Ask a Democrat: On Social Security, Which Side Are You On?

by Richard Eskow

This is a moment of moral clarity. Right now there are only two sides in the Social Security debate: the side that says it’s acceptable to cut benefits – in a way that raises taxes for all income except the highest – and the side that says it isn’t.

It’s time to ask our leaders – and ourselves – a simple question: Which side are you on?

Nancy Pelosi says (http://www.huffingtonpost.com/2012/12/18/nancy-pelosi-fiscal-cliff_n_232...) she can convince most Congressional Democrats to “stick with the President” as he pursues his gratuitous and callous plan to cut Social Security benefits as part of a deficit deal – even though Social Security does not contribute to the deficit.

Excuse me: Stick with the President? What about sticking with our seniors and our veterans? What about sticking with our disabled fellow Americans? What What about sticking with the more than 4,000 children on Social Security who lost a parent in the Iraq War?

If you want to “stick with” Americans on Social Security, it’s time to call (http://strengthensocialsecurity.org/publicstatementcallpage) everybody who represents you in Washington – your Representative, your Senator, your President – and tell them that they’ll lose your support if they do this deal.

It’s time for an end to the Orwellian doublespeak. Cutting benefits won’t “strengthen” Social Security, as Nancy Pelosi claims. Cuts of 6.5 percent for a 75 year old and 9.2 percent for a 95 year old aren’t so small that “folks won’t even notice ‘em,” as President Obama claimed. They’re not a “technical” adjustment, as his press secretary argued (http://www.huffingtonpost.com/2012/12/18/nancy-pelosi-fiscal-cliff_n_232...), nor do “most economists believe … this about getting a proper measure of inflation.”

The smart economists know that even today’s cost of living formula isn’t enough. It undercounts the things older and disabled people use the most, like health care and public transportation. Some other people know the formula’s inadequate, too: Seniors. They live with the costs every day.

So let’s stop all the double-talk and get down to the real question at hand: Which side are you on?

It’s time to put an end to weasel words and waffling language, too. You know the kind I mean: “We won’t slash benefits.” “No major cuts.”

The Huffington Post reports (http://www.huffingtonpost.com/2012/12/20/chained-cpi-democrats_n_2339682...) that Democrats voiced their objections to the President’s chained CPI offer. But when asked, they “did not rule out voting for a deal” which included it.

That’s not good enough.

Mike Lux wrote an informative piece (http://www.huffingtonpost.com/mike-lux/only-an-uprising_b_2339671.html) explaining why so many Democrats are likely to fall in line anyway unless we pressure them. You can probably guess the reasons: Access. Influence. Not alienating the top guy. I’m not dismissing their concerns. I get it. They’re in a tough position.

Know who’s really in a tough position? Elderly widows trying to get by on $850 a month. If Obama’s deal goes through that figure will fall to around $770 a month by the time they’re 95.

Know who else is in a tough position? Kids who lost a Mom or Dad in Iraq. Disabled Americans. And the millions of struggling families who’ll see their taxes go up as the “chained CPI” bounces them into higher tax brackets.

It’s “going to be a tough vote”? Tough. You should’ve thought of that before you decided to run for office, because tough comes with the territory.

And please don’t tell those of us who oppose this deal that we’re too “extreme” or too “left.” Three-quarters of all Republicans and Tea Party members agree with us, so who’s “extreme”? Don’t tell us we’re close-minded, either: Some of us know the numbers better than you do, but you won’t talk to us. You’d rather give credibility to the stealth corporate lobbyists at Fix the Debt and the Committee For a Responsible Federal Budget.

We’re very open-minded. We’re open to lifting the payroll tax cap. We’re open to fighting unemployment so that more people can pay into Social Security’s trust fund. We’re open to increasing its benefits as a stimulus measure – and because it’s the right thing to do. We’re open to a public exchange of ideas on the subject.

Don’t try to cut benefits behind closed doors and then tell us to be “open-minded.”

It’s true that waffling Democrats have offered some fine rhetoric. They’ve always got good rhetoric. In fact, they’ve got rhetoric to burn. But somebody else always winds up feeling the heat.

The President even offered up a new rhetorical flourish – the “superlative CPI” – he says will help those who are most deeply in need. But he offered no details, and the devil’s in the details. A lot of seniors on Social Security are already impoverished, according to the research (http://www.ssa.gov/policy/docs/ssb/v65n2/v65n2p14.html). And that study was don before the economy was battered in 2008 – by many of the same Wall Street CEOs pushing this deal. It’s a pipe dream.

