Entitled to Know

Social Security isn’t bankrupt. Unfortunately, too many in our national media just don’t seem to understand that basic truth.

We’ve written about this before so won’t rehash it again (not too much, anyway). But the latest oversimplified, sky-is-falling and propaganda-laden coverage from Debra Saunders in the San Francisco Chronicle just can’t be ignored. And we’re not the only ones who think so. End of the Echo blog has a nice response and so did our President, Barbara Kennelly. Here is her Letter to the Chronicle, since you probably won’t ever see it published.

Dear Editor,

If Debra Saunders really wants to have an honest discussion about our nation’s current fiscal mess (Everyman’s Mortgage Crisis, 3/11/08), let’s start with the facts. Comments like “Washington has promised benefits...without funding them” and “Washington continues to authorize...benefits without putting aside money for them” are certainly provocative but the problem is those statements just aren’t true. American workers (not Washington) have contributed $2 trillion dollars to the Social Security trust fund in the past two decades leading to a $187 billion surplus. Those contributions will continue to build the surplus to $4.2 trillion over the next decade.

Washington does face a crisis; however, it’s a budget crisis not an entitlement crisis. President Bush inherited a budget surplus and a Social Security trust fund built-up in preparation for baby boomers’ retirements. Now, after billions of dollars in tax cuts, an underfunded war in Iraq and six years of a Republican-led Congress following the President’s “borrow and spend” lead, we face record debt and budget deficits. These deficits are now being used as the primary argument for cutting programs like Social Security and Medicare, while tax cuts for the wealthy continue and billions in subsidies to the drug and insurance industry are protected.

Washington will have to make difficult choices to repair the fiscal damage done by this administration. But serious health care reform and strengthening Social Security for the long term should be the priorities rather than destroying the very programs so critically needed by millions of Americans.

Sincerely,

Barbara B. Kennelly, former Member of Congress
President and CEO of the National Committee to Preserve Social Security and Medicare

Mark Weisbrot is co-director of the Center for Economic and Policy Research and he’s also written a wonderful piece on Media accountability, false information and its affect on political progress.

The Treasury Department and the Office of Management and Budget have released their FY 2007 US Financial Report. This report shows that by using the same accounting methods as private companies, the federal budget deficit is actually 69% higher than the administration reported two months ago, putting the deficit at $275.5 billion for this fiscal year. The Bush administration will proudly tell you that this is 38% less than last year’s deficit. But who would’ve thought seven years ago we would be expected to celebrate a $275.5. billion dollar deficit?

Rather than focusing on the tax and spend policies which created this deficit, this report touts the “healthy economy” and continues to issue more dire warnings of an “oncoming fiscal train wreck” of entitlement spending.

Let’s be clear here, entitlement costs did not create our current budget deficit. The challenges facing each of these programs are different and they’ll require unique solutions, yet the Bush administration continues to lump Social Security, Medicare and Medicaid together in an attempt to persuade older Americans and their families to foot the bill for this administration’s irresponsible budget policies. The long-term challenges facing Social Security are modest and manageable and should be addressed -- but there is no need to buy into this “crisis” campaign designed to persuade Americans this program must be eviscerated in order to be fixed.

Medicare, on the other hand, faces a shortfall in 2019 in large part because it suffers from the same skyrocketing healthcare costs Americans are seeing nationwide. We can’t continue to ignore national health care reform if we want to control federal spending. Yet the administration’s supporters continue to ignore the real issues in favor of their rhetoric designed to erode Americans’ deep faith in social insurance programs.

Americans want fiscal discipline returned to Washington; however, the challenges facing Medicare and Social Security are different. A one-size-fits-all ‘let’s cut entitlements’ approach won’t work no matter how hard the Bush administration tries to sell it.

What a difference a week makes! There has been more discussion and debate about this administration’s phony Social Security crisis in the past 9 days than we’ve seen since 2005.

Thank goodness.

We’ve been talking about it for years (although it felt more like a monologue sometimes than a dialogue) including most recently here, here and here. Dean Baker at the Center for Economic and Policy Research has also written many good pieces on the administration’s phony “entitlement crisis” propaganda.

Even so, the Washington Post continues its Social Security obsession. As we sat down to write another composite of this week’s debate we found this wonderful post at The Economist’s View which sums it all up wonderfully.

