Slow Learners: Social Security Privatization Still A GOP Goal
Congressional Republicans have faced all kinds of heat recently for their misguided campaign to end Medicare and replace it with a privatized voucher system. It’s tempting to think the GOP would not only back away from this crusade, but would also learn a valuable lesson about Americans’ appreciation for bedrock domestic social programs.
Alas, that’s not the case. A few days ago, Rep. Pete Sessions of Texas, a member of the House Republican leadership, unveiled the “Savings Account For Every American Act,” which would allow Americans to withdraw from the Social Security system and opt into a privatized system.
Of course, with Social Security functioning as a pay-as-you-go program, if workers “opt out” of the system, Social Security would either (a) crumble with insufficient funds; or (b) need Congress to spend more money to make up the difference. How would Sessions address this? By all appearances, he hasn’t thought that far ahead.
Democrats, not surprisingly, were only too pleased yesterday to go on the offensive.
Democratic Congressional Campaign Committee Chairman Steve Israel (D-N.Y.) on Tuesday predicted that House Republican plans to let workers opt out of Social Security would fail as voters realize how it will threaten their retirement.
“Seniors who have paid into Social Security through a lifetime of hard work shouldn’t end up in a risky privatization scheme to gamble their retirement on Wall Street,” Israel said. “The public has rejected this kind of Social Security privatization in the past and will again.”
Israel accused Republicans of looking to resolve the government’s fiscal crisis by scaling back Medicare and Social Security, while ignoring higher corporate taxes.
In fairness, I should note that “Savings Account For Every American Act” (or, “SAFE Act”) isn’t exactly on a fast track to the House floor. After being introduced late last week the bill, H.R.2109, has an underwhelming six co-sponsors. That’ll likely increase, but Social Security’s supporters probably don’t need to leap into action to defeat the bill just yet.
Still, there’s something truly amazing about the fact that any Republican officials would pursue this at all. The American mainstream has shown, over and over again, that Social Security privatization is a non-starter. The very idea pushed Bush’s presidency into a downward trajectory in 2005, and it never recovered. Even Paul Ryan, when shaping the radical House GOP budget plan, left Social Security out of the equation.
For that matter, after the economy crashed in 2008, I assumed it’d be a long while until Republicans started talking up Social Security privatization again.
Perhaps Pete Sessions and his cohorts are slow learners?
I suppose the real fun would be putting the Republican presidential field on the spot. “Mr. Romney, a member of the House Republican leadership is pushing legislation to privatize Social Security. If such a bill reached your desk as president, would you sign it?”
Inquiring minds want to know.
Update: One of the six co-sponsors is Republican Caucus Chairman Jeb Hensarling of Texas. This is relevant because it means two members of the GOP leadership are on board with this proposal.
By: Steve Benen, Contributing Writer, Washington Monthly-Political Animal, June 8, 2011
Is Paul Ryan’s Medicare A Voucher System Or Not: Who Is Demagoguing Who?
During the White House meeting this week between President Obama and the Republican leadership, Rep. Paul Ryan took the President to task for demagoguing Ryan’s proposed Medicare changes.
According to the Congressman, the insistence on the part of the President- and his brother and sister Democrats – that the program is a voucher system rather than the ‘premium support’ program Ryan steadfastly claims the idea to be, is grossly misleading Americans, all for the purpose of political gain.
While Ryan’s confrontation with Obama brought cheers from the GOP freshman class who fill the corridors of Congress these days, the question that needs to be asked is, ”Who is demagoguing who?”
In truth, the concepts behind premium support and voucher programs are fairly close, each with a similar objective – the government helping out the beneficiary by paying a portion of a benefit, in this case an insurance premium.
Rep. Ryan likes to point out that his proposed Medicare program is the same as that employed by the Federal Employees Benefits Program and the Medicare Part D benefit that helps seniors pay for their prescription drugs. Both these programs operate using government premium support, whereby the government contributes towards the payment of the premiums charged by the private insurance carrier to the beneficiary, but makes the government’s share of the premium payment directly to the insurance company issuing the policy.
This direct payment is what is often considered the point of distinction between a voucher and premium support. In a voucher program the government gives the financial support directly to the beneficiaries who are then on their own to do what they will with the money, so long as they don’t look to the government to do anything else for them.
Using this standard alone, Rep. Ryan would have a point.
Indeed, his plan proposes seniors going to private insurers for their health care coverage with the government contributing a share of the premium charges and making the payment directly to the insurance company. This is just as the federal government does in the cases of federal employee benefits and Medicare Part D.
