-lived support for an assault weapons ban.

So what’s left of Trump’s alleged populism? I count one thing:

He doesn’t want to cut Social Security and Medicare.

Is there anything else left? He’s not stridently anti-gay, but he’s opposed to gay marriage nonetheless. Sort of Jeb Bush-ish. He refuses to say that he still supports affirmative action. His foreign policy is…um…a little hard to get a handle on, but it sure can’t be described as liberal these days. He claims to have opposed the Iraq War, but that’s just a lie—and ten years in the past anyway. He sometimes sounds a populist note on trade, but his real position is that he’s smarter than all the dimwits in Washington and could negotiate better terms than they do. He doesn’t seem to harbor any real leftish views on trade.

So really, his support for Social Security and Medicare is pretty much it for non-conservative heresies—and even there his position remains unclear. Does he mean that he doesn’t want to cut Social Security and Medicare at all, or does he mean he doesn’t want to cut them for people currently in the system? After all, the standard Republican position already protects Social Security and Medicare for anyone over age 55. But since Trump has declined to provide any further detail, we don’t really know what his position is.

Trump used to have a few more quasi-liberal positions, but the campaign has sanded them all down. Today, he’s just a really loud right-winger who understands that bashing Social Security and Medicare doesn’t win any votes. That’s it.

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Donald Trump Is Just a Garden Variety Right-Winger These Days

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Elizabeth Warren Wants to Give Seniors a Raise

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Elizabeth Warren wants to give seniors the same pay raise enjoyed by CEOs—and to raise taxes on some executive pay in the process. The liberal senator from Massachusetts is introducing a bill on Thursday to boost Social Security payments for 2016 with a one-time bump in benefits.

Social Security payments—for both retirees and people receiving disability insurance—are pegged to inflation, with the government calculating a cost-of-living adjustment, the percentage by which payments increase each year. But in recent years, with the economy still puttering only slowly upward following the recession, inflation has stalled, which has left Social Security recipients with no or minimal annual increases. 2016 is set to be only the third year since 1975 when Social Security won’t get any cost-of-living increase, joining 2010 and 2011.

Warren’s bill, dubbed the SAVE Act (short for Seniors and Veterans Emergency Benefits Act), would offer a one-time 3.9 percent increase. Why such a specific percentage? Warren points to a study showing that pay for CEOs at the 350 largest companies increased by 3.9 percent in 2015. Warren’s bill would pay for this one-time benefit hike by eliminating a corporate tax exemption for performance pay packages—which would also extend the solvency of the entire Social Security program.

As Mother Jones‘s Pema Levy documented earlier this year, Warren has focused on Social Security since coming to the Senate—not just defending the current program against cuts, but fighting to expand benefits. Her proposal comes at a time when much of the political debate over entitlements has pulled in the opposite direction. New House Speaker Paul Ryan, whose earlier proposals would have privatized parts of Social Security, is promising to explore changes to entitlements, and the Republican presidential candidates have debated lowering Social Security benefits. But Warren may be rallying Democrats to her side. Earlier this year, during votes on amendments to a budget, Warren introduced legislation to expand benefits that failed to pass but won the backing of all but two Democratic senators.

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Elizabeth Warren Wants to Give Seniors a Raise

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Reports of Entitlements’ Death Have Been Greatly Exaggerated

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When news of a bipartisan budget deal began to emerge Monday night, progressives immediately worried that President Obama and the Democrats in Congress would allow cuts to entitlement programs in order to strike a deal with Republicans. “The White House, every Democrat running for president, and every Democrat in Congress should make clear that any deal that cuts Social Security, Medicare, or Medicaid benefits would be unacceptable policy—and politically, would be wildly unpopular with voters,” the Progressive Change Campaign Committee said in a statement. House Speaker John Boehner didn’t do much to allay their fears, saying on Tuesday that the deal “is the first significant reform to Social Security since 1983.”

But budget experts say these concerns are unfounded. In fact, the deal actually shores up the finances of an important entitlement program without hurting people who have already earned their benefits.

Released Monday night, the 144-page budget deal would fund the government and raise the debt ceiling for two years, punting any showdown to 2017, after Obama has left the White House. The bill also lifts the tight federal spending caps imposed by the 2011 sequestration law.

Even though the deal saves money by making small cuts to Medicare and Social Security disability insurance (the main part of the program beyond the standard retirement benefits), the budget mostly tinkers around the edges. “The agreement doesn’t have any changes in disability eligibility standards,” says Paul Van de Water, a senior fellow at the progressive Center on Budget and Policy Priorities. “It doesn’t change the level of benefits. The small amount of savings are achieved through program integrity measures, which are just efforts to make sure the Social Security Administration is doing the best possible job of who’s actually eligible for benefits.” These sorts of technocratic tinkers are simple measures to ensure the integrity of the programs’ goals, something pushed by both conservatives and progressives.

Primarily, the deal shuts down a pilot program that allows 20 states to dish out benefits without requiring a prior medical sign-off. “To a very small degree, that would reduce the number of people awarded benefits, well less than a percent of the number of people getting benefits,” Van de Water says. “This is designed to produce better decisions, not to make the program more restrictive or less generous.” By awarding benefits slightly less frequently, the deal lengthens the solvency of the disability benefits program.

For Medicare, the deal cuts costs by reducing the amount the government spends on payment rates for providers. When it comes to recipients, the deal stabilizes premiums for a group of seniors who were due for a large rate spike in 2016. Because Social Security isn’t scheduled to get a cost-of-living bump this year, premium rates won’t rise for most people who receive Medicare. For the 30 percent of Medicare Part B recipients for whom rates would have jumped 52 percent next year, the budget deal keeps the current rates in place. But everything evens out for beneficiaries in the end, as the people who benefit this year will have to pay higher premiums down the road. “It’s a good way of spreading out the costs and meaning people aren’t hit by a huge increase this year, and they can budget for it,” Van der Water says. “But it’s not a net benefit over time. It’s simply smoothing things out.”

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Reports of Entitlements’ Death Have Been Greatly Exaggerated

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Jeb Bush Wants America to "Phase Out" Medicare

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On Wednesday, Republican presidential candidate Jeb Bush told a crowd in New Hampshire that Americans need to consider ways to “phase out” Medicare.

The former Florida governor, who was speaking at an event hosted by the Koch-brothers supported group Americans for Prosperity, also suggested “people understand” and agree with him on the issue.

“They know, and I think a lot of people recognize that we need to make sure we fulfill the commitment to people that have already received the benefits, that are receiving the benefits,” Bush said. “But that we need to figure out a way to phase out this program for others and move to a new system that allows them to have something—because they’re not going to have anything.”

Bush’s comments echo the views of former president and brother George W. Bush, who pushed to severely slash Social Security with a controversial reform plan back in 2005. That effort proved overwhelmingly unpopular and failed.

A day before Bush’s Medicare comments, a new report showing the program’s costs to be significantly under what had been previously projected nearly ten years ago, as our own Kevin Drum noted:

Beyond that, it’s always foolish to assume that costs will rise forever just because they have in the past. Medicare is a political program, and at some point the public will decide that it’s not willing to fund it at higher levels. It’s not as if it’s on autopilot, after all. We live in a democracy, and after lots of yelling and fighting, we’ll eventually do something about rising medical costs if we simply don’t think the additional spending is worth it.

Despite the resulting failure of his brother’s plan to do away with Social Security, Bush said he believes that his plan to gradually eliminate Medicare will prove to be a “winning argument if we take it directly to people.”

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Jeb Bush Wants America to "Phase Out" Medicare

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