Do Republicans Really Oppose Making Health Care Insurance Cheaper?
The health-care debate has a cyclical nature, and I don’t want to keep writing the same posts over and over again. So rather than write a whole new piece on the GOP’s rediscovery of the Congressional Budget Office’s estimate that the health-care law will reduce the labor supply (which they recast as “destroying jobs”), I’ll just link to the long post I did on the subject in January.
In case you don’t want to click over, though, the short version is this: If you make health-care insurance cheaper and make it harder for insurance companies to deny people coverage, then a certain number of people who would like to leave the labor force but can’t afford or access health-care insurance without their job will stop working.
To understand why, imagine a 62-year-old woman who works for IBM and beat breast cancer 10 years ago. She wants to retire. She has the money to retire. But no one will sell her health care under the status quo. Under the health-reform law, she can buy health care in an exchange because insurers can’t turn her away due to her history of breast cancer. So she’ll retire. Or imagine a 50-year-old single mother who wants to home-school her developmentally disabled child but can’t quit her job because they’ll lose health care. The subsidies and the protections in the Affordable Care Act will give her the option to stop working for awhile, while under the old system she’d need to stick with her job to keep her family’s health-care coverage. That’s how health-care reform can reduce the labor supply. If either case counts as a destroyed job, then so does my winning the lottery and moving to Scotland in search of the perfect glass of whiskey.
Moreover, this would happen for any health-care reform that reduced costs and improved access. So when Republicans say that they want a better health-care reform bill that does even more to reduce costs, they’re calling for legislation that, according to them, would “destroy” even more jobs than the Affordable Care Act. If they’re against all legislation that might destroy jobs in this way, then they’re against making health care cheaper. In fact, by that logic, we could just jack the price of health-care insurance up and make it easier for insurers to turn individuals away. Then even more people would have to stick with their employers. Job creation!
By: Ezra Klein-The Washington Post, February 11, 2011
Social Security and The Deficit: Associated Press Passes Off Dishonest Editorial About Social Security Finances
The insidious ways that conservative narratives bleed into our mainstream economic discourse as objective truths is a dominant theme in my book, and this story by the Associated Press’s Stephen Ohlemacher — ostensibly a piece of reporting rather than opinion — is one of the most egregious examples I’ve encountered. Check out the lede:
“Sick and getting sicker, Social Security will run at a deficit this year and keep on running in the red until its trust funds are drained by about 2037, congressional budget experts said Wednesday in bleaker-than-previous estimates.”
Is it “sick”? Social Security has $2.5 trillion in T-Bills sitting in a trust fund, is financed through 2037 and if nothing were to change it would still be able to pay out higher benefits than it does today, indefinitely.
Is it getting sicker? Well, the 2000 Social Security Trustees’s report (PDF) projected that the trust fund would run out in … 2037. But the 1997 report (PDF) expected the trust fund to be depleted by 2029 — 8 years earlier than currently projected. So in that sense, it’s “healthier” today than it was 13 years ago. More from the AP’s thinly veiled editorial:
“The massive retirement program has been suffering from the effects of the struggling economy for several years. It first went into deficit last year but had been projected to post surpluses for a few more years before permanently slipping into the red in 2016.”
“This year alone, Social Security will pay out $45 billion more in retirement, disability and survivors’ benefits than it collects in payroll taxes, the nonpartisan Congressional Budget Office said.”
OK, this is just incredibly dishonest. Let me explain why:
When he says the program is “in the red” what he’s talking about is that current tax revenues being paid into the system have fallen below current benefit payments. Which should be unsurprising with wages stagnating and an unemployment rate of 9.4 percent.
But what’s unsaid is that the Social Security’s revenues aren’t limited to current tax receipts, thanks to the interest earned on those T-Bills in the trust fund. They earned 5.1 percent in 2008, and 4.8 percent in 2009. When you include that earned interest, as any honest reporter must do, the program has not “gone into the red,” and — if we define “going into the red” as total annual outlays exceeding total income, including interest income — it won’t until at least 2018, according to the Trustees’ latest report (PDF).