Entitlement hysteria is in full view on Capitol Hill this week as the Senate Budget committee held its first hearing on legislation proposed to create yet another bipartisan commission. We’ve already expressed our position on this commission, see here and here . Unfortunately, this first hearing proceeded down exactly the path we’ve expressed concern about before.

During this hearing there was virtually no acknowledgement that the challenges facing Social Security and Medicare are very different. A one-size-fits-all discussion of "entitlements" ignores the unique challenges facing Medicare (a healthcare program) and Social Security (a retirement and social insurance program). Lumping these programs together in search of policy solutions makes no sense. There was also little discussion of national healthcare reform and its role in this debate, even though skyrocketing healthcare costs are what is jeopardizing Medicare’s solvency.
Curiously missing from the Budget Committee’s table of experts was CBO Director Peter Orszag who has said,

“We do a disservice by uniting the health care issue with the aging issue"

He has testified many times to other Congressional committees that the rising cost of healthcare represents a far more serious fiscal danger than aging baby boomers. Medicare, not Social Security, is what is driving up the costs of entitlements. Medicare costs are increasing so dramatically because of overall increases in the cost of health care, not because of our aging population.

Coincidentally two new studies also came out this week detailing just how critical the healthcare debate is for seniors and Americans of all ages. The Kaiser Family Foundation reports that between 1997 and 2003, median out-of-pocket health spending increased by 50% while individual income rose by just 15%. Insurance premiums where the largest chunk of that increase. The Commonwealth Fund surveyed patients in seven industrialized nations and found Americans spend double what people in the other countries do on health care, but have more trouble seeing doctors, are the victims of more errors and go without treatment more often.


Focusing so much attention on "entitlements" while glossing over underlying issues such as healthcare reform is a fatal flaw in this commission approach.

by Barbara B. Kennelly, President/CEO

More than one hundred congressional staffers and reporters joined us yesterday to talk about a wonderful new report prepared by the National Academy of Social Insurance (NASI)on Social Security and the pocketbook realities facing retirees, now and in the future.

I think this report, "Social Security and Retirement Income Adequacy", is incredibly important as the debate over "entitlement reform" moves from conservative think tanks thru the Bush administration to Congressional committees and soon presidential politics. For the past six years, the future of Social Security has been continuously framed as a crisis in the making. Dire macroeconomic projections make great headlines but ignore the dollars and cents truth facing retirees. This NASI analysis correctly shines light on retirement savings, Social Security's role for American seniors and how massive benefit cuts like those proposed by some in Washington could harm millions of current and future retirees, and their families.

Virginia Reno, VP for Income Security with NASI, told the audience yesterday that while private pensions wane and 401K's are still largely being utilized by higher-wage earners, Social Security continues to meet the description of what a successful retirement program should provide. This is from the report's conclusion:

"Social Security has many features of an ideal pension system. It delivers retirement income progressively, effectively, and efficiently. But its replacement rates are modest. To maintain Social Security replacement rates at levels experienced in the past two or three decades would require some increase in benefits. At the same time, steps are needed to bring the Social Security program into financial balance (Reno and Lavery 2005). As private pensions shift from defined benefits to individual savings accounts, a strong defined benefit in Social Security gains added importance. Policymakers who are concerned about securing adequate retirement income in the future – for boomers, their children, and grandchildren – will face choices. They will need to decide how much to build on the strength of the Social Security system, how much to expect from employer-sponsored pension plans, and how much to expect individuals to save for themselves."

Another panelist at yesterday's briefing was Nancy Altman, Social Security expert and author of “The Battle for Social Security: From FDR’s Vision to Bush’s Gamble”. She offered several suggestions to meet Social Security's long range shorftfall that don't involve large benefit cuts or private accounts. Those suggestions are detailed by former SSA Commissioner, Robert Ball, in his proposal "Meeting Social Security's Long-Range Shortfall".

The bottom line is there are more than enough options to preserve and strengthen the monthly benefit. Options which are currently being ignored by this administration's supporters in favor of crisis predictions and dire warnings... all part of a buildup to benefit cuts.

Do you have $215,000 socked away for your retirement healthcare costs? Most don’t. But that’s what Fidelity’s annual healthcare survey shows retirees will need to cover their medical bills. And not surprising…that number is 7.5% higher than last year. That’s significantly higher than inflation and expected to continue growing at the same unsustainable clip, year after year.

