Take Social Security and Medicare Off the Bargaining Table

Prominent Democrats—including the president and House Minority Leader Nancy Pelosi—are openly suggesting that Medicare be means-tested and Social Security payments be reduced by applying a lower adjustment for inflation. 

This is even before they’ve started budget negotiations with Republicans—who still refuse to raise taxes on the rich, close tax loopholes the rich depend on (such as hedge-fund and private-equity managers’ “carried interest”), increase capital gains taxes on the wealthy, cap their tax deductions, or tax financial transactions. 

It’s not the first time Democrats have led with a compromise, but these particular pre-concessions are especially unwise.

For over thirty years Republicans have pitted the middle class against the poor, preying on the frustrations and racial biases of average working people who can’t get ahead no matter how hard they try. In the Republican narrative, government takes from the hard-working middle and gives to the undeserving and dependent needy.  

In reality, average working people have been stymied because almost all the economic gains of the last three decades have gone to the very top. The middle has lost bargaining power as unions have shriveled. American politics has been flooded with campaign contributions from corporations and the wealthy, which have used their clout to reduce marginal tax rates, widen loopholes, loosen regulations, gain subsidies, and obtain government bailouts when their bets turn sour. 

Now five years after the worst downturn since the Great Depression and the biggest bailout in history, the stock market has recouped its losses and corporate profits constitute the largest share of the economy since 1929. Yet the real median wage continues to fall—wages now claim the lowest share of the economy on record—and inequality is still widening. All the economic gains since the trough of the recession have gone to the wealthiest 1 percent of Americans; the bottom 90 percent continue to lose ground. 

What looks like the start of a more buoyant recovery is a sham because the vast majority of Americans have neither the pay nor access to credit that allows them to buy enough to boost the economy. Housing prices and starts are being fueled by investors with easy money rather than would-be home buyers with mortgages. The Fed’s low interest rates have pushed other investors into stocks by default, creating an artificial bull market.

If there was ever a time for the Democratic Party to champion working Americans and reverse these troubling trends, it is now—forging an alliance between the frustrated middle and the working poor. This need not be “class warfare” because a healthy economy is in everyone’s interest. The rich would do far better with a smaller share of a rapidly-growing economy than a ballooning share of one that’s growing at a snail’s pace and a stock market that’s turning into a bubble. 

But the modern Democratic Party can’t bring itself to do this. It’s too dependent on the short-term, insular demands of Wall Street, corporate executives, and the wealthy.  

It was Bill Clinton, after all, who pushed for repeal of Glass-Steagall, championed the North American Free Trade Act and the World Trade Organization without adequate safeguards for American jobs, and rented out the Lincoln Bedroom to a steady stream of rich executives. 

And it was Barack Obama who continued George W. Bush’s Wall Street bailout with no strings attached; pushed a watered-down “Volcker Rule” (still delayed) rather than renew Glass-Steagall; failed to prosecute a single Wall Street executive or bank because, according to his Attorney General, Wall Street is just too big to jail; and permanently enshrined the Bush tax cuts for all but the top 2 percent.

Meanwhile, over the last several decades Democrats have allowed Social Security taxes to grow and its revenue stream to become almost as important a source of overall government funding as income taxes; turned their backs on organized labor and labor-law reforms that would have made it easier to form unions; and then, even as they bailed out Wall Street, neglected the burdens of middle-class homeowners who found themselves underwater and their homes worth less than what they paid for them because of Wall Street’s excesses. 

In fairness, it could have been worse. Clinton did stand up to Gingrich. Obama did get the Affordable Care Act. Congressional Democrats have scored tactical victories against social conservatives and Tea Party radicals. But Democrats haven’t responded in any bold or meaningful way to the increasingly concentrated wealth and power, the steady demise of the middle class, and further impoverishment of the nation’s poor. The Party failed to become a movement to reclaim the economy and our democracy. 

And now come their pre-concessions on Social Security and Medicare. 

Technically, a “chained CPI” might be justifiable if seniors routinely substitute lower-cost alternatives as prices rise, as most other Americans do. But in reality, seniors pay 20 to 40 percent of their incomes for healthcare, including pharmaceuticals — the prices of which are rising much faster than inflation. So there’s no practical justification for reducing Social Security benefits on the assumption inflation isn’t really eating away at those benefits as much as the current cost-of-living adjustment allows.   

Likewise, although a case can be made for reducing the Medicare benefits of higher-income beneficiaries, as a practical matter their savings are almost as vulnerable to rising healthcare costs as are the more modest savings of middle-income retirees. “Means-testing” Medicare also runs the risk of transforming it into a program for the “less fortunate,” which can undermine its political support. 

In short, Medicare isn’t the problem. The underlying problem is the sky-rocketing costs of health care. Because Medicare’s administrative costs are a fraction of those of private health insurance, Medicare might be part of the solution. Medicare for all, or even a public option for Medicare, would give the program enough clout to demand health providers move from a fee-for-service system to one that paid instead for healthy outcomes. 

With healthcare costs under better control, retirees wouldn’t be paying a large and growing portion of their incomes for healthcare — which would alleviate pressure on Social Security. I’m still not convinced a “chained CPI” is necessary, though. A preferable alternative would be to raise the ceiling on the portion of income subject to Social Security taxes (now $113,600). 

Besides, Social Security and Medicare are the most popular programs ever devised by the federal government, which is why Republicans hate them so much. If average Americans have trusted the Democratic Party to do one thing it has been to guard these programs from the depredations of the GOP.  

Putting these two programs “on the table” is also tantamount to accepting the most insidious and dishonest of all Republican claims: That for too long most Americans have been living beyond their means; that we are rapidly approaching a day of reckoning when we can no longer afford these generous “entitlements;” and that prudence and responsibility dictate that we must now begin to live within our means and cut back these projected expenditures, particularly if we are to have any money left to invest in the young and the disadvantaged. 

The truth is the opposite: That for three decades the means of most Americans have been stagnant even though the overall economy has more than doubled in size; that because almost all the gains from growth have gone to the top, most Americans haven’t been able to save enough for retirement or the rising costs of healthcare; and that because of this, Social Security and Medicare are barely adequate as is.  

Paul Ryan’s House Republican budget takes on Medicare, but leaves Social Security alone. Why should Democrats lead the charge on either? 

The Republicans are already slashing help for the young and the disadvantaged. Democrats shouldn’t succumb the lie that the elderly and young are in competition for a portion of a shrinking pie, when in fact the pie is larger than ever. It’s just that those who have the largest and fastest-growing portions refuse to share it. 

We are the richest nation in the history of the world — richer now than we’ve ever been. But an increasing share of that wealth is held by a smaller and smaller share of the population, who have, in effect, bribed legislators to reduce their taxes and provide loopholes so they pay even less. 

The budget deficit “crisis” has been manufactured by them to distract our attention from this overriding fact, and to pit the rest of us against each other for a smaller and smaller share of what remains. Democrats should not conspire. 

Needy children should be getting far more help, better pre-school care, better nutrition. Seniors need better healthcare coverage and more Social Security. All Americans need better schools and improved infrastructure. 

The richest nation in the history of the world should be able to respond to the legitimate needs of all its citizens. 

 

Comments

A little noticed fact exposes the grotesque hypocrisy of claiming to "fix the debt" by cutting entitlements. Billionaire Pete Peterson’s front, called “Fix the [National] Debt,” provides a teachable moment. It’s been possible for 51 years for individuals to make donations to a Treasury Account titled “Gifts to Reduce the Public Debt.” It’s even tax deductible. Yet in all that time only $85 million has been donated (see online: CNN Money, 11/20/12, “Americans Donate $8 million to cut national debt.”)
Peterson and Fox owner Murdoch, with tools and dupes, grossly exaggerate the import of the national debt. If it’s so dangerous, where are their own example - setting, magnificent, patriotic donations? Didn’t they benefit at all in wealth – making from the $ trillions of dollars expended on infrastructure and on “defense” to protect them from USSR communists taking over and socializing their property?
Main Street unemployment and personal debt are painfully slow in receding and debt peonage looms for college students. Government spending does, in fact, create or support millions of private industry jobs in defense and elsewhere. So spending cuts kill jobs and retard recovery more. Peterson, tools and dupes; on this national debt: PAY UP OR SHUT UP!

Monopoly, risk filtering and gatekeeping are part
of the plan for the Democrats also.

Considering particularly that
over 45,000 Americans die
prematurely annually from want
of health coverage (their cost is
shifted into your premium
but the cartel is only responsible for
a predefined cartel-controlled
reduced risk, ) it's as though,
in the movie "Jaws," the
leader of the Amity Town Chamber
of Commerce succeeded in perpetually,
continuously keeping the Amity beaches
open even as people kept right on
having their limbs chewed off by a
great white shark.
It's expensive for all
of them, but he and his businesses
make out.

The reason it's worse than
analogous to Jaws,
is although the late - arriving
patient in the defective,
dangerous system gets deathly
shafted in the manner of the swimmer
getting eaten by the big shark,
whereas the other swimmers
get away with a satisfying swim
and day at the beach, the patient
who does have coverage does
not have a happy experience.
That covered patient will likely
sooner or later face a choice of
"go naked" or "premium death
spiral" as soon as he / she is
in a policy cluster that's no
longer desirable for the carrier,
and, in any event, it's a
monopoly situation once the
patient presents (a) risk
factor(s,) and entirely a game
of name your price for the
carrier.

ObamaCare Ostensibly Makes
Health Care Universally
Affordable (It Doesn't Cause
Of The Understating Of The
Increases In CPI, And Because
Affordability Is Keyed To
Coverage To The Self-Only
Worker, Even If He/She Has
A Family.) Though Still Outside
The High Risk Exchanges Higher
Risk Is Typically Keyed To The
Likes Of 20% Statutory
Operational Profit, Vs. 40% For
Low Risk (Healthy, Young)
Customers, That Actually
Constitutes The Institutionalization
Of Monopoly, Which Is Also
Fully Blanket-Universal.
Hence, The Must-Pay
Language Really Does Work
Like A Tax, But A Tax
Running From A Cartel.

THE NOT-REALLY PROGRESSIVE
OBAMACARE ACTUALLY AGGRAVATES,
OR ELSE COMES WITH UNEASY
WILLINGNESS TO ACCEPT, THE
BEGINNING OF THE DISMANTLING
OF MEDICAID/MEDICARE, WHICH,
THOUGH MEDICARE WAS ORIGINALLY
NATIONAL HEALTH INSURANCE
FOR CUSTOMERS UNWANTED BY
THE CARRIERS, ARE STILL BETTER
THAN NOTHING.

I know readers hate these, usually being
taste-presumptuous, but I think these
are appropriate anyway.

http://www.youtube.com/watch?v=77IdKFqXbUY
(RFK)

http://www.youtube.com/watch?v=8H7a0JTpDdA
(Gene McCarthy)

Gatekeeping Can Come With
Brash Risk Filtering, Such As With
The Medicare Disability Patient Thriving
On Physical Therapy vs. Languishing
But Being Kept Alive On Med's, Though
They Erase Much Of Her Gains From
Physical Therapy, And Her Being Told
She Has To Go Back To Med's Until
Her Physical Therapy Allowance Resets.

Risk filtering is high risk subsidized in place
of legitimate risk equalization. Otherwise, who
needs a broker cartel?

See:
http://www.nomiprins.com/thoughts/2012/11/10/real-danger-of-obamacare-insurance-company-takeover-of-healt.html

This is monopoly:

http://pages.citebite.com/f9g6i1b7rfvh

http://pages.citebite.com/d9u6v1v6jspj

(notice this is a pdf:)

http://www.americanprogress.org/wp-content/uploads/issues/2009/06/pdf/health_competitiveness.pdf

http://pubget.com/paper/18520870/Market_concentration_in_the_health_care_insurance_industry_has_adverse_repercussions_on_patients_and_physicians

http://www.dailykos.com/story/2009/10/14/793112/-Schumer-Leahy-Take-on-Insurance-Antitrust-Exemption-Video-Added

http://pages.citebite.com/p8i5t8h6mphi

FAQ:
Does The Annual Fee On Health
Insurance Providers Work As
Some Sort Of Broad Brush Risk
Equalization?

My View:
No. It Bears No Relation.

Does It Have Any Monopoly
Mitigative Effect?

My View:
No. The Carriers Keep Their
Statutory Profit Margins. Therefore,
This Will Be Passed
Along As A Tax On The Insured.

TBTF is monopoly of the currency.
The GSE's are risk filtering in place of
good public education, empowerment, and
enabling mechanisms ("bootstrapping.")

The Democrats are good with it.

But third parties are useless.

Only a new movement in the Democratic Party can
accomplish anything.

One better do so soon.

http://www.multiurl.com/ga/globalwarmingandfishcollapse

As To The 1st Component,
Newly Exposed Sea, FROM
ICE MELTING, Delivers
Much Colder Air

In case a filter thinks the bundle's too opaque:
http://news.nationalgeographic.com/news/2003/05/0515_030515_fishdecline.html

http://phys.org/news/2010-12-winters-driven-global-scientists.html

http://www.rollingstone.com/politics/news/global-warmings-terrifying-new-math-20120719

You need to be logged in to comment.
(If there's one thing we know about comment trolls, it's that they're lazy)

Connect
, after login or registration your account will be connected.
Advertisement