However, there is a more important distinction between premium support plans and vouchers.
In the plan that provides heath care benefits for federal employees, on which Ryan relies to make his premium support case, if a government employee’s premium costs go up –and they always do – the government increases the premium support in lockstep with the increased premium.
Not so with RyanCare.
Ryan’s proposal, that would turn Medicare into a private insurance program with the government providing assistance to seniors on their premium payments, limits increases in that support to the cost of living index – an amount wholly insufficient to cover the extra costs as we know that rising costs of health care and premium charges always exceed annual cost of living increases. Thus, if premiums increase (and of course they will) the costs of these increases will be shifted to our senior citizens who, in most instances, would not appear to have the ability to take on these increased costs on their fixed retirement budgets.
This, by anyone’s definition, is a voucher program.
In a recent piece by Washington Post blogger Ezra Klein, Ezra interviewed Henry Aaron of the Brookings Institute and Bob Reischauer of the Urban Institute. Messrs. Aaron and Brookings are the two gentlemen who originally came up with the term “premium support” to describe their idea for a Medicare system where the program is opened up to competition by private insurers but has safeguards built in to protect Medicare beneficiaries from the very cost shifting program the Ryan plan proposes.
While Ryan has largely adopted this model – the two originators make clear that he has done so without the key cost shifting safeguards that they believe are so essential to it working.
According to Aaron-
If one does the arithmetic, income grows a few percentage points faster than prices. Health-care spending grows faster than income by a couple of percentage points. So we’re looking at linking to an index that grows less rapidly than health-care costs by three to four percentage points a year. Piled up over 10 years, and that’s a huge erosion of coverage. It’s vouchers, not premium support.
Clearly, Ryan’s plan bears a far greater resemblance to a voucher program than the premium support programs he looks to as back up for what he is selling.
We can have a debate as to whether we would be better off turning Medicare over to the private markets. While I believe it is an idea fraught with dangerous consequences to our future seniors (those who are not yet 55 years of age), an honest debate to discuss these different ideas cannot hurt.
However, when Ryan and friends continue to play the political game of blaming the President for misleading the public when it is, in fact, Ryan who is attempting to mislead, there will be no honest debate.
It is not the President who is demagoguing on this one – it is Paul Ryan.
By: Rick Ungar, The Policy Page, Forbes, June 5, 2011
GOP Has 2012 Trouble: Attacking Medicare And Social Security Could Be Death Of Republicans’ 2012 Hopes
Recent weeks have finally defined the race for the 2012 Republican presidential nomination. The field has finally achieved a greater level of clarity as many candidates have opted out, running the absurd-to-formidable gamut from Donald Trump to Mitch Daniels. A smaller number have opted in, running the has-been to may-never-be gamut from Newt Gingrich to Tim Pawlenty, not to mention former Massachusetts Gov. Mitt Romney, who officially entered the race yesterday.
A former Minnesota governor, Pawlenty officially joined the wannabe ranks last week with a speech aimed at defining himself as a fearless teller of hard truths (previously he had perhaps best been known for lacking any definition at all). This is smart on several levels. He quickly moved to fill the void left by Daniels, the governor of Indiana, whom many in the party had yearned for as a tough-minded fiscal hawk. And in part it is a strong bid for the mantel of not-Romney, the alternative to the former Massachusetts governor and current GOP front-runner. Romney is a laughably transparent flip-flopper, so Pawlenty’s new truth-teller frame could make him an ideal foil.
Politicians love to position themselves as tellers of hard truths, brave enough to boldly level with the voters. And the current tempestuous political climate, with its roiling discontent with politics as usual, especially lends itself to such a pose. Pawlenty is merely the latest candidate to seize this meme.
But his candidacy runs squarely afoul of Robert’s 13th rule of politics: People like the idea of hard truths and hard-truth tellers much more than they like the reality of them. You can ask straight shooters like Walter Mondale (“Mr. Reagan will raise taxes, and so will I. He won’t tell you. I just did.”), Paul “I’m not Santa Claus” Tsongas, and John “Straight Talk” McCain. Winning the presidency requires an aspirational element at odds with the doom-and-gloom that comes with those self-consciously trying to speak hard truths.
