Biden vows to save Social Security and Medicare in face of shortfalls
Dale Coberly; USA Today Report of Biden Speech not as bad as it might have been. It still amounts to a lie by Misdirection. On September 27, USA TODAY published an article which AB suggested I review.
“Biden vows to save Social Security and Medicare in face of shortfalls, but offers few details,” Maureen Groppe, USA Today
It has been said that looking at the face of the devil is one of the chief torments of hell. That is the way I feel when I look at the so many lying and ignorant articles about Social Security.
This is going to be my belated review of the USA TODAY article, much shortened for your reading pleasure and my sanity. Easiest for me to use quotes from USA followed by my ( coberly ) comments.
~~~~~~~~
USA TODAY: “Biden vows to save Social Security and Medicare in face of shortfalls, but offers few details.”
President Joe Biden on Tuesday put the spotlight on Medicare and Social Security, hot button issues that could pack a political punch six weeks before the midterm elections.
His remarks at the White House were delivered days after the popular programs got little attention in House Republicans’ rollout of the agenda they promise to pursue if voters give them control in November.
Both Medicare and Social Security face long-run financing problems.
Coberly: Note how quickly the article changes from “Biden’s speech” to “Social Security long run financing problems.” USA is just using the Biden speech as an excuse to publish the old lies (by misdirection) about Social Security
USA: Democrats’ proposed solutions have generally focused on increasing taxes on higher income earners while also promising to expand benefits.
Republicans accuse Democrats of further straining Medicare through recent efforts to lower prescription drug costs. Many Republicans have backed raising the eligibility age for Medicare and the retirement age for Social Security as part of a plan to keep the programs solvent without hiking taxes.
Coberly: “Democrats … increase taxes … Republicans keep program solvent without hiking taxes” [note I will put paraphrases in quotes. the reader is expected to be smart enough to tell the difference between a direct quote and a paraphrase]. So, we have established that Dems want to tax and spend while Republicans what to save and strengthen. But I am at a loss to understand how lowering prescription drug prices strains Medicare.
USA: Because the government is paying out more in monthly Social Security benefits than it’s collecting in taxes, it’s projected to run out of reserves to fully fund benefits in 2035. At that point, it would have enough money to cover 80% of benefits. The Medicare trust fund, which covers inpatient hospital services, will only be able to pay 90% of scheduled benefits after 2028.
Coberly: “run out of reserves …” but no discussion of what that means. the reserves are not particularly important. SS is paid for by employee contributions (aka payroll tax). The “reserves” are just a prudent reserve to smooth out variations in payroll tax collections vs expenses (benefits paid out). The Reserve has been significantly increased in recent years to ensure the baby boom generation pays its fair share, which would normally happen automatically under the pay as you go financing structure of Social Security. But, it would impose an unfair burden on “the young” because of the much larger size of the boomer generation. That reserve is now being drawn down as it was intended to be while paying for the boomers (paying them back).
Meanwhile, the increasing life expectancy will mean the payroll tax needs to be increased slightly … more years in retirement takes more money. You would need to save more in any case, with or without Social Security. Or work longer, which might not be as much fun as you think: living longer does not mean keeping your strength, abilities, health, or that you won’t want to retire to enjoy your longer life after working 40 or more years … and paying for that retirement yourself.
As for paying “only 90%”… gee, does that mean reducing costs 10% would keep Medicare solvent?
USA: Biden accused Republicans of wanting to cut the programs without detailing his own past promise to fix the funding shortfalls. Instead, he focused on recent steps to reduce prescription drug costs for Medicare patients.
Coberly: apparently not, according to USA reducing costs will not help fix funding shortfalls.
USA: The “Commitment to America” House Republicans announced last week promises to “save and strengthen Social Security and Medicare” without specifying how.
Coberly: yep, save and strengthen, but not how. but hold on
USA: Democrats immediately pointed to a budget plan proposed by House conservatives earlier this year. The plan rejects as “fundamentally immoral” raising payroll taxes to cover Social Security’s shortfall. Instead, conservatives propose slowly increasing the eligibility age to reflect that life expectancy has increased since the program began. Benefits would also go up for lower-income workers and down for higher earners.