This is America’s true economic crisis…not “entitlement” spending. Between the uncontrolled deficit spending over the past six years and the debt that comes with it, tax cuts for the wealthy and these skyrocketing healthcare costs it’s easy to see where our true challenges lie.

Fidelity projects that a 65-year-old worker who now earns $60,000 a year and expects to retire at the end of this year should expect that 50 percent of his or her pretax Social Security benefit will be eaten up by health expenses in the next 16 to 18 years. But rather than proposing real healthcare reforms to reign in the unchecked cost of healthcare, this administration is arguing we can’t afford the aging baby-boom generation and we must cut benefits…they call it “entitlement reform”. Social Security and Medicare did not create our current budget and healthcare crisis and cutting these programs just as the nation’s baby-boomers retire won’t solve them.

With the war in Iraq, Congressional hearings on US Attorney firings and countless other issues currently leading the news, it's easy to lose sight of all of the other important issues still simmering on Capitol Hill's back burner. Among them, many proposals which are critical to seniors currently receiving Social Security and Medicare.

It's hard to describe our current budget picture in 10 minutes or less...we understand that challenge. But it would've been nice if Sunday's 60 Minutes piece hadn't jumped so fully in lock-step behind the administration's "we can't afford our seniors" line. While Comptroller General David Walker acknowledged the critical role that skyrocketing healthcare costs play in all of this, the discussion of tax cuts and deficit spending were, once again, glossed over.

Dean Baker at the Center for Economic and Policy Research wrote a terrific post about it last night.

by Barbara B. Kennelly, President/CEO (bio)

President Bush’s ongoing campaign to convince Americans we “can’t afford” our aging population continues with new claims of economic gloom and doom…unless we cut Social Security.

We should not confuse the fact that there will be more retirees in the future with the notion that benefits are too high and should be cut. The average Social Security retiree check – right now – is just over $1,000 a month. Could you live on $12,000 a year? Yet, 20 percent of Social Security beneficiaries do just that. For 2 out of 3 retirees, Social Security is most of their income.

The fastest growing part of the federal budget isn’t Social Security and Medicare…it’s the interest on the debt which has grown by nearly $3 trillion in just the last 5 years. The Bush tax cuts for the wealthy and the Iraq War have dramatically increased the federal debt and seniors are being asked to pay the price.

We need to get our immediate fiscal problems under control so that we will be in a position to strengthen the Social Security and Medicare programs, not privatize or destroy them in the name of “entitlement reform”.

New York actuary, David Langer, adds his voice to the chorus of others like economist Dean Baker who've tried and tried to provide some desperately needed perspective in the "entitlement reform" campaign. The Christian Science Monitor wrote today about Langer's view that now is the time to improve benefits...not cut them.

"The New York actuary's opinion runs contrary to the standard view in Washington. Both conservatives and liberals tend to talk about how to "reform" the system by trimming its long-term costs. Otherwise, it's argued, the cost of benefit payments from Social Security and Medicare will become overwhelming as baby boomers retire. By contrast, Mr. Langer urges making Social Security benefits much more generous to provide safe and adequate pensions, even if payroll taxes must rise."

In other words, we can afford an aging population if we'll only confront our long-term funding issues honestly without a crisis mentality.

"Kogan wants to make clear that there is no general "entitlement crisis." Medicare and Medicaid costs are growing rapidly as healthcare costs escalate."

We can't continue to ignore the tougher issue of healthcare reform (which might hurt insurers' bottom line) in favor of benefits cuts (which certainly hurts seniors and their families)under the guise of "entitlement reform". The goal should be strengthening Social Security and Medicare, not cutting these programs just as we need them most.

Here's a letter to the editor Barbara wrote after reading the Boston Globe editorial on the "Fiscal Wake-up Tour".

Fiscal priorities
February 25, 2007

If we're really going to have an "honest discussion" about our nation's current budget mess, as suggested in Scot Lehigh's Feb. 16 op-ed, "Fiscal wake-up tour's inconvenient truth," those leading the discussion should be honest about their ultimate goals.

Contrary to claims by Comptroller General David Walker and conservative think-tankers, Social Security and Medicare are not responsible for our budget deficit. President Bush inherited a surplus and a Social Security trust fund built up in preparation for baby boomers' retