VSPs Get Their Way With Budget Deal: Social Security Benefits Are Cut
by Barkley Rosser (Econospeak)
VSPs Get Their Way With Budget Deal: Social Security Benefits Are Cut
All the Very Serious People are jumping up and down and cheering. We have a budget deal in the House and the debt ceiling is being raised and there will be no more artificial budget crises until after the new president is in office, hurray hurray hurray! Not only that, all the Dems in the House voted for it, with everybody gushing gratitude to John Boehner for making it possible by resigning as Speaker to turn it over to reasonable Paul Ryan once Boehner could get this deal through the House, thwarting the evil Tea Party/Freedom Caucus bomb throwers who want to have a big crisis with the government shut down and indeed bankrupt outright. We are saved!
Well, indeed there certainly are these benefits. But without much publicity, Paul Ryan is reported to be behind slipping into the deal something that he has long supported, entitlement benefit cuts, which have been heavily featured in past budgets he has proposed. The particular cut is the ending in Social Security of the ability of couples to “file and suspend” with this being replaced by “deemed filing.” File and suspend allowed someone to get Social Security benefits prior to retiring, while not having to accept the lower benefits one gets if one retires at 62 or 66. One can get the higher benefits later. This will now not be allowed, so one must accept the lower benefits if one starts getting benefits early. This has only been possible for married couples with this involving one getting spousal benefits and then their own through some semi-complicated maneuvers that have been allowed since 2001.
So, while most commentators have simply ignored this item, or focused on some other changes that have involved propping up the disability part of Social Security (which has needed some propping), this is indeed a benefit cut and one that will affect people who are on the verge of retiring (those already doing it I think are grandparented in), not non-voting Gen-Xers or millennials down the road, as would be the case for most of the proposals being made by the GOP presidential candidates (e.g. gradually raising the retirement age as has been going on for several decades thanks to the 1983 Greenspan commission). Most of those who have noted this, particularly the VSP types, have applauded it, saying this has been sort of a scam and has been available mostly to higher income people. There is something to this, but there is no doubt it is a benefit cut, and we did not see any cuts to any other programs, when in fact defense spending being allowed to rise. Even though Cruz claimed this deal would raise the deficit during the latest GOP debate, it will not. The bottom line is that Social Security benefits are being cut while DOD spending is increasing, and this was unanimously supported by Dems in the House, and probably will be also be in the Senate. What a farce.
Regarding Ryan, Paul Krugman and Dean Baker have done a good job of pointing out how off the wall the budgets he has proposed in the past have been, filled with asterisks, while he has somehow been praised over and over as this responsible Republican in the House. Of course he has national recognition due to being Romney’s VP candidate, and he has some favorable qualities, including even his desire to spend time with his family. He looks like a reasonable person until one looks too closely. However, it is a bit ironic that the VSP crowd is so enamored of him. Their fave commission was the failed Bowles-Simpson one, with the long favored VSP deal being cutting entitlement benefits in exchange for a tax increase. It should be remembered that the reason it failed (and its “report” was simply a document issued by Bowles and Simpson themselves, not the whole commission) was that some of the Republicans on the commission voted against its recommendations. One of those who did so was Paul Ryan. Why did they do so? Because it proposed tax increases. So, Paul Ryan is just great on cutting Social Security (and Medicare and Medicaid) benefits, but he is not in favor of that crucial other piece of the VSP deal, tax increases. But that has not restrained their enthusiasm for him.
Oh, and WaPo in particular has continued to look like itself earlier today in a column by Charles Lane. He mostly wastes time blaming Obama for all the failures of the VSP dreams to come true, “kicking the can” down the road, although he mostly focuses in particular on Obama’s “failure” to implement cuts to Social Security and healthcare, shame on him. Lane mentions in passing these cuts in Social Security in the budget deal, but basically dismisses them, “too little, too late.” Only near the end does he mention in passing the unwillingness of GOPsters to raise taxes, with his focus overwhelmingly on the “need” to cut those darned entitlement benefits, gosh darn it!