Besides, why fund an antipoverty program with other seniors’ and disabled people’s benefits, when the wealthy still won’t pay their fair share under your “compromise”: to avoid the “fiscal cliff”? As far as the “cliff” goes, Van Halen said it best: Go ahead and jump.

And if politicians come around at election time after voting for this deal, a lot of people will tell them the same thing I just said: Jump off a cliff.

Even if your only loyalty is to Team Blue – if Democratic victories are all you care about – you still need to make those calls (http://strengthensocialsecurity.org/publicstatementcallpage). Democrats’ huge polling lead on Social Security helped them win the House in 2006. Then that lead fell by 21 points (http://blog.ourfuture.org/20110120/Shocker__Obamas_Less_Trusted_Than_Bus...) and Republicans won the House back – helped in large part by their “Seniors’ Bill of Rights,” a transparent con only made plausible by muddled Democratic doublespeak.

It’s only been a few weeks since the party’s renewed credibility on this issue helped it achieve a major victory. Now it’s about to trade it away – again. And this time it lose that advantage forever. We need to act – now. We need to tell them: Don’t just say the right thing. Do the right thing. Put up or shut up.

There are real leaders who can show them how it’s done. Rep. Keith Ellison: “I will not vote for something that includes chained CPI.” Rep. Raul Grijalva: Chained CPI is “a Beltway fig leaf that I will never support.” Rep. Charlie Rangel: “Any deal that cuts Social Security, Medicare or Medicaid benefits is unacceptable and I will oppose it.”

That’s how it’s done.

This is no time for us to waffle, either. Did you vote for Barack Obama, or for a Democratic Senator or Representative? I did. I feel a personal responsibility to do everything I can to stop them from doing this.

It’s time to make those phone calls and send those emails. Because Lux is right about something else: Without mass resistance these Social Security cuts are a done deal. And we’ll have to face the fact that we didn’t do enough to stop it.

Tell the President you’re against the chained CPI. Tell your Senators and your Representative to declare their unequivocal opposition to it like Grijalva and Ellison and the others did, and to vote accordingly.

And ask them that simple question: Which side are you on?

© 2012 Richard Eskow
http://blog.ourfuture.org/20121221/ask-a-democrat-on-social-security-whi...

Richard (RJ) Eskow is a well-known blogger and writer, a former Wall Street executive, an experienced consultant, and a former musician. He has experience in health insurance and economics, occupational health, benefits, risk management, finance, and information technology. Richard has consulting experience in the US and over 20 countries.

Richard has also worked in long-range forecasting. With the Institute for the Future in Palo Alto, he participated in an online game where 10,000 players enacted future disaster scenarios. He has also done forecasting and analytical work for the Rockefeller Foundation and other organizations. He is among "fifty of the world's leading futurologists" whose "hopes, fears, and best predictions" are collected in a 2011 book entitled The Rough Guide to the Future.

He is a regular columnist for the science and culture blog 3 Quarks Daily and a Contributing Editor for Tricycle magazine. His reflections on blogging and spiritual principles were included in "Best Buddhist Writing of 2008."

Six Weeks After Reelection, Obama Sells Out Liberal Democrats

by Ted Rall

After the election Kerry Eleveld wrote a piece for The Atlantic titled “Why Barack Obama Will Be a More Effective Liberal in His Second Term.”
http://www.theatlantic.com/politics/archive/2012/11/why-barack-obama-wil...

“In response to their initial disappointment with the president’s early performance, many progressives speculated that Obama was just waiting for a second term to be more liberal,” he said. That was true. They were.

Eleveld continued: “A more likely explanation is that Obama was still finding his groove, figuring out which levers worked best for him in the context of governing the nation. And in some ways, he was still developing the courage of his convictions.”

That, it turns out, was false. He wasn’t.

You can’t develop convictions that you don’t have in the first place.

It’s hard to remember now, more than six weeks later, but there was once a time (six long weeks ago) when liberal Democrats who naïvely chose to ignore Obama’s consistently conservative first term, his consistently conservative career in the Senate, and his consistently conservative pre-politics career as a University of Chicago law professor, seriously believed that his reelection would lead to a progressive second term.

