“Balking At Their Own Ideas”: The GOP Offers President Obama A Chained-CPI Off-Ramp
When Rep. Greg Walden (R-Ore.), the chairman of the National Republican Congressional Committee who’ll oversee his party’s 2014 midterm efforts, accused President Obama of waging “a shocking attack on seniors,” it took an enormous amount of chutzpah. At issue, of course, is a controversial proposal to change the way Social Security is indexed — the “chained-CPI” policy — that the White House does not like, but which Obama offered as a concession to congressional Republicans who demanded it.
In effect, Walden was condemning the president for his own party’s proposal. A day later, House Speaker John Boehner, one of the officials who demanded Obama put chained-CPI on the table, subtly rebuked Walden’s craven criticism.
But let’s not lose sight of the fact that Walden isn’t alone. Last week, Rep. Steve Southerland (R-Fla.) said he’s “not a fan” of the policy, and soon after, they had some company.
“The president is trying to say this draconian thing that no one likes is the Republicans’ fault,” Rep. James Lankford (Okla.), the chairman of the House Republican Policy Committee, told reporters on Friday.
“It’s not my plan,” Rep. Aaron Schock (R-Ill.) said about chained CPI. “This is the president’s plan.”
Rep. Tom Reed (R-N.Y.), a House Ways and Means Committee member, added, “I’m very sensitive to the fact that you’re impacting current seniors in particular. It’s something I’m very hesitant to jump up and down and support.”
The word “bullpucky” keeps coming to mind.
Yes, plenty of congressional Republicans, including members of the GOP leadership, have welcomed Obama’s offer — while refusing to point to any comparable concessions they’d accept, of course — so this isn’t a party-wide phenomenon.
But the larger point is that having even some congressional Republicans balk at their own idea offers the president an opportunity.
Remember, the White House doesn’t actually like chained-CPI. Obama freely admits he doesn’t want this policy, and only offered it because Republicans are such enthusiastic supporters of the idea. From the president’s perspective, he and his team are going to have to tolerate some measures they don’t like if there’s going to be a bipartisan compromise in which both sides accept concessions they would otherwise reject.
But over the course of just a few days, GOP lawmakers have called this policy — the one Republicans demanded — a “shocking attack on seniors,” a “draconian” policy, “the president’s plan.”
It is, of course, painfully absurd for the right to criticize Obama for doing exactly what Republicans asked him to do, but therein lies the point: there’s nothing stopping the president from simply walking away from the idea if the GOP has suddenly discovered they dislike their own proposal.
As I mentioned briefly last week, Obama, who doesn’t like chained-CPI anyway and realized his own party is furious, could credibly declare right now, “I thought Republicans wanted this policy. But if they consider this ‘a shocking attack on seniors,’ I’ll gladly drop the idea.”
By: Steve Benen, The Maddow Blog, April 15, 2013
“Exposing Republican Intransigence”: John Boehner Rejects Obama’s Offer To Cut Social Security
House Speaker John Boehner (R-OH) preemptively rejected President Barack Obama’s upcoming budget proposal Friday, slamming the president’s offer to cut Social Security as “only modest entitlement savings.”
President Obama’s budget plan, which he will send to Capitol Hill on Wednesday, will reportedly seek $1.8 trillion in deficit reduction through a combination of new revenues and spending cuts. The most controversial cut is the move to the chained consumer price index (“chained CPI”) for Social Security, which would significantly reduce annual cost-of-living adjustments for Social Security beneficiaries. President Obama has long suggested that he could support the measure, which would cut federal spending by about $130 billion over the next decade, only if Republicans agree to raise new tax revenues.
To many of the president’s liberal allies, such a proposal has been a non-starter. When he floated the idea in late 2012, many House Democrats warned that they would rather go over the “fiscal cliff” than accept the cut. Similarly, in an exclusive interview with The National Memo in March, AFL-CIO president Richard Trumka vowed that America’s largest labor federation would oppose any budget deal that included chained CPI, saying the index is “another example of how Washington creates fancy-sounding phrases to mask stupid policies that only work for the rich.”
The public seems to stand with Trumka; recent polling suggests that Americans strongly oppose any Social Security cuts.
