“Uh Oh, Republicans Are Trying to ‘Protect’ Social Security Again”: A Misleading Argument To Tee Up Benefit Cuts
Whenever Republicans start talking about protecting Social Security, warning bells go off in my head.
Remember President George W. Bush’s ill-fated plan in 2005 to privatize Social Security? It was pitched as a way to protect Americans from what the then-president and his supporters falsely claimed was the system’s impending collapse.
The bells have started up again. Buried in the new rules being adopted by the House Republican majority for the current session of Congress is one that the drafters say will “protect” Social Security retirement benefits from being raided to pay for Social Security disability benefits. What this boils down to is using a misleading argument to tee up benefit cuts.
This bulletin from the Center on Budget and Policy Priorities explains the ruse in detail.
In brief, Social Security has several parts. The biggest part, by far, is the retirement system. Another smaller part, Social Security Disability Insurance, pays benefits to disabled workers.
On eleven different occasions in the past, Congress has allocated money from one system to the other whenever one of the funds was running short. Such shifts have historically been noncontroversial, as well they should be: They are basically housekeeping maneuvers.
The new Republican rule, however, bars the House from doing a straightforward shift of money from the retirement system to the disability system. That could cause havoc. The disability system is currently strained, for two main reasons. One, disability claims rise with the aging of the population. Two, a tax change in 1983 was only partially reversed in later years, leaving the disability system underfunded. If money is not shifted from the retirement system to the disability system, severe cuts to disability benefits will be needed starting in 2016.
In their new rule, Republicans say they are protecting the retirement system from being robbed. What they don’t say – because it is the truth – is that reallocating money from the retirement system to the disability system would put the disability fund on a firm footing while barely denting the retirement fund, for the simple reason that the retirement fund is far bigger than the disability fund.
A reasonable reallocation could enable both the disability system and the retirement system to pay full benefits through 2033.
That is plenty of time for reasonable politicians to enact modest reforms in taxes and benefits that could ensure the solvency of both systems well into the 21st century.
The real challenge is to shield the systems from deliberate destruction by today’s Republicans until cooler heads prevail.
By: Teresa Tritch, Taking Note, The Editorial Pages Editor’s Blog, The New York Times, January 7, 2014
“Pitting Retirees Against The Disabled”: GOP Manufacturing A Social Security Crisis To Threaten Benefits For Millions Of Disabled Americans
When conservatives who like to whine about “welfare” are forced to be more specific, some go after the traditional if significantly less generous TANF program of cash assistance, or Medicaid, or those receiving subsidies under Obamacare. But more often these days, they attack either Disability Insurance or SNAP, programs that have experienced large increases in eligibility because of the economy or demographic trends or both.
Congressional Republicans failed last year to force the inclusion of a major reduction in SNAP eligibility in the 2014 Farm Bill. But now they appear to be going after DI, through the half-clever mechanism of pitting beneficiaries against the larger universe of Social Security retirement recipients. Here’s a quick description of the ploy from TPM’s Dylan Scott:
The incoming GOP majority approved late Tuesday a new rule that experts say could provoke an unprecedented crisis that conservatives could use as leverage in upcoming debates over entitlement reform.
The largely overlooked change puts a new restriction on the routine transfer of tax revenues between the traditional Social Security retirement trust fund and the Social Security disability program. The transfers, known as reallocation, had historically been routine; the liberal Center for Budget and Policy Priorities said Tuesday that they had been made 11 times. The CBPP added that the disability insurance program “isn’t broken,” but the program has been strained by demographic trends that the reallocations are intended to address.
The House GOP’s rule change would still allow for a reallocation from the retirement fund to shore up the disability fund — but only if an accompanying proposal “improves the overall financial health of the combined Social Security Trust Funds,” per the rule, expected to be passed on Tuesday. While that language is vague, experts say it would likely mean any reallocation would have to be balanced by new revenues or benefit cuts.
I have zero doubt Republicans will describe this rules change, now that it’s getting attention, as a measure to “protect Social Security,” even though DI is part of the same system, and the ploy may actually be aimed at producing “entitlement reforms” affecting retiree benefits as well as disability eligibility. But Democrats, led by Elizabeth Warren, do seem to be all over this with unusual alacrity:
“It’s ridiculous – but not surprising – that on the very first day of the new Congress, Republicans are manufacturing a Social Security crisis to threaten benefits for millions of disabled Americans – including 233,260 in Massachusetts alone,” Warren said on Facebook. “We can’t turn our backs on the promises we’ve made to our families, friends, and neighbors who need our help the most. House Republicans should stop playing political games to put America’s most vulnerable at risk.”
