Obama and social safety nets
Obama not standing up to radical right attempting to undo America’s Social Insurance ProgramObama seemed to get a spine for a brief time around the State of the Union address. But he just can’t seem to maintain a strong progressive position–too easily swayed by the Wall Street bunch that run his Treasury or just not understanding what is required to keep his base voting for him. If he treats Social Security–which doesn’t have anything to do with the deficit–as one of the cards he can “trade” to the right-wing Republican crowd for some kind of a “grand deal” (of undefined necessity), he will destroy the gains of Roosevelt’s New Deal for petty concessions from the entrenched GOP that intends to dismantle the New Deal.
Obama has been threatening to include chained CPI as one of his own budget recommendations. This is foolhardy. For those who depend on Social Security, which they have paid into all their working lives, reducing benefits–which is what moving to chained CPI does–is nothing short of betrayal.
Robert Reich is urging people to sign onto a MoveOn petition to Obama to make clear that we understand the importance of holding firm against the radical right’s attempt to dismantle the New Deal. I’ve reproduced the letter and link, below.
From: Robert Reich
Date: Thu, Apr 4, 2013 at 11:10 AM
Subject: Mr. President, don’t hurt seniors with your Chained CPI
Social Security is not driving the deficit, therefore it should not be part of reforms aimed at cutting the deficit. The chained CPI, deceptively portrayed as a reasonable cost of living adjustment, is a cut to Social Security benefits that would hurt seniors.
There are several sensible reforms to Social Security that should be considered to help make it sustainable, including lifting the ceiling on income subject to Social Security from $113,700 to $200,000 or more, as well as instituting a 1% raise in the payroll tax rate, a rate that hasn’t changed in over 20 years.
Both of these reforms would go a long way toward protecting the long-term health of Social Security, but neither should not be conflated with efforts to reduce the federal budget deficit.
President Obama needs to stand by his Democratic principles and fight to protect Social Security benefits.
That’s why I created a petition on SignOn.org to President Barack Obama, which says:
Mr. President, the chained CPI is a cut to Social Security benefits that would hurt seniors—it’s an idea not befitting a Democratic president. If you want to reform Social Security, make the wealthy pay their fair share by lifting the cap on income subject to Social Security taxes.
Click here to add your name to this petition, and then pass it along to your friends.
Thanks!
–Robert Reich, former U.S. Secretary of Labor
This petition was created on SignOn.org, the progressive, nonprofit petition site. SignOn.org is sponsored by MoveOn Civic Action, which is not responsible for the contents of this or other petitions posted on the site. Robert Reich, former U.S. Secretary of Labor didn’t pay us to send this email—we never rent or sell the MoveOn.org list.
I cannot understand how anyone thinks a senior on SS can get by on less than the roughly $1000 a month or less that it currently pays.
So what happens when they can’t live independently anymore? Let me propose the Perverse Law of Service Cost Cutting — “when you cut social service payments, social service costs will rise.”
Can seniors move in with the kids? Not enough of them. So what happens instead? After a period of spending down all their resources and losing all their possessions, skipping meds and trying other cost cutting that will make them more frail or ill, they will, I think, end up moving from Medicare plus SS to Medical Assistance in a care home, a portmanteau deal that takes all but a tiny fraction of their SS income in exchange for long term care in assisted or full care housing.
What does MA cost? Well, my mother’s MA care cost roughly $1400 a week, $73,000 a year. The SS portion of this was about $10,000.
So, in exchange for cuts to SS, seniors will be stripped of all their possessions and shifted wholesale into institutions costing taxpayers five times what they were paying before.
Mind-boggling.
“The poverty of our century is unlike any others. It is not as poverty was before the result of natural scarcity, but of a set of priorities imposed upon the rest of the world by the rich. Consequently the modern poor are not pitied but writtn off as trash”. John Berger
The serious plutocrat is the same as the slavocrat!
Obama is pandering to Plutocrats.
Hey ‘middle aisle’ Dems, no more support from me!
This is totally beyond me, and I do not get Obama at all. What does Obama have to gain from this? IMO he has zero to lose if he stands up to this. Cutting SS benefits will cut future growth. It is austerity, and anything from Europe. Austerity will increase deficits, and make us poorer.
We need to reduce the deficit. To do so we must make cuts to programs driving the deficit. Social Security is not driving the deficit. Therefore, we should make cuts to Social Security.
What I don’t get is how many in the media are in love with the C-CPI, even though the main constituencies of both parties are not because it is both a tax increase on the low and middle income earners, and a reduction to future benefits. The alternative solution (assuming that we need to be worried about deficit reduction via fixing SS) would be to lift the cap on the SS tax, which is highly regressive for the top earners. In other words, rather than tax the wealthy, we are going to tax the low and middle class, while cutting benefits for seniors and others.
anirrationalviewoftheirrational, we do not need to reduce the deficit right now, and doing so will increase it. Look to Europe for the results – massive unemployment.
The deficit adds to our private savings, and the government is the monopoly providers of dollar denominated financial assets to the economy. Paying off the debt or making debt payments is simply a matter of debiting securities accounts at the Fed and crediting reserve accounts at the Fed.
Lastly SS is totally solvent, and we do not need to reduce aggregate demand by lifting the cap and reducing people’s pay during difficult economic times – unless you want higher unemployment, which will further hurt SS payroll tax collections.
Chained CPI ought to be called cascading CPI.