The budget reportedly includes several other cuts, such as $400 billion in health care savings (including additional means-testing for Medicare,) and $200 billion in cuts to farm subsidies, federal employee retirement programs, and unemployment compensation. Obama’s budget also aims to raise $600 billion in new revenues, including an increased cigarette tax, which would be used to finance the president’s proposal for universal pre-K.
“While this is not the president’s ideal deficit-reduction plan, and there are particular proposals in this plan like the CPI change that were key Republican requests and not the president’s preferred approach, this is a compromise proposal built on common ground, and the president felt it was important to make it clear that the offer still stands,” a senior Obama administration official told The Hill.
Obama’s offer to meet in the middle has already failed to move House Republicans, however. Not waiting for the full proposal to be released, House Speaker John Boehner quickly released a statement Friday blasting Obama’s plan.
“Despite talk about so-called balance, the president’s last offer was significantly skewed in favor of higher taxes and included only modest entitlement savings,” Boehner said. “In the end, the president got his tax hikes on the wealthy with no corresponding spending cuts. At some point we need to solve our spending problem, and what the president has offered would leave us with a budget that never balances.”
“If the president believes these modest entitlement savings are needed to help shore up these programs, there’s no reason they should be held hostage for more tax hikes,” Boehner added.
Although Boehner’s statement still completely ignores the $2.5 trillion in deficit reductions to which the White House has agreed since 2010, it does at least acknowledge that Obama is offering “entitlement savings” — even if Boehner rejects the compromise out of hand. This is a modest step in the right direction, considering that until this budget, Republicans have consistently denied that Obama has offered them anything at all.
In the end, that subtle shift may end up as the most significant result of Obama’s budget deal. Although the proposal has no real chance of becoming law — as evidenced by Boehner’s immediate rejection — making a highly publicized compromise offer will further expose the Republicans’ intransigence.
In March, President Obama reportedly offered congressional Republicans a choice: accept a deal that raised revenue in exchange for chained CPI and means-testing of Medicare, or walk away with no budget deal at all. In April, it appears that Boehner has made his decision.
By: Henry Decker, The National Memo, April 5, 2013
“Holding Corporate Monarch’s Accountable”: Steering America Toward A More Secure Retirement
To the let’s-cut-entitlements crowd, what’s wrong with America is that seniors are living too high off the hog. With the cost of medical care still rising (though not as fast as it used to), the government is shelling out many more dollars per geezer (DPG) than it is per youngster (DPY). The solution, we’re told, is to bring down DPG so we can boost DPY.
We do indeed need to boost DPY. And we need to rein in medical costs by shifting away from the fee-for-service model of billing and paying. But as for changing the way we calculate cost-of-living adjustments for seniors to keep us from overpaying them — an idea beloved of Bowles, Simpson, Republicans and, apparently, the White House — this may not be such a hot idea, for one simple reason: An increasing number of seniors can’t afford to retire.
Nearly one in five Americans age 65 and over — 18.5 percent — were working in 2012, and that percentage has been rising steadily for nearly 30 years. In 1985, only 10.8 percent of Americans 65 and older were still on the job, and in 1995, that figure was 12.1 percent.
Both good news and bad news have contributed to this increase. The good news is that more seniors both can and want to work than in years past, as health care and medical science have extended their capabilities, and as the share of Americans in desk jobs has increased while the number on the factory floor has shrunk. A 2011 survey by the Society of Actuaries reported that 55 percent of working seniors said they had stayed employed because they wanted to stay active and involved. But the same survey showed that 51 percent were working because they needed the money.
What advocates for reducing Social Security adjustments fail to consider is that corporate America’s shift away from defined-benefit pensions to defined-contribution 401(k) plans — or to no retirement plans at all — has diminished seniors’ non-Social Security income and made the very idea of retirement a far more risky prospect. Today, more than half of U.S. workers have no workplace retirement plan. Of those who do, just 35 percent still have defined-benefit pensions. In 1975, 88 percent of workers with workplace retirement plans had defined-benefit pensions.
The shift from traditional pensions to 401(k)s is one of the main reasons most seniors aren’t able to set aside enough income to guarantee a secure retirement. A 2010 survey by the Federal Reserve found that the median amount saved through 401(k)s by households approaching retirement was $100,000 — not nearly enough to support those households through retirement years, as seniors’ life expectancy increases. And as most Americans’ wages continue to stagnate or decline, their ability to direct more of their income to 401(k)s diminishes even more.