Coberly: immoral to raise the payroll “tax” [it’s not a tax. it’s “mandatory savings”, you get your money back with interest. it’s so the rest of us won’t have to pay welfare when you get old without having saved enough to retire.] but it’s not immoral to raise the retirement age so old ladies whose knees are giving out, or old cubicle workers whose minds are giving out, can’t retire even if they have paid for it themselves … because the rich are going to be living longer.
USA: For Medicare, the eligibility age would rise, and the program would be turned into income-based subsidies for specific health plans.
Coberly: yep, raise the eligibility age. I suppose that’s so the elderly poor won’t be able to get the medical care they need to live longer. As for “subsidies for specific health plans,” that means government handing out more for Medicare Advantage while people are denied benefits.
USA: Democrats have also attacked a proposal by Florida Sen. Rick Scott, the head of the campaign arm of Senate Republicans. The proposal requires all federal legislation be renewed every five years. Democrats accuse Republicans of wanting to “sunset” Social Security and Medicare. Scott has said he wants to “fix and “preserve” those programs, without providing details.
Coberly: yep “fix and preserve” by sunsetting the programs. that’ll fix ‘em.
USA: A bill sponsored by nearly all House Democrats would increase Social Security benefits in various ways and apply the payroll tax for the first time on wages above $400,000. But most of the new benefits would be temporary, and the increased taxes would buy only about four extra years of solvency for the trust fund, according to the Center on Budget and Policy Priorities, a liberal think tank in Washington, D.C.
Coberly: this is the “but wait for it” I mentioned: The Dems have their own plan to fix and preserve Social Security by destroying the key feature that has made it work for 85 years: it is not welfare. The rich do not pay for it … beyond what it is worth to them as insurance in case they suddenly stop being rich.
USA: On Medicare, an effort by Senate Democrats this summer to boost taxes on some high earners to shore up that program was not successful.
Coberly: And this is what will happen to the Democrat’s plan to raise taxes on the rich to pay for Social Security, unless the rich remember that turning SS into welfare was always their best bet to destroy it. They know how to destroy welfare.
USA: Biden did sign into law the Inflation Reduction Act, which included several provisions aimed at reducing prescription drug costs for Medicare patients. It requires the government to negotiate prices for some top-selling drugs and requires drug makers to pay rebates if their prices rise faster than inflation. It also limits out-of-pocket drug spending costs for Medicare patients to $2,000 a year.
“I can go to bed at night knowing that my out-of-pocket costs for all that I have is going to be affordable and predictable,” Bob Parant, a Medicare beneficiary from New York who is dependent on insulin, said when he introduced Biden at Tuesday’s event.
Coberly: This is what USA means when they say Biden has “no plan…”
USA: How Republicans have pushed back. Republicans have charged that Democrats’ efforts to control prescription drug prices – what they call “Democrats’ drug takeover scheme” – will reduce pharmaceutical companies’ spending on research and development, resulting in fewer new drugs.
Texas Rep. Kevin Brady, the top Republican on the House Ways and Means Committee, has said repealing the provisions is likely a top priority for Republicans if voters hand them control in the November elections, Axios has reported.
Coberly: This is what Republican always say: any government program always reduces big companies’ ability to innovate and reduce costs. And we have seen how that always works out.
USA: Republicans have also attacked Democrats for not using the nearly $300 billion the government is projected to save by negotiating drug prices to shore up Medicare’s finances.
Coberly: Maybe because saving $300 billion in costs is how they are shoring up Medicare’s finances?
USA: What they are saying,
- “I’ll protect those programs. I’ll make them stronger. And I’ll lower your costs, to be able to keep them,” Biden said Tuesday.
- “We will not have as part of our agenda a bill that raises taxes on half the American people and sunsets Social Security and Medicare within five years,” Senate Minority Leader Mitch McConnell, R-Ky., said in March.
Coberly: watch out for the fine print.
USA: “We are well past the time for talking points and partisan entrenchment, “said Shai Akabas, director of economic policy for the Bipartisan Policy Center.
Coberly: This is a meaningless sentence.
USA: “Unfortunately, the president used his speech to attack his political opponents on the issue as opposed to putting forward his own specific plan to secure Social Security, something he has failed to do over the course of his administration,” said Maya MacGuineas, president of the nonpartisan Committee for a Responsible Federal Budget.
Coberly: Maya and the “non-partisan Committee for a Responsible Federal Budget are liars committed to killing Social Security… which has nothing to do with the federal budget.
Social Security can be fixed forever by raising the payroll tax about a dollar per week (real dollars) in any year the Trustees project “short range financial inadequacy” while incomes are projected to grow ten dollars per week. Which means you will have nine more real dollars in after tax income while you have added one more dollar to your retirement savings. It adds up. but so does your real income, And it is what you will have to save anyway if you want to have enough to pay for your basic needs when you can no longer work.
Social Security is the only PLAN THAT CAN MAKE SURE THAT YOUR SAVINGS WILL STILL BE THERE…IF YOU DON’T LET THE POLITICIANS AND NON PARTISAN EXPERT LIARS STEAL IT FROM UNDER YOUR NOSE.
“Biden Vows to Save Social Security, Medicare but gives few details,” Maureen Groppe, (usatoday.com).
There are a few typos in the above that I think are not important though they do interrupt the flow while the reader says “what?” Also some confusion in the opening lines about who is saying what. I hope that is not important. What is worse, is that while reading my own writing I get the feeling that it is going to be very hard for the reader who doesn’t already know what i mean to know what i mean. This may be inevitable anyway. could always be cured by more careful writing or more careful reading, but who has time for that?
maybe also worth noting: while the “preserve and protect” crowd think raising the retirement age is the “obvious” solution, the employers of America are not thinking about raising their “mandatory retirement age,” which means they will force you to retire before you can collect Social Security.
but, oh, well, who thinks about these things?
Employers are moving away from mandatory retirement ages, particularly if the employee can get over to Medicare. Fewer defined benefit pension programs now. Age as a number is decreasingly important to employers. “Can you do this job?” is way more important. Also very little expectation of life-long careers anymore. There is some “this person could be CEO in 20 years” that a few young people get the benefit of, but a lot of it is “more than 18 months would be a bonus for us” expectations, and a 68 year-old that can do the job looks attractive really, as the light bulbs are starting to go on that that person might actually stay 3 or 4 years.
Eric
this is not what i am seeing out here. in any case it does not affect the importance of SS. most people are not going to become CEO if kept on a few years after “retirement age.” or if they are, more power to them. if you like your job and are healthy and want to keep it SS is not standing in your way. unless you are one of those people who can’t stand to not collect benefits which they see as money left on the table.
most of the people i know are quite desperate to retire by the time they are 62 if not sooner. since they have paid for their SS benefits, there should be no reason they can’t collect them. the fact is that by raising the payroll tax about one dollar per week (for each the employer and the worker, and “per year” meaning that it’s an extra dollar per week every year. it adds up. but so does your income (about ten times as fast. it’s how much you will need to “save” in any case. and it is not a burden anyone would notice if the people who want to destroy SS were not screaming lies into their ears trying to make them think they are being cheated.
well,
thanks for asking, anyway.
Have to challenge the idea that the basis is a “mandatory savings” that you get back. If that were the case, then SSA should happily provide one-time lump sum settlements for retirees who prefer those. Or stipulate annuity terms. Were a beneficiary to pass tomorrow, their SS “asset” is over, but balance due on a commercial annuity is part of the estate. Those who pass prior to collecting get nothing (I understand about spouse benefits, but keeping it simple here). Now I don’t think lump-sum or true annuity makes sense as you’d certainly end up with lots of broke people in their 70s or 80s (or older). The contributions are more of a hybrid including aspects of taxation and personal savings.
Eric
I don’t know whether to congratulate you for reaching the poit that it is “kind of a hybrid” or laugh at you for thinking you “have to challenge..”
SS is what it does. I try to explain it to people in terms that they know something about. Most of them can’t get beyond “seeing” that it is not exactly what i am comparing part of it to.
I think it’s best if you think of it as insurance…but more like fire insurance than a life insurance with annuity “part of the estate.” you collect the “insurance” if you have the fire, but you don’t get your premium back if you don’t have the fire. on the other hand the “fire” in the case of SS is reaching old age or disability or death with dependents without having enough money to retire, live without being able to work, or leave your dependents. and in SS case you DO get your premium back, with interest. more interest if you are poor, less interest if you are “rich”, which is how SS is able to give the “more” to the poor. this is not welfare or a “tranfer payment” as you were paying for the insurance. and when you go to collect your SS, they don’t give it to you unless you paid the premiums. etc. etc. it gets a little complicated to “explain” in a few words. but not so comlicated an ordinary person can’t understand what it IS (not what “it;s like”) if they take the trouble.