That’s because when we give people less money because they have substituted cheaper goods in their purchases — then — they substitute EVEN cheaper goods — then — we give them EVEN less money — then — they substitute EVEN cheaper goods, etc., etc.
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Reminds me of the Republican plan — “hedonics”; should have been called “headonics” — to give Social Security retirees less money to eat because they were getting a better deal every year on computers and such — same overall value in their stipend (also same hidden value in the taxpayers’ left over money, so no real unfairness).
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Want to get more money flowing into Social Security? Get the labor market straightened out.
Double the minimum wage for starters — instant flood of funding. Doubling the minimum would boost half the paychecks — doubling the minimum reaches today’s median pay.
Realistic? Actually we would have to *triple* today’s minimum to catch up to *doubling* of productivity since 1968. (Today’s minimum is $1.25/.hr below 1956’s minimum!)
Elizabeth Warren: Minimum Wage Would Be $22 An Hour If It Had Kept Up With Productivity
Only 3.6% inflation from doubling the minimum: $70 million employees X $8,000 average raise = $560 billion. Divide that by $15.8 trillion = 3.6%.
If we instead cut all wages from the median down in half would that help McDonald’s and Wal-Mart? No; and it is my contention that that is what we have effectively done just that by inaction (both minimum wage and lost unions) — so doubling would only repair the damage to Mac and Wal.
Realistic? Yes; because worker/consumers will buy a lot more fast food and retail goods at $30,000 then at $15,000 — but not a lot more at $40,000 then $30,000 so no claim the boom to Mac and Wal-Mart will go up forever with increases in the minimum wage. In the first round though employees (consumers) of half the country will get raises disproportionate to what their employers will have to raise prices to pass through.
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Also, no more gangs because people will be able to make an honest living. Half of Chicago’s gang age minority youth ( 100,000 ) are in gangs because they wont work for jobs that have been effectively outsourced to Mexico and beyond.
Also, ghetto schools will begin to work — schools don’t work now because students (and teachers!) literally expect nothing sufficiently remunerative waiting for them in America’s labor “sinkhole” when they graduate — as reported by Berkley professor Martin Sanchez Jankowski who spent nine years on the ground in five poor New York and Los Angeles neighborhood (and previously spent ten years studying gangs).
Islands in the street: Gangs and American Urban Society
Cracks in the Pavement: Social Change and Resilience in Poor Neighborhoods
Even pulling half of us out of the pay and benefits sinkhole will not restore normal bargaining power and political muscle. Even those above 90 percentile — whose pay has kept up with productivity — lack political punch. Only re-unionizing will accomplish that — and the only stable, fair and balanced labor setup, tested beginning in continental Europe and then around the world is legally mandated, sector-wide labor agreements. Be nice if our economic doctors would ever even discuss out loud the only fundamental cure for 140 million American patients.
Productivity doubles every two generations — twice as fast as population — so why any problem funding Social Security? In the instant case it is because wages haven’t nearly kept up: the (American) median stagnated over the last two generations (!), by early 2007 the minimum was almost cut in half.
IT’S THE LABOR MARKET (SINKHOLE), STUPID!
“mmcosker said…
anirrationalviewoftheirrational, we do not need to reduce the deficit right now, and doing so will increase it. Look to Europe for the results – massive unemployment.”
I agree, I was making an assumption for the sake of argument on how stupid the approach to the deficit via the SS is.
I cannot imagine what is so all-critical about dropping the deficit by $2 trillion over 10 years during which the economy will produce something like $200 trillion.
What deficit crisis? — saity Paul Krugman
http://www.nytimes.com/2012/12/17/opinion/krugman-that-terrible-trillion.html
“Right now, given reasonable estimates of likely future growth and inflation, we would have a stable or declining ratio of debt to G.D.P. even if we had a $400 billion deficit.”
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“If you do the math, it seems likely that full economic recovery would raise revenue by at least $450 billion.”
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“A reasonable estimate is that economic recovery would reduce federal spending on such programs by at least $150 billion.”
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“Which brings us back to ONE TRILLION DOLLARS.”
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Oh, incidentally, Boehner just turned the President down flat. NancyO
http://editors.talkingpointsmemo.com/archives/2013/04/boehner_not_good_enough.php?ref=fpblg
Yep Nancy,
I think the hippies have this one right. Boehner et al are going to run again on how it’s the Dem’s taking your SS and Medicare.
Either party, they all win. Dem’s are good with Wall St, Wall St gets the money and the Repubs get to keep their social anti tax issues while being the defenders of freedom and your pocket book/wallet.
ordinarily i’d argue with Reich about lifting the cap.
but his proposal is close enough to sane that i am going to sign his petition.
thing is you CAN raise the cap as much as he suggests IF you raise the benefits to “match.” According to a CBO report this would still cut the “actuarial shortfall” about a third.
raising the payroll tax 1% (combined?) would cut the shortfall about another quarter. But that tax raise will only cost the workers about 20 cents per week per year if phased in over the time needed to avoid an actual shortfall.
So why wouldn’t you raise the tax 80 cents per week per year and avoid the shortfall altogether and defer the “raising the cap” argument until you have had time to explain to the “near rich” that increasing their guaranteed SS benefit by 15 k… from current 25 k to 40 k, would be worth the extra 6k per year in “tax.”
Oh? you wouldn’t do this because no one understand the math. the “it’s just math” all the pundits love to say, as if they understood a damn thing about math, much less “the” math.