With the eclipse of the defined-benefit pension, Social Security assumes an even greater role in the well-being of American seniors. But advocates of entitlement cuts don’t even discuss the waning of other forms of retirement security: Listening to Alan Simpson, you’d never know that America’s elderly aren’t getting the monthly pension checks their parents got.
And it’s not as if those employers are suffering. Just as U.S. businesses have been able to raise the share of corporate profits to a half-century high by reducing the share of their workers’ wages to a half-century low, so, too, their ability to reduce pension payments has contributed not just to their profits but also to the $1.7 trillion in cash on which they are currently sitting.
So here’s a modest plan to enable seniors to retire when they wish, rather than having to work into their 70s and even beyond: Require employers to put a small percentage of their revenue, and a small percentage of their workers’ wages, into a private, portable, defined-benefit pension plan. To offset the increased costs, transfer the costs of paying for workers’ health care from employers and employees to the government, and pay for the increased costs to the government with the kind of value-added tax that most European nations levy. (The tax burden is higher in Europe, but because the level of benefits is higher as well, the tax has wide public support.)
The odds of such a plan being enacted today, of course, are nil. (Then again, the odds of any bill getting through Congress these days are close to nil.) But until we compensate for, or reverse, the abdication of corporate America from any major role in providing its workers with retirement security, we should lay off monkeying with Social Security to reduce the program’s future payments. As for all those cash-drenched chief executives who proclaim that we must cut entitlements, how about they make up the difference by restoring the pensions their companies slashed?
By: Harold Meyerson Opinion Writer, The Washington Post, March 6, 2013
“Insurance Against Need, Guaranteed Return”: Why Democrats Must Get Smart On “Entitlements”
In a season of depressing budget news, the worst may have been that a majority of U.S. House Democrats signed a letter urging President Barack Obama to oppose any benefit cuts to Social Security, Medicare, Medicaid and other entitlements. That’s the last thing we need.
To hold the line on harmful cuts to discretionary spending, Obama and the Democrats must educate the public about the necessity of entitlement reform. Otherwise, the poor and needy — largely spared by the automatic reductions under sequestration — will get hit much harder down the road.
Liberals are right to reject Republican proposals that would slash social-welfare programs even as they refuse to consider closing tax loopholes for the wealthy. And I agree that the sequestration will cut into the bone of important government functions and investments in the future.
That makes two more reasons to start talking seriously about how we will pay for the insanely expensive retirement of the baby boomers.
How expensive? Anyone reaching retirement age in the next 20 years (including me) will take more than three times as much out of Medicare as he or she contributed in taxes. By 2030, the U.S. will have twice as many retirees as in 1995, and Social Security and Medicare alone will consume half of the federal budget, with the other half going almost entirely to defense and interest on the national debt. It’s unsustainable.
If Democrats don’t want to talk about these programs, they can say goodbye to every other pet program. We can preserve Medicare in amber only at the expense of investments in pre-kindergarten programs or cancer research.
To reform entitlements, we should assess what these programs were meant to do in the first place.
For starters, Presidents Franklin D. Roosevelt and Lyndon B. Johnson didn’t call them entitlements. Jimmy Carter’s administration borrowed the term from Anarchy, State and Utopia, a 1974 book by Robert Nozick, a political philosopher. “Entitlement” sounds selfish and at odds with the dignity and peace of mind that Social Security and Medicare are meant to provide.
It distorts the animating idea behind these programs, which is social insurance.
FDR didn’t have strong feelings about benefit levels, retirement ages or eligibility standards. He focused on what he called guaranteed return. By that he meant that having paid into the system through a kind of insurance premium (though in fact it was merely a payroll tax), Americans should rest easy that some money would be there for them if they lived long enough to need it. The whole point was “insurance against need.”
“Guaranteed return” and “insurance against need” should continue to be the two guiding principles of social-insurance reform.
“Guaranteed return” means no privatization or voucher system for these programs. FDR would have strongly opposed President George W. Bush’s plan to allow Social Security contributions to be invested in the stock market. He thought subjecting retirement income to what he called “the winds of fortune” was a breach of the social contract. Imagine what would happen to someone who retired in 1929 or 2008? No guaranteed return.