So kudos to Pawlenty for standing up to big ethanol in little Iowa. But while some may take off their hats to him for traveling to Florida in order to call for overhauls (read: cuts) of Social Security and Medicare, it might be merely to scratch one’s head. As Hot Air blogger Allahpundit quipped after Pawlenty’s Florida performance, “Alternate headline: ‘Pawlenty now unelectable in not one but two early primary states.’ ”
Maybe this is actually deep strategy. Many conservatives and Tea Partyers in particular seem intent these days on—as Ronald Reagan used to complain of some of his more gung-ho supporters—going “off the cliff with all flags flying.” Perhaps this is a clever way for Pawlenty to appeal to that “I’d rather lose being right” instinct.
An additional problem for would-be hard-truth tellers is that in the telling, these so-called truths often become vehicles for an even harder ideology. The attempt to conflate serious problems with ideologically inflexible and partisan solutions can create political tensions and open deadly political rifts. See the political abyss House Budget Committee Chairman Paul Ryan has marched his colleagues into over his plan to repeal and replace Medicare.
With the future insolubility of Medicare as a starting point, Ryan and the GOP have embarked on an emphatically ideological course. They hailed themselves as seriously facing a tough issue, and they spin the plan as an attempt to save the program, but all it would save would be the name “Medicare.” A guarantee of healthcare would be replaced with a voucher of diminishing value. If it fails to cover seniors’ costs . . . tough luck. The view was perhaps best summed up by Georgia GOP Rep. Rob Woodall, who chastised a constituent at a town hall meeting last month when she asked how, after Ryan’s reforms eliminated the guarantee of Medicare, she could expect to get medical coverage since she worked for a company that doesn’t offer it in their retirement package. “Hear yourself, ma’am,” he said. “You want the government to take care of you, because your employer decided not to take care of you. My question is, ‘When do I decide I’m going to take care of me?’ ”
Woodall, like many conservatives, fails to grasp why programs like Medicare were created. They were a response to a market failure—specifically an inability of senior citizens to get or pay for healthcare. But in Woodall’s world there are apparently no market failures; if seniors can’t get healthcare it’s because they simply won’t take responsibility for themselves. Of course in 1964, 44 percent of senior citizens had no health coverage, and the cost of medical bills had driven more than one third of them below the poverty line. If only they had had the moral fiber to take care of themselves!
Safe in a heavily conservative district, Woodall can spout such nonsense. But roughly 60 House Republicans represent districts Barack Obama won in 2008 and virtually all voted for the Ryancare overhaul. In this case, the gap between hard truths and hard ideology may be big enough to swallow a House majority.
Just ask the pollsters employed by the House GOP, who warned that the bill was a ticking time bomb, Politico reported last week. Or ask Jane Corwin, that bomb’s first casualty. She is the Republican who lost May’s special election in a GOP-leaning New York district in which the Ryan plan was the defining issue. Or ask Sens. Olympia Snowe, Susan Collins, Lisa Murkowski, and Scott Brown, four of the five Senate Republicans who fled the plan last week (the fifth, Rand Paul, opposed it as not being conservative enough).
Or ask Gingrich, the former House speaker who drew party-wide opprobrium when he dismissed the Ryan plan as being so much “right-wing social engineering.” Pity poor Newt: He was just trying to tell a hard truth.
By: Robert Schlesinger, U. S. News and World Report, June 3, 2011
Age Gap: The GOP’s Generational Weapon In The Medicare Fight
To senior citizens at town hall meetings angry or worried about their plan to convert Medicare to a private insurance scheme, Republicans have a simple answer: It’s not about you. You’ll be fine. This is for “the next generation.”
The next generation is everyone 55 or under, since the plan would not start for ten years and would affect only newly eligible seniors. The stated logic of the ten-year delay is that it takes time to put the system in place and that people need time to plan. But if “premium support” (a euphemism right up there with “enhanced interrogation”) were ever going to work, it could be implemented as quickly as the Affordable Care Act (four years) or Medicare’s prescription drug coverage (two years). Presumably, the delay is mostly a political kludge, intended to avoid a backlash from those now or soon to be dependent on Medicare by affecting only those young enough to be giving little thought to retirement health coverage.
But the line they chose is more than a gimmick: The 55-and-over cutoff marks a sharp and significant generational divide. Those over 55 will continue to benefit from one of the triumphs of social insurance in the Great Society, while the rest of us will be on our own, with a coupon for private health insurance. If you consider what it means to be 55 years old in 2011, you’ll see the significance of the line.
Today’s 55-year-old was born in 1956. That’s not generally considered a major break in the generations. It’s smack in the middle of the Baby Boom (the peak of the boom, in fact), with almost a decade to go before the first Gen-Xers were born, dreaming of Winona Ryder. But the difference between early and later Boomers, especially in their experience of the economy, is dramatic.