SS retirement benefit is truly a financial product, not a fire insurance kind of product. There are lots of ways to talk about this, but if you go down the road of using terms like “get your money back with interest” you lead people to think it is “their” money. Only the monthly deposit becomes “ their” money. It can work out okay for most people, but the program is not “your money” in the way we think about the rest of “our money”.
Eric
it is their money. they paid for it. their monthly (payroll tax deduction) earns interest and pays for insurance. the boss claims “his” share is “really” the workers money when he wants to have the workers think he would pay them more if he didn’t have to pay “his” share of SS. but if it is the workers money, how come the employers always call it a “jobs killing tax”? apparently paying the workers “their money” kills jobs.
you can think about “the rest of your money” any way you want. but SS is not “the rest of your money.”
My sense of the last 40 years is that in the 1980s people decided to shift revenue collection for federal spending towards a regressive tax; via SS tax increases. In your mind you can justify it with the notion of a big “baby boomer” social security need in the future. And you would not be wrong exactly, but I really dislike is that now that the Trust Fund looks clearly getting to the point of on-going big net redemption, we find Dale (and others) advocating increasing the regressive tax again starting now to “save” the system. It would work I am pretty certain, as Dale knows the numbers, but I have trouble thinking it is just a coincidence that doing so means the more progressive revenues that the Treasury collects never needs to handle that huge redemption of the regressive “loan” workers made for decades. ‘Move along. Nothing to see here.’
Eric
somehow you have to get out of your own mind and learn some facts. when i try to teach you something…or at least point to something you can find for yourself, it just rolls off your back.
social security is not a regressive tax. it is (mandatory) savings of a set portion of your wage income with a very progressive payback schedule. “regressive tax, regressive tax…” is osmething some “liberals (mostly professors)cam up with because they can’t think beyond meaningless labels…the kind of people who think the rich guy should pay for their (the professors) groceries because he (the rich guy) has more money.
you don’t seem to understand what money is..how it works…and i say that knowing full well that you probably know more about some businesses than i do.
Eric,
I think you need to think about the definition of regressive tax. It is not entirely obvious. The percentage paid by all workers making right up to the cap is exactly the same. That is by definition neither regressive nor progressive. You can only consider SS to have a regressive tax structure if you believe that people who are not going to benefit should pay anyway.
SS is progressive on the benefits side, so (as a program by workers for workers) it is progressive overall.
I think my answer leads to the question of why income tax should be progressive. Do people who make more money and therefore pay higher taxes at higher rates (theoretically), get more for their taxes? I know it can be debated, but the answer is clearly, yes.
arne
general taxes for the needs of the whole country have to be “progressive” because taxing the poor at the same rate as the rich would either leave the poor without enough to eat or leave the country without enough to pay for its needs.
i think this is clearly obvious to everyone who has not twisted themselves up with words that appeal to an “ideology” but make no sense when they are applied to real problems.
There are too many “flat tax” believers for me to go with “you just have to think about it for a moment”.
Arne
thank you for your comments…sincerely. I hope i have not said “just have to think about it for a moment.” if i did it was more a cry of despair than, i hope, an implication that the other guy is not thinking, or even that “truth” can be discovered by thinking for a moment. on the other hand i broke my heart trying to teach math to college students because i thought all i had to do was “explain it better.” it was only later i realized that what a teacher needs to do is inspire (by threats?) the students to think about it themselves.
your comment about regressive taxes was better than mine (less grouchy?). my point about “ideology” was probably giving people too much credit. “ideology” can be something like “faith” in the importance of doing good. But it often seems to me to devolve into someting more like hysterical complaining that your sister got the biggest piece of burfday cake. Everyone thinks they are just demanding what is “fair”, even if it’s not, even it won’t do you any good, and even if it destroys the complex system of balances that makes civilization possible.
which all comes down, i think, to the point that for me at least “do the rich get more for their taxes?” is an unanswerable question. but “can the country work without a progessive income tax” seems to me to be a technical question with an “obvious” correct answer.
which won’t keep the bad guys from playing it for their advantage in an election…or even in a dictatorship where lying to the people is still necessary to keep them confused and off balance. some of them in despair for the truth, and some because they will believe anything the boss tells them.