“It’s time for President Obama to assume the Roosevelt-inspired mantle of muscular liberalism,” Anthony Woods wrote in The Daily Beast. “This is his moment. He only has to take it.”
http://www.thedailybeast.com/articles/2012/11/26/what-progressives-want-...

It’s his moment, all right. And he’s taking it. But when it comes to Obama, liberals are once again guilty of some major wishful thinking. Obama’s economic policies are closer to Herbert Hoover than Franklin Roosevelt.

“With re-election safely behind him, we hope Obama will be bolder in his second term,” Peter Dreier and Donald Cohen wrote in The Nation.
http://www.thenation.com/article/171263/obama-won-now-its-time-change-sy...

Again with the Hope!

Change, not so much.

Race doesn’t matter. Looks don’t matter. Age doesn’t matter. Style doesn’t matter. Only one thing matters when you’re electing a politician: policy. And the willingness and ability to carry it out. Everything you needed to know about Barack Obama boils down to the fact that he voted nine times out of ten to fund the Iraq war (http://www.factcheck.org/elections-2008/the_truth_on_troop_support.html), at the same time that he was giving speech after speech pretending to oppose it. And that was before he won in 2008.

It didn’t take long for Obama to sell out the liberal base of his party the first time. Everything became clear in December 2008, when his cabinet picks didn’t include a single liberal. Well, here it is, December 2012, and can’t get fooled again but we did, as George W. Bush would sorta say.

Wait a minute: I thought Obama was a Democrat. So why is he appointing a Republican as secretary of defense? Not just a Republican, but a homophobe? In 1998 Republican Senator Chuck Hagel criticized President Clinton’s nominee for ambassador to the sensitive strategic hotbed of Luxembourg not only for being gay, but for being “openly, aggressively gay.” (http://articles.latimes.com/2012/dec/21/nation/la-na-hagel-20121222) Gay rights groups demanded that Hagel “repudiate” his bigoted comments, and he dutifully did so, but the point is that a truly progressive Democratic president would never have appointed a gay-bashing right-wing Republican in the first place. Yeah, America has changed, but it wouldn’t be that hard to find a liberal Democrat who thought gays and lesbians were real human beings back in 1998.

The “fiscal cliff” negotiations have led to another replay of Obama’s 2008 sellout, this one on economic fairness. Throughout the 2012 campaign the president promised to raise taxes on the top 2% of American households, those earning over $250,000 a year. As of November 9th he was still “sticking to his guns,” calling his stance nonnegotiable (http://nbcpolitics.nbcnews.com/_news/2012/11/09/15052361-obama-sticks-to...). On December 17th, however, without the defeated Republicans even having to propose a counteroffer, Obama pulled a classic Democratic negotiating-against-himself maneuver. Not only did he offer House Speaker John Boehner to protect the spectacularly wealthy taxpayers who earn up to $400,000 from a tax hike (http://www.huffingtonpost.com/2012/12/17/obama-fiscal-cliff-offer_n_2319...), he quietly sold out senior citizens by gutting the current system that calculates cost-of-living increases for Social Security and other federal entitlement programs.

At first, few people would notice Obama’s switch to a so-called “chained consumer price index.” (Under the new system, if the price of steak goes up, the government assumes you’ll switch to hamburger—so it doesn’t count as inflation.) This year, for example, the inflation rate under the chained CPI is 0.3% less. But inflation is exponential and the effect is cumulative. By the time you hit age 92, you’d lose an entire month of Social Security benefits each year.
http://money.cnn.com/2012/12/19/news/economy/inflation-chained-cpi/index...

This, remember, was the president who was supposed to bust out as an FDR-style crusading liberal ready, willing and able to fight the right-wing Republicans and stand up for ordinary Americans.

The good news is, the anticipation is over. Liberals who worried that Obama would sell them out need worry no more (http://thehill.com/blogs/pundits-blog/presidential-campaign/269519-dem-b...). Not so deep down, they knew this would happen. Now they can settle down for four more years of depressing Republican-lite kowtowing to corporations and the one percent.

I know what they’re thinking. Things would be even worse if Mitt Romney had won.

I wouldn’t be so sure.

Policy-wise, a Romney administration would have been pretty much the same as Obama’s second term. Who knows, he might have picked Chuck Hagel as Defense Secretary.

In terms of building the political Left, a President Romney would have galvanized liberals and progressives to fight for a fairer society that treats everyone equally and with dignity. Obama, his sellouts, and his faux liberal apologists represent two steps backwards for progressivism.

© 2012 Ted Rall
http://tedrall.com/

Ted Rall is the author of the new books "Silk Road to Ruin: Is Central Asia the New Middle East?," and "The Anti-American Manifesto" . His website is tedrall.com.

Harry Reid Finally Settles It: Social Security Is Off the Table

by John Nichols

Preserving Social Security should never have been all that difficult.

But it took Harry Reid to settle the issue —at least as regards the miserably long and absurdly inappropriate debate of 2012.

“We’re not going to have any Social Security cuts,” the Senate majority leader said on the floor of the chamber Sunday. “It’s just doesn’t seem appropriate at this time.”

Senate Minority Leader Mitch McConnell, R-Kentucky, had attempted Saturday to use the “fiscal cliff” fight to advance a proposal to adopt a chained consumer price index—“chained CPI”—scheme that would slash cost-of-living increases for Americans who rely on Social Security and other government programs. The Obama administration had entertained the “chained CPI” switch earlier in December. But as the critical point when a deal to cut Social Security might have been made, Reid said “No.”

That simple rejection of the false premises of Paul Ryan and all the other fantasists who have tried to push Social Security over the “fiscal cliff”—and into the grips of the Wall Street speculators—confounded the political pawns and the “expert” pundits who imagined that “entitlement reforms” (Washington for Social Security cuts) were “inevitable.”

Within hours of Reid’s Sunday announcement, McConnell and the Republicans backed down and it was clear, finally, that Social Security was “off the table.”

Reid’s firm rejection of any cuts actually moved the negotiations forward — making clear to the Republicans that they would get no deal on Social Security.

“I was really gratified to hear the Republicans have taken their demand for Social Security benefit cuts off the table,” said Reid, the wily Nevadan who has repeatedly defied political expectations to save his own seat (in 2010) and then to increase the Democratic Senate majority (in 2012). “The truth is they should never have been on the table to begin with.”

True enough.

But it took Reid’s rejection of the Republican proposal to foreclose any more wheeling and dealing with the economic security of Americans who rely on Social Security to make ends meet.

Groups that have battled to save Social Security hailed Reid Sunday night.

“Majority Leader Harry Reid and the Democrats are to be applauded for standing up for the American people by standing firm against cutting Social Security,” said Nancy Altman, co-director of Social Security Works. “Social Security has no place in this fiscal showdown. It does not and, by law, cannot add a penny to the federal debt. Republican policymakers are wrong to try to ram through unpopular cuts, ones which are opposed by the vast majority of Americans they have been elected to serve.”

Altman was right to hail Reid, who was certainly not the only Democratic absolutist in the Social Security fight but who took the critical stand at the critical moment.

Reid deserves the praise. But it is important to remember that all he did was embrace economic, social and political reality.

Social Security does not contribute a penny to the federal deficit. “In fact,” as the coalition explains, “it currently enjoys a $2.6 trillion surplus that will grow to $4.3 trillion by 2025. Social Security has its own dedicated revenue stream described above. And Social Security is forbidden by law from borrowing, so it cannot deficit spend.”

Cutting Social Security, especially using the privatization schemes outlined by House Budget Committee chairman Paul Ryan and other fiscal fools, would undermine the current recovery and threaten prospects for long-term economic stability.

The Social Security program is fiscally sound, efficiently run and it works. In the most recent year for which premise statistics are available, Social Security lifted 19,808,000 Americans out of poverty.

And Social Security is popular.

Extraordinarily popular. “When asked which was more important, 70 percent of respondents said that protecting education, Medicare and Social Security was more important than broad cuts to reduce the deficit,” notes the AFL-CIO’s analysis of a post-election poll conducted by Greenberg Quinlan Rosner Research on behalf of Democracy Corps and Campaign for America’s Future. “More than half—58 percent—of the overall sample said that they felt strongly about opposing such cuts. Only 17 percent of the survey said they felt strongly that across-the-board cuts were important enough to cut the popular programs.”

With numbers like that on his side, Harry Reid did not take a political risk Sunday night.

He simply did the right thing.

That settled it for 2012.

But what of next year?

The Progressive Change Campaign Committee (http://boldprogressives.org/victory-harry-reid-says-he-will-not-agree-to...), which did so much to strengthen the backbones of Reid and other Democrats, responded in with the proper mix of celebration and resolve.