A baby born in 1956 would have graduated from high school in about 1974, from college in 1978 or so. Look at almost any historical chart of the American economy, and you see two sharp breaks in the 1970s. First, in 1974, household incomes, which had been rising since World War II, flattened. Real wages started to stagnate. The poverty rate stopped falling. Health insurance coverage stopped rising. Those trends have continued ever since.
Second, a little later in the decade, around the time today’s 55-year-olds graduated from college (if they did—fewer than 30 percent have a four-year degree), inequality began its sharp rise, and the share of national income going to the bottom 40 percent began to fall. Productivity and wages, which had tended to keep pace, began to diverge, meaning that workers began seeing little of the benefits of their own productivity gains. The number of jobs in manufacturing peaked and began to drop sharply. Defined benefit pensions, which provide a secure base of income in retirement, began to give way to 401(k)s and similar schemes that depend on the worker to save and the stock market to perform. While the benefits of higher education rose, college tuitions started to rise even faster. Those trends, too, have continued.
If there was ever going to be a generational war in this country, that high school class of ’74 would be its Mason-Dixon line. It’s the moment when Bill Clinton’s promise—“if you work hard and play by the rules you’ll get ahead”—began to lose its value. Today’s seniors and near-seniors spent much of their working lives in that postwar world, with their incomes rising, investments gaining, their health increasingly secure, and their retirements predictable. Everyone 55 and younger spent his or her entire working life in an economy where all those trends had stalled or reversed. To borrow former White House economist Jared Bernstein’s phrase, it was the “You’re On Your Own” economy. Finally, those 55-year-olds are spending several of what should be their peak earning years, years when they should be salting away money in their 401(k)s and IRAs, in a period of deep recession and very slow recovery.
The Ryan plan, in other words, delivers to the older generation exactly what they’ve had all their lives—secure and predictable benefits—and to the next generation, more of what they’ve known—insecurity and risk. It’s hardly the first generational fight the GOP has started. The previous one was just last fall, when they campaigned for Medicare, and against the $500 billion in cuts (mostly by getting rid of the overgenerous subsidies to private insurers in an experimental program) passed as part of the Affordable Care Act. With an off-year electorate that was overwhelmingly older, they could put all their bets on the older side, knowing that seniors would see little benefit from the Affordable Care Act and were naturally worried about any change to the health system they enjoyed.
Heading into the 2012 election, however, the electorate is likely to shift back to one in which younger and middle-aged voters vote in proportion to their share of the population, so a “Mediscare” campaign won’t work. This time, the GOP hopes to play both sides of the generational war, gambling that while seniors want security, younger voters never expected the certainty of Medicare, just as they don’t expect reliable pensions or Social Security benefits, and thus will embrace a plan that sounds innovative, flexible, and market-based. Contending that the only alternative to premium support is the end of Medicare entirely, they are offering a generation that is accustomed to getting less than their parents a little bit, rather than nothing.
This strategy is a variation on the generational conflict the Bush Administration tried to launch in 2005 over Social Security privatization. Although it never reached the level of specificity that Ryan achieved, the calculus was the same: Younger voters would welcome the opportunity to take advantage of the stock market for their retirement, rather than the stodgy and predictable system their parents and grandparents liked.
That wager didn’t work, however: It turned out that older voters were terrified of Social Security privatization and younger voters unenthusiastic. Within five months, the radical move that every pundit thought was a near-certainty when George W. Bush declared “I’ve got political capital and I intend to use it,” had disappeared, never even introduced as legislation. And despite this week’s relaunch of the Ryan plan, it’s likely to end in the same result. If Social Security is any precedent, younger voters will be indifferent, while older voters won’t believe they’re exempt. The Republicans will again walk away from the conflict, hoping to get credit for being “serious” without bearing a political price for the error.
For Democrats, the defeat of the Ryan plan, like the failed Social Security privatization before it, will be regarded as a great victory, and an opportunity to get a fresh start with worried older voters. But they should not ignore the generational divide revealed by Ryan’s cutoff. If progressive politics has nothing to offer the late Boomers and the generations that follow except the same old programs, and nothing that responds to their distinctive experience of the economy, then eventually they’ll fall for one of these gimmicks from the right.
By: Mark Schmitt, The New Republic; Senior Fellow, Roosevelt Institute, May 20, 2011
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