So we’ll probably see leading Republicans take a low profile on the issue for a while, as their friends in the conservative chattering classes probably ratchet up the talk about the freeloading bums on DI.
By: Ed Kilgore, Contributing Animal Blog, The Washington Monthly, January 7, 2015
“Busting Another Myth About Immigration Reform”: Conservative “Reality” Just Happens To Be An Ideological Constructed Fallacy
Conservatives like to complain that immigrants not only take jobs citizens would otherwise do (mostly untrue), but also constitute a drain on social services. It’s not only an inhumane argument but also impractical: if you need people to perform difficult and dangerous jobs, do you really want them not to be able to get medical treatment or for their kids to go uneducated?
But these arguments aren’t just impractical and immoral. They’re also wrong. As it turns out, undocumented immigrants are a net positive to the social security system:
Here’s how the math works. Five percent of the U.S. work force is undocumented, which is some 8.1 million people. Thirty-eight percent of the 8.1 million pay social security taxes, which comes to roughly $12 billion a year, according to CAP estimates. That’s a pretty nice cushion for a graying America.
Stephen Goss, chief actuary for the Social Security Administration, told the Daily Beast, “Even as it stands under current policy, unauthorized immigrants contribute positively to the financing of social security not only in terms of their own contributions, but in the succeeding generations when they have children on our soil that are citizens from day one.”
Bringing them out of the shadows will let them actually collect on the money they have paid into the system, but it would still be a net positive:
Obama’s executive order would allow newly legalized workers to eventually collect benefits when they reach retirement age. But that’s a long way off for many of them, and any potential loss would be more than offset by the millions of young workers who will be brought into the system to pay taxes for three or four decades before they can collect benefits.
Conservative arguments present reasonable people with a quandary: do you attack their arguments for their heartless immorality? Or their functional impracticality? Or their ill-informed simple wrongness? Whether it’s socialized medicine, immigration policy, climate change, social issues, tax policy, foreign policy or so much else, conservatives are constantly pursuing policies that fail basic moral tests, are largely unworkable, and that are proven wrong by actual evidence at every turn. And yet (or perhaps as a consequence) conservatism veers ever further rightward.
It’s not just a political disagreement. We’re living in different realities at this point. Conservative “reality” just happens to be an ideological constructed fallacy.
By: David Atkins, Political Animal, The Washington Monthly, November 29, 2014
“Getting Democracy Backwards”: McConnell Digs A Hole On Social Security, Falls In
Senate Minority Leader Mitch McConnell (R-Ky.), in the midst of the toughest race of his career, still isn’t quite sure how he wants to present himself to voters. On the one hand, the longtime Republican senator is proud to be the nation’s top obstructionist, helping create the most dysfunctional Congress in modern history. On the other hand, McConnell wants the public to see him as the consummate dealmaker.
To help prove the latter point, the GOP incumbent cited an interesting example last week.
Though he hasn’t mentioned it much on the campaign trail over the past year, McConnell specifically touted his effort to push President George W. Bush’s plans to reform Social Security in 2005, which would have set up private accounts for retirees.
“After Bush was re-elected in 2004 he wanted us to try to fix Social Security,” said McConnell. “I spent a year trying to get any Democrat in the Senate – even those most reasonable Democrat of all, Joe Lieberman – to help us.”
We now know, of course, that Democrats weren’t interested in privatizing Social Security. Neither was the American mainstream, which hated the Bush/Cheney idea. But the fact that McConnell brought this up, unprompted, was a clumsy error from a senator who’s usually more disciplined.
With time running out in Kentucky, Mitch McConnell decided to remind the state that he wanted to effectively eliminate the popular and effective Social Security system. Indeed, it’s been part of McConnell’s governing vision for many, many years.
When local reporter Joe Sonka asked McConnell whether voters should expect the senator to push Social Security privatization after the midterms, McConnell replied, “I’m not announcing what the agenda would be in advance.”
Wait, he’s not?
I’m starting to think Republicans have collectively forgotten the point of a political campaign. Last week, Scott Brown told voters in New Hampshire, “I’m not going to talk about whether we’re going to do something in the future.” Around the same time, McConnell said he’ll only announce Senate Republicans’ agenda after the election.