“Democrats stood firm — and Harry Reid declared from the Senate floor that no deal would pass this year that touched Social Security,” declared PCCC co-founders Stephanie Taylor and Adam Green in a message to the hundreds of thousands of PCCC members who contacted Congress with messages opposing any cuts to Social Security, Medicare and Medicaid benefits. “Today’s victory shows that activism works. In 2013, we’ll keep fighting any proposed cuts to these benefits.”

Social Security was worth fighting for in 2012.

And because activists prevailed—with an assist from Harry Reid—it will be worth fighting for in 2013.

© 2012 The Nation
http://www.thenation.com/blog/171936/harry-reid-finally-settles-it-socia...

John Nichols is Washington correspondent for The Nation and associate editor of The Capital Times in Madison, Wisconsin. His most recent book is The “S” Word: A Short History of an American Tradition. A co-founder of the media reform organization Free Press, Nichols is co-author with Robert W. McChesney of The Death and Life of American Journalism: The Media Revolution that Will Begin the World Again and Tragedy & Farce: How the American Media Sell Wars, Spin Elections, and Destroy Democracy. Nichols' other books include: Dick: The Man Who is President and The Genius of Impeachment: The Founders' Cure for Royalism.

An Ugly, Ugly, Ugly Deal

by Robert Borosage

On New Year's Day, the Senate and House passed a "fiscal cliff" deal by respective votes of 89-8 and 257-167. The deal has some good parts. It lets the Bush tax cuts expire on the wealthy, raises the estate tax marginally and increases taxes on capital gains and dividends a bit. Unemployment benefits are extended for a year. Tax boosts for the low paid workers – the child tax credit, expanded earned income credit, refundable tuition tax credits – are extended, if only for five years. Social Security, Medicare and Medicaid are not touched.

But no one should be fooled. This is an ugly deal, with foul implications for the coming months.

1. Setting Up the Next Extortion

The most ominous part of the deal is what was left out. The deal makes no provision for lifting the debt ceiling. It postpones the sequester (automatic cuts in domestic and military spending) for only two months. It is a smaller deficit reduction package than that originally sought by the president. It therefore sets up the right-wing House zealots to hold the economy hostage once more, while demanding deep cuts in public services (known as cuts in domestic spending), backed by a media frenzy about deficits. And while Social Security, Medicare and Medicaid escaped unscathed in this deal, they will be the prime targets in the coming debate.

2. Hiking Taxes for Working Americans; A Million Jobs Lost

By allowing the payroll tax cut to expire, every working American gets a tax hike of 2% of their income (up to about $113,000 in income). A worker making $50,000 a year will pay an extra $1,000 in taxes. Payroll checks will be cut. Belts will have to be tightened even more. That will lower demand, producing job loss totaling up to an estimated million jobs. (Taxes on the wealthy go up also, but those have only marginal effects on jobs).

3. Compromising the Compromising President

President Obama sensibly told Republicans that he would not sign any bill or agree to any deal that extended the Bush tax cuts on those making over $250,000. He had stumped on that across the country on this pledge and received a mandate from the voters. Polls showed the majority of Americans were with him. With all the Bush tax breaks due to expire, Republicans were faced with letting taxes go up on everyone just to defend tax breaks for the richest Americans. The President began the negotiations saying this was not negotiable. He could not have been in a stronger position.

But he chose to compromise. The Bush tax cuts will be allowed to expire on couples making over $450,000. This costs about $150-200 billion in revenue over 10 years. The president argues he got the important extension of unemployment insurance and the working poor tax credits in return. But these could have been folded into a package after going over the cliff. And the cost to the president is significant. Once more Republicans have learned that obstruction works, that the president will always blink.

The next extortion – the debt ceiling, automatic sequester – in the next eight weeks makes this a big deal. The President says sensibly that he will not negotiate over lifting the debt ceiling. Period. And now there is even less reason for the Republicans to believe him than before. This encourages extreme demands rather than discouraging them. This was the time to draw the line.

4. Feeding the deficit distraction

The deal is already being denounced in the mainstream media as “too timid,” offering too little in deficit reduction. It guarantees the next eight weeks will be fixated on the debate about what to cut and how much to cut headed into the debt ceiling.

But this entire debate is wrong-headed. You can’t fix the debt without fixing the economy. And deficit reduction won’t fix the economy. The recovery is too slow and too skewed to put people back to work. Deficit reduction can only slow it further.

We need a big and bold debate about fundamental reforms needed to make this economy work for working people. That includes making big investments vital to our future at a time when we can borrow for virtually nothing – rebuilding and modernizing our decrepit infrastructure, funding R&D, doing at least the basics in education. We need to balance our trade, and revive manufacturing, beginning with capturing a leading role in the global move to clean energy.

We need to address inequality frontally. That requires much more than small marginal increases in taxes for millionaires. It includes raising the minimum wage, empowering workers to organize and bargain for a fair share of the profits they help to generate, limiting perverse CEO compensation schemes. It includes a financial transaction tax that might curb Wall Street gambling.

We need to continue health care reform, taking on the entrenched lobbies — the drug and insurance companies, the private hospital complexes — that drive up our medical costs. If we paid per capita what other industrial countries pay for health care, we’d project surpluses as far as the eye can see. We have to fix our broken health care system.

But Washington is talking about none of this. Instead the Congress and the President are going to continue to debate how much more to cut from public services as if that would fix the economy. That debate is likely to turn foul. Republicans use the debt ceiling to demand structural cuts in Social Security, Medicare and Medicaid. They’ll likely be willing to repeal or dilute the sequester as an incentive to focus on the core security programs. And they’ll be convinced that the president will fold once more.

Americans are struggling with mass unemployment, declining wages, increasing insecurity, Gilded Age inequality. Trimming the deficit addresses none of these, and is likely to slow growth, making things worse.

We’ve had an ugly debate leading to a wretched agreement. And that agreement only insures that the debate will get uglier.

© 2012 Campaign for America's Future
http://blog.ourfuture.org/20130101/an-ugly-deal

Robert L. Borosage is the founder and president of the Institute for America’s Future and co-director of its sister organization, the Campaign for America’s Future.

The Hoax of Entitlement Reform

by Robert Reich

It has become accepted economic wisdom, uttered with deadpan certainty by policy pundits and budget scolds on both sides of the aisle, that the only way to get control over America’s looming deficits is to “reform entitlements.”

But the accepted wisdom is wrong.

Start with the statistics Republicans trot out at the slightest provocation — federal budget data (http://blog.heritage.org/2012/05/24/the-truth-about-president-obamas-sky...) showing a huge spike in direct payments to individuals since the start of 2009, shooting up by almost $600 billion, a 32 percent increase.

And Census data (http://mercatus.org/publication/nation-government-dependents) showing 49 percent of Americans living in homes where at least one person is collecting a federal benefit – food stamps, unemployment insurance, worker’s compensation, or subsidized housing — up from 44 percent in 2008.

But these expenditures aren’t driving the federal budget deficit in future years. They’re temporary. The reason for the spike is Americans got clobbered in 2008 with the worst economic catastrophe since the Great Depression. They and their families have needed whatever helping hands they could get.

If anything, America’s safety nets have been too small and shot through with holes. That’s why the number and percentage of Americans in poverty has increased dramatically, including 22 percent of our children.
http://www.npc.umich.edu/poverty/

What about Social Security and Medicare (along with Medicare’s poor step-child, Medicaid)?

Social Security won’t contribute to future budget deficits. By law, it can only spend money from the Social Security trust fund.

That fund has been in surplus for the better part of two decades, as boomers contributed to it during their working lives. As boomers begin to retire, those current surpluses are disappearing.

But this only means the trust fund will be collecting from the rest of the federal government the IOUs on the surpluses it lent to the rest of the government.

This still leaves a problem for the trust fund about two decades from now.

Yet the way to deal with this isn’t to raise the eligibility age for receiving Social Security benefits, as many entitlement reformers are urging. That would put an unfair burden on most laboring people, whose bodies begin wearing out about the same age they did decades ago even though they live longer.

And it’s not to reduce cost-of-living adjustments for inflation, as even the White House seemed ready to propose in recent months. Benefits are already meager for most recipients. The median income of Americans over 65 is less than $20,000 a year (http://www.census.gov/hhes/www/cpstables/032012/perinc/pinc01_1.xls). Nearly 70 percent of them depend on Social Security for more than half of this. The average Social Security benefit is less than $15,000 a year.

Besides, Social Security’s current inflation adjustment actually understates the true impact of inflation on elderly recipients — who spend far more than anyone else on health care, the costs of which have been rising faster than overall inflation.