“Insurance against need” suggests keeping the focus on poor and middle-class recipients who depend on the money most. That means means-testing, giving wealthier retirees less. FDR, who favored high levels of taxation on the rich, would have been fine with taxing their benefits, too, as long as they were guaranteed to get at least something back.
Liberals generally oppose means-testing social-insurance programs. For decades they’ve argued that if the wealthy don’t get a heaping portion of Social Security and Medicare, it will undermine the political support of the programs and turn them into a form of welfare. Once that happens, the theory goes, the programs will be ended.
Like the word “entitlements,” this hoary idea should be retired. Social Security and Medicare are now so deeply in the marrow of the American middle class that they will never be seen as welfare. The question is not whether to reform them, but how.
Roosevelt structured Social Security as an insurance program with “contributions” through the tax code “so no damn politician can ever take it away.” He didn’t specify anything about the level of taxation or cost-of-living increases, which weren’t an issue in the 1930s but would become one shortly after World War II.
Today, only the first $110,000 in income is subject to the 7.65 percent tax that pays for Social Security and Medicare. Lifting the cap to higher income levels (say $250,000 or $400,000) could eventually generate hundreds of billions of dollars.
Republicans consider this a tax increase. That’s only true outside the context of these programs. The change could be structured so that no one paid in more than actuarial tables say they would take out. That would still raise billions and be consistent with the idea of paying for your own retirement if you can afford it.
For lifting the cap to have any chance, it would have to be matched by reforms such as adopting the chained consumer-price index, a new way to measure cost-of-living adjustments that Obama apparently favors. Liberals oppose chained CPI because it would theoretically result in lower benefits. But less frequent cost-of-living increases aren’t the same as cuts, especially if the current system is, as many experts believe, based on an inaccurate assessment of inflation.
Maybe there are better ideas for reforming social insurance. The point is, we better start talking about them. Otherwise, grandpa and grandma and their fellow Grateful Dead fans are going to eat all the food on the table.
By: Jonathan Alter, The National Memo, March 1, 2013
“Seniors Take Note”: Republicans Effectively Confessed To Having Mislead Conservative Members Who Now Must Be Mollified
I’m not sure House Republicans realized how large an error they made by kidnapping and then releasing the debt limit earlier this year. By admitting their bluff, they effectively confessed to having misled conservative members, and those members needed to be mollified.
That created a new problem: How could they appease conservatives while lacking the power to satisfy any of their substantive demands? So they offered up grandiose symbolism: A raincheck on the brinksmanship (the current fight over the sequester) and a promise to pass a budget that would wipe out the deficit in 10 years if enacted.
But it’s not clear that they counted their votes, or considered the budget math when they made that promise.
“We are saying a 10-year balance — that’s tougher than the last [Paul] Ryan budget,” Rep. Mike Simpson (R-ID), a former Budget Committee member told Politico.
“There could be a significant number of Republicans that say, ‘I’m not going there because it would be too dramatic.’ I have said to my constituents, nobody is talking about changing Social Security and Medicare if you’re 55 years or over.’ I’ve been selling it for three or four years that way. So have many other members. Well, to balance in 10, that 55 years is going to move up to 58, 59, 60. It makes us look like we’re going back on what we were telling people when we were trying to sell this.
We haven’t seen Ryan’s latest budget, so we don’t know what precise ratio of funny math and concessions to reality he’ll use to make the numbers work. And until he’s written it he won’t offer many hints.
But we do know a couple things. First, given Republicans’ famous preference for never increasing taxes or cutting defense spending, we know that it’s probably impossible for them to draft a budget that balances in 10 years without eating into entitlement benefits for people older than 55. Second, per above, we know that GOP leaders promised conservatives a budget that balances over 10 years to win their support for increasing the debt limit. So either Ryan will produce a budget that relies on sleight of hand more than his previous budgets did, or he’ll have to admit that the GOP’s pledge to leave retirement programs untouched for people over 55 was neither sincere nor sustainable.
As Simpson’s quote suggests, that’ll make it harder for Republicans to pass a budget at all; and if they do, it’ll come at a potentially enormous cost with their voting base.
By: Brian Beutler, Talking Points Memo, TPM Editor’s Blog, February 15, 2013
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