This is a little nutty, even by 2014 standards. Call me old fashioned, but in a democracy, candidates are supposed to tell voters what they’d do if elected. Then, after the election, the winning candidates are supposed to pursue the agenda endorsed by the electorate.
When McConnell says “I’m not announcing what the agenda would be in advance,” he’s getting democracy backwards. The longtime incumbent is asking voters to give him control of the Senate first, at which point he’ll tell everyone what he intends to do with his power.
It’s an odd pitch. Either McConnell still intends to eliminate Social Security, replacing it with private accounts, or he doesn’t. The senator brought this up as an example of his bipartisan outreach, so it’s not unreasonable to ask whether he still intends to pursue an anti-Social Security agenda if McConnell gets a promotion.
This probably isn’t the issue McConnell wanted to deal with in the campaign’s final week, but he opened the door, and shouldn’t be too surprised when others walk through it.
By: Steve Benen, The Maddow Blog, October 27, 2014
“The Entitlement Of The Very Rich”: Gutting Social Security And Medicare Far More Unthinkable Than Not Reauthorizing Ex-Im Bank
The very rich don’t think very highly of the rest of us. This fact is driven home to us through fluke events, like the taping of Mitt Romney’s famous 47 percent comment, in which he trashed the people who rely on Social Security, Medicare, and other forms of government benefits.
Last week we got another opportunity to see the thinking of the very rich when Jeffrey Immelt, the CEO of General Electric, complained at a summit with African heads of state and business leaders that there is even an argument over the reauthorization of Export-Import Bank. According to the Washington Post, Immelt said in reference to the Ex-Im Bank reauthorization, “the fact that we have to sit here and argue for it I think is just wrong.”
To get some orientation, the Ex-IM Bank makes around $35 billion a year in loans or loan guarantees each year. The overwhelming majority of these loans go to huge multi-nationals like Boeing or Mr. Immelt’s company, General Electric. The loans and guarantees are a subsidy that facilitates exports by allowing these companies and/or their customers to borrow at below market interest rates.
As a practical matter, whether the bank is reauthorized or not will have no noticeable impact on the economy. If the government took away the subsidy on this $35 billion in exports, it would probably lead to a decline of between 10 and 30 percent in these exports ($3.5 billion to $10.5 billion), while costing Boeing, GE, and the rest some of their profit margin on the portion they continued to export.
The loss of exports would be in the range of 0.2 percent to 0.5 percent of total exports or 0.02 percent to 0.06 percent of GDP. (This assumes that none of the exports include imported parts, which is obviously not the case.) In short the impact on the economy of ending the subsidies from the Ex-Im Bank would be almost invisible.
If the folks pushing for the Ex-Im Bank reauthorization were really concerned about jobs created through trade, we could generate far more jobs with even a modest decline (e.g. 1 percent) of the dollar against other currencies. This would make our exports cheaper to people in other countries and would reduce the price of domestically produced goods relative to imports, thereby leading consumers to purchase more U.S. made goods.
While ending the Ex-Im Bank would have little impact on trade and jobs it would be a big deal to Mr. Immelt’s company and presumably to Mr. Immelt’s compensation. Therefore it is not surprising that he might find it “just wrong” that we should even have to argue about it.
For some additional context, it is worth noting that Mr. Immelt is one of the members of the Peter Peterson initiated group, Fix the Debt. In that capacity he has gone around the country arguing for the need to cut Social Security and Medicare benefits. So we have someone who makes $25 million a year, at least in part from taxpayer handouts, who runs around the country complaining about retired workers getting $1,300 a month from Social Security, whining because he has to argue to continue the handouts he receives.
It would be nice if Immelt were just another crazed one percenter who had no credibility outside of his country club, however this is not the case. It was not an accident that Mr. Immelt was at this summit. He is a highly respected business leader and apparently is close enough to president Obama to have been made head of his Council on Jobs and Competitiveness.
The reality is that the Immelts of the world are able to put muscle behind their sense of entitlement because politicians need their campaign contributions to be credible candidates. For this reason, they are almost certain to secure the reauthorization of the Ex-Im Bank, which has the support of most of the leadership of both parties.
The rest of us just have our votes. But if the public has a clear understanding of the agenda of the Immelts of the world, and their political allies, it will be better positioned to protect the entitlements that workers depend on and have paid for. Gutting Social Security and Medicare should be far more unthinkable than not reauthorizing the Ex-Im Bank.
By: Dean Baker, Co-Director, CEPR; The Hufington Posst Blog, August 12, 2014
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