That leaves two possibilities that “entitlement reformers” rarely if ever suggest, but are the only fair alternatives: raising the ceiling on income subject to Social Security taxes (in 2013 that ceiling is $113,700), and means-testing benefits so wealthy retirees receive less. Both should be considered.

What’s left to reform? Medicare and Medicaid costs are projected to soar. But here again, look closely and you’ll see neither is really the problem.

The underlying problem is the soaring costs of health care — as evidenced by soaring premiums, co-payments, and deductibles that all of us are bearing — combined with the aging of the boomer generation.

The solution isn’t to reduce Medicare benefits. It’s for the nation to contain overall healthcare costs and get more for its healthcare dollars.

We’re already spending nearly 18 percent of our entire economy on health care (http://www.oecd.org/unitedstates/BriefingNoteUSA2012.pdf), compared to an average of 9.6 percent in all other rich countries.

Yet we’re no healthier than their citizens are. In fact, our life expectancy at birth (78.2 years) is shorter than theirs (averaging 79.5 years), and our infant mortality (6.5 deaths per 1000 live births) is higher (theirs is 4.4).

Why? Doctors and hospitals in the U.S. have every incentive to spend on unnecessary tests, drugs, and procedures.

For example, almost 95 percent of cases of lower back pain are best relieved by physical therapy. But American doctors and hospitals routinely do expensive MRI’s, and then refer patients to orthopedic surgeons who often do even more costly surgery. There’s not much money in physical therapy.

Another example: American doctors typically hospitalize people whose diabetes, asthma, or heart conditions act up. Twenty percent of these people are hospitalized again within a month. In other rich nations nurses make home visits to ensure that people with such problems are taking their medications. Nurses don’t make home visits to Americans with acute conditions because hospitals aren’t paid for such visits.

An estimated 30 percent of all healthcare spending in the United States is pure waste, according to the Institute of Medicine (http://resources.iom.edu/widgets/vsrt/healthcare-waste.html).

We keep patient records on computers that can’t share data, requiring that they be continuously rewritten on pieces of paper and then reentered on different computers, resulting in costly errors.

And our balkanized healthcare system spends huge sums collecting money from different pieces of itself: Doctors collect from hospitals and insurers, hospitals collect from insurers, insurers collect from companies or from policy holders.

A major occupational category at most hospitals is “billing clerk.” A third of nursing hours are devoted to documenting what’s happened so insurers have proof.

Cutting or limiting Medicare and Medicaid costs, as entitlement reformers want to do, won’t reform any of this. It would just result in less care.

In fact, we’d do better to open Medicare to everyone. Medicare’s administrative costs are in the range of 3 percent.

That’s well below the 5 to 10 percent costs borne by large companies that self-insure. It’s even further below the administrative costs of companies in the small-group market (amounting to 25 to 27 percent of premiums). And it’s way, way lower than the administrative costs of individual insurance (40 percent). It’s even far below the 11 percent costs of private plans under Medicare Advantage, the current private-insurance option under Medicare.

Healthcare costs would be further contained if Medicare and Medicaid could use their huge bargaining leverage over healthcare providers to shift away from a “fee-for-the-most-costly-service” system to a system focused on achieving healthy outcomes.

Medicare isn’t the problem. It may be the solution.

“Entitlement reform” sounds like a noble endeavor. But it has little or nothing to do with reducing future budget deficits.

Taming future deficits requires three steps having nothing to do with entitlements: Limiting the growth of overall healthcare costs, cutting our bloated military, and ending corporate welfare (tax breaks and subsidies targeted to particular firms and industries).

Obsessing about “entitlement reform” only serves to distract us from these more important endeavors.

This work is licensed under a Creative Commons License
http://robertreich.org/post/39872465002

Robert Reich, one of the nation’s leading experts on work and the economy, is Chancellor’s Professor of Public Policy at the Goldman School of Public Policy at the University of California at Berkeley. He has served in three national administrations, most recently as secretary of labor under President Bill Clinton. Time Magazine has named him one of the ten most effective cabinet secretaries of the last century. He has written thirteen books, including his latest best-seller, Aftershock: The Next Economy and America’s Future; The Work of Nations; Locked in the Cabinet; Supercapitalism; and his newest, Beyond Outrage. His syndicated columns, television appearances, and public radio commentaries reach millions of people each week. He is also a founding editor of the American Prospect magazine, and Chairman of the citizen’s group Common Cause. His widely-read blog can be found at www.robertreich.org.

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