Yes, the Trust Fund grew last year, is growing this year, and will continue to grow for several more years, until it reaches a projected $4.2 trillion dollars. Back to the AP misinforming the public:
“That figure nearly triples – to $130 billion – when the new one-year cut in payroll taxes is included.”
“Congress has promised to replenish any lost revenue from the tax cut, but that’s hardly good news, either, adding to the federal budget deficit. In another sobering estimate, the congressional office said government red ink this year will increase to $1.5 trillion, the most in U.S. history.”
Could any ordinary citizen reading that possibly know that, by law, Social Security’s financing is separate from the rest of the federal budget, and that the program has not added a single penny to the deficit?
These are two wholly separate issues — there’s Social Security’s financing, which has been in surplus since 1983, and then there’s the federal budget, which is in deficit because of the downturn, tax breaks showered on the wealthy and trillions in war spending. (Note: unlike the Social Security program, we don’t have a War Trust Fund with its own dedicated revenue stream.)
The AP then turns the program’s greatest strength into a weakness. Behold the sleight-of-hand:
“Social Security has built up a $2.5 trillion surplus since the retirement program was last overhauled in the 1980s. Benefits will be safe until that money runs out. That is projected to happen in 2037 – unless Congress acts in the meantime.”
No, Congress could raise taxes to cover the shortfall anytime — nothing need be done in “the meantime.”
But more to the point, this narrative ignores the fact that the Trust Fund had a specific purpose: to ease the glut of baby-boomers entering the system. As I wrote in September, it “was a far-sighted act of governance.”
At the time, the oldest boomers were 37 years old, and the youngest were just 19. In 2037, when the fund is projected to be tapped out, the oldest baby boomers still kicking will be 91 and the youngest will be 73 years old. Not to be morbid, but given that the life expectancy of Americans is 78.1 years today, that means that the “glut” of baby-boomers receiving benefits will be receding in the nation’s rearview mirror. In other words, the trust fund will have done exactly what it was intended to do.
This point never seems to wind up in the conversation.
But it gets even worse, as Ohlemacher advances perhaps the most dishonest spin in the entire debate — that the trust fund is not a huge pile of T-Bills, but just “IOUs” — that the funds have been “borrowed” by the government.
“The $2.5 trillion surplus, however, has been borrowed over the years by the federal government and spent on other programs. In return, the Treasury Department has issued bonds to Social Security, guaranteeing repayment, with interest.”
Again, this conflates two wholly separate issues. Let’s run it down:
The national debt is (approximately) $14 trillion. None of that debt is a result of Social Security, which is fully funded and has run surpluses for years.
The federal government issued $14 trillion in T-bills to cover its budget shortfalls — that’s the national debt. It exchanged those $14 trillion in T-bills for cash (which it spent on programs other than Social Security). It must pay back that cash, with interest, as those T-bills are redeemed.
So, yes, it borrowed money — it borrows money by issuing Treasury Bills, which are held by individuals, institutions and governments. One of those institutions happens to be the Social Security Administration — $2.5 trillion of those T-Bills were exchanged for cash paid into Social Security by workers (and the interest is earned). Which is good, as it’s a safe investment for the surpluses that have been generated. They couldn’t just stick those trillions under a mattress.
But those T-Bills could just as easily have been exchanged for cash from China, or from private pension funds — there would be no difference at all. That would have happened if there had never been a Social Security program in the United States. The $14 trillion in debt would be exactly the same — it doesn’t matter who holds the T-Bills.
All of the above is why the deficit has nothing to do with SS — they are two completely separate issues being conflated by the “entitlement crisis” crowd. And no “neutral” reporter should ever write a story that simply carries their water for them.