Original published at Econospeak
Tiny scams for individual baby boomers cut.
The big scams that need fixed are the ones that put two ($2,700M for a surveyor and a fixer) useless air defense radar blimps over DC and one of them takes off for Pennsylvania taking out power lines in its path.
Or the idea the US needs a strategic bomber to fight a first strike nuclear war.
“[The] evil Tea Party/Freedom Caucus bomb throwers… want to have a big crisis with the government shut down and indeed bankrupt outright.”
No person, company, or government has EVER gone bankrupt by not going deeper into debt. It is what I call The Default Lie — that if we don’t assume more debt we will default on the debts we have. That is a LIE. Our debt service is only about 5% of revenue, and is easily covered by monthly tax receipts.
” Our debt service is only about 5% of revenue, and is easily covered by monthly tax receipts.”
I don’t think that raising the debt ceiling has anything to do with debt service. IIRC, it has to do with paying our bills that have already been incurred.
There is no problem with increasing the debt ceiling.Yet the Tea Party/Freedom Caucus bomb throwers want to have a big crisis with the government shut down and indeed bankrupt outright, when the good faith and credit of the US is brought into doubt.
No, Joel, NOT raising the debt ceiling will NOT cause us to go bankrupt.
And no, we have NOT incurred those bills, any more than promising your family a vacation actually incurs the cost of that vacation.
“And no, we have NOT incurred those bills, any more than promising your family a vacation actually incurs the cost of that vacation.”
In what sense is federal legislation like a promise of a family vacation? False analogy much?
“Raising the debt ceiling allows Congress to pay for things that it has already decided to spend money on. Around one-third of federal spending is discretionary, for which Congress approves annual spending bills with specific instructions about how to spend the money. The other two-thirds is mandatory, meaning money is spent on certain programs established by existing law, such as Medicare, Medicaid and Social Security.
The debt ceiling has become a difficult vote for lawmakers because it’s viewed as one way to force fiscal restraint. If your bank doesn’t increase your credit card limit, the thinking goes, you’re going to have to cut back on spending.
Many economists and investors say that’s a flawed analogy because Congress has already voted to approve the spending. In that sense, refusing to raise the debt limit is a bit like dining and dashing at a restaurant. Congress knew the bill was coming when it ordered the meal. Refusing to raise the debt limit is like running out of the restaurant before paying the check.”
“In what sense is federal legislation like a promise of a family vacation?”
Simple, we have neither paid for nor received the goods or services, so we stop or reduce the orders. We made promises to give people money that we don’t have, we don’t give it to them.
Sorry, honey, we have to cut our vacation by 20% this year — Minneapolis instead of Miami.
Sorry, folks, we have to cut your welfare by 20% this year.
See how that works?
Not the same.
“See how that works?”
This appears to be a new and unfamiliar use of the word “works.”
No, its like arriving at a restaurant and realizing your credit card is maxed out and then going home to eat leftovers, rather than calling your credit card company and begging for a higher credit limit so you can enjoy a meal out that you never intend to pay for.
Or maybe you think someday Congress will actually retire some of the debt it has run up? As CCR sang it, Someday never comes!
And the question is:
What does Monetary Sovereignty mean? My mistake. You are not asking that question. You do not understand the US is a Monetary Sovereignty and can issue, designate, and retire legal tender. The US fully intends to pay its debt.
I see you’re another one of the simpletons who believes that a nation with a GDP in the tens of trillions of dollars and a sovereign currency is like a family.
Analogies are funny things. Both the national debt and family debt are monetized in dollars. After that, the similarities end.
Ad hominem arguments are invalid, Michael.
Care to try again?
Not an ad hominem, Michael displays a logic fallacy (or two) none the less.
More like a mix of strawman (exaggerating Joel) or begging the question (Presuming the US has the same rules as a family budget).
Regarding raising the debt ceiling and the restaurant analogy, two different cases have been put forward. One is you realize your credit card is maxed out, so you stay home and eat leftovers (or in the travel example, you go to Minneapolis rather than Miami, assuming you are a lot closer to the former than the latter). The second case is you go to the restaurant, order food, eat it, and then leave the restaurant without paying.
The latter is what is involved in not raising the debt ceiling. The problem arrives when bills arrive that indeed have been not only legislated, but the work has been done or the requirements have been fulfilled. This includes everything from contracts such as a company building stuff for DOD to old people expecting checks they are eligible for, with none of these being paid. It is walking out of the restaurant without paying after having the dinner that you ordered.
Comparing a change in vacation plans to a reduction in welfare payments, shows a gross misunderstanding of either vacations, or living on welfare, or perhaps both.
“I see you’re another one of the simpletons….”
Sounds like an ad hominem to me, Ilsm.
“The problem arrives when bills arrive that indeed have been not only legislated, but the work has been done or the requirements have been fulfilled. This includes everything from contracts such as a company building stuff for DOD to old people expecting checks they are eligible for, with none of these being paid. It is walking out of the restaurant without paying after having the dinner that you ordered.”
Those are two entirely different things. You first example, a company’s building stuff for DoD, is after the service or product has been delivered. The second, old people’s expecting checks, is simply a non-binding promise, like promising the family a vacation and a new car.
It is true that receiving transfers is not quite the same as being paid for delivering a product. But in terms of the law there really is no difference. The law says that contracts mude be paid for when the conditions of it are fulfilled, and the law also says that a transfer recipient must be paid at the right time when they fulfill the legally defined characteristics for them to be paid.
The latter is not equivalent to saying, “Oh, we had better not go to the restaurant and order dinner,” because legilstaing that the transfer recipients are to be paid under such and such conditions is the equivalent of ordering dinner.
THIS Congress did not order that dinner.
And that is a key part of the problem. ALL spending should be approved by the Congress in office when the spending is done. ALL spending should be “discretionary”, not “mandatory.”
Thus, since this Congress did not authorize the spending, this Congress is within its authority to say that we will not go further into debt for it.
“Thus, since this Congress did not authorize the spending, this Congress is within its authority to say that we will not go further into debt for it.”
I’m sorry, but this is the dangerous advice of a simpleton. Who would do business with the US government if the next Congress was free to repudiate the contracts of the previous Congress? That is folly.
Does this sound familiar with Congress saying the same about a treaty negotiated by a president??
The shark has just been jumped!
“Does this sound familiar with Congress saying the same about a treaty negotiated by a president?? ”
Yes. Only when Sen. Tom Cotton stated publicly that a treaty then under negotiation could be repudiated by the next administration, it moved from merely being the idle ruminations of a simpleton to treasonous territory.
“Who would do business with the US government if the next Congress was free to repudiate the contracts of the previous Congress?”
“Can one generation bind another and all others in succession
forever? I think not. The Creator has made the earth for the
living, not for the dead. Rights and powers can only belong to
persons, not to things, not to mere matter unendowed with will.”
–Thomas Jefferson to John Cartwright, 1824.
The government cancels contracts all the time. The CRS even has a paper on the practice: https://www.fas.org/sgp/crs/misc/R43055.pdf
““Can one generation bind another and all others in succession
forever? I think not.”
Warren, Congress meets every year, not once a generation.
Contracts don’t last forever. Nobody is talking about contracts that last forever.
I’m sure Jefferson did not have in mind contracts between the US government and other parties for the delivery of specific goods and services when he wrote those words. I’m sure Jefferson was not presenting a justification for Congress to breach contracts when he wrote those words.
Smarter trolls, please.
“The government cancels contracts all the time. ”
Click the link. Always click the link.
Your link does not document that the government cancels contracts all the time.
Moreover, I didn’t say the government couldn’t cancel contracts. I questioned whether businesses would do business with the US government when the behavior of Congress brought into doubt the good faith and credit of the US government. Can you spot the difference?
The “good faith and credit” of the government would not be brought into doubt by our not going further into debt. I would say that the U.S. government’s unscrupulous borrowing brings into doubt its credit.