By: Joshua Holland | Sourced from AlterNet, January 27, 2011
Social Security-Raising False Alarms
If there’s a better government program than Social Security, I’d like to know what it is. It has gone a long way toward eliminating poverty among the elderly. Great numbers of them used to live and die in ghastly, Dickensian conditions of extreme want. Without Social Security today, nearly half of all Americans aged 65 or older would be poor. With it, fewer than 10 percent live in poverty.
The Center on Budget and Policy Priorities tells us that close to 90 percent of people 65 and older get at least some of their family income from Social Security. For more than half of the elderly, it provides the majority of their income. For many, it is the only income they have.
When you see surveillance videos of some creep mugging an elderly person in an elevator or apartment lobby, the universal reaction is outrage. But when the fat cats and the ideologues want to hack away at the lifeline of Social Security, they are treated somehow as respectable, even enlightened members of the society.
We need a reality check. Attacking Social Security is both cruel and unnecessary. It needs to stop.
The demagogues would have the public believe that Social Security is unsustainable, that it is some kind of giant contributor to the federal budget deficits. Nothing could be further from the truth. As the Economic Policy Institute has explained, Social Security “is emphatically not the cause of the federal government’s long-term deficits, since it is prohibited from borrowing and must pay all benefits out of dedicated tax revenues and savings in its trust funds.”
Franklin Roosevelt couldn’t have been clearer about the crucial role of the payroll taxes used to finance Social Security. They gave the beneficiaries a “legal, moral and political right” to collect their benefits, he said. “With those taxes in there, no damn politician can ever scrap my Social Security program.”
There has always been feverish opposition on the right to Social Security. What is happening now, in a period of deficit hysteria, is that this crucial retirement program is being dishonestly lumped together with Medicare as an entitlement program that is driving federal deficits. Medicare costs are a serious problem, but that’s because of the nightmarish expansion of health care costs in general.
Beyond Medicare, the major drivers of the deficits are not talked about so much by the fat cats and demagogues because they were either responsible for them, or are reaping gargantuan benefits from them, or both. The country is drowning in a sea of debt because of the obscene Bush tax cuts for the rich, the wars in Afghanistan and Iraq that have never been paid for and the Great Recession.
Mugging the nation’s grandparents by depriving them of some of their modest, hard-earned Social Security retirement benefits is hardly an answer to the nation’s ills. And, believe me, those benefits are modest. The average benefit is just $14,000 a year, which is less than the minimum wage would pay. With employer-provided pensions going the way of the typewriter and pay telephones, the income from Social Security is becoming more precious by the day.
“If we didn’t have Social Security, we’d have to invent it right now,” said Roger Hickey, co-director of the Campaign for America’s Future. “It’s perfectly suited to the terrible times we’re going through. Hardly anyone has pensions anymore. People’s private savings have taken a huge hit, and home prices have been hit hard. So the private savings that so many seniors and soon-to-be seniors have counted on have just been wiped out.
“Social Security is still there, and it’s still paying out retirement benefits indexed to wages. It’s the one part of the retirement stool that is working.”
The deficit hawks and the right-wingers can scream all they want, but there is no Social Security crisis. There is a foreseeable problem with the program’s long-term financing, but it can be fixed with changes that do no harm to its elderly beneficiaries. One obvious step would be to raise the cap on payroll taxes so that wealthy earners shoulder a fairer share of the burden.
The alarmist rhetoric should cease. Americans have enough economic problems to worry about without being petrified that their Social Security benefits will be curtailed. A Gallup poll taken recently found that 90 percent of Americans ages 44 to 75 believed that the country was facing a retirement crisis. Nearly two-thirds were more fearful of depleting their assets than they were of dying. The fears about retirement are well placed — most Americans do not have enough to retire on. But there should be no reason to believe that Social Security is in jeopardy.
The folks who want to raise the retirement age and hack away at benefits for ordinary working Americans are inevitably those who have not the least worry about their own retirement. The haves so often get a perverse kick out of bullying the have-nots.
By: Bob Herbert, Op-Ed Columnist, The New York Times, January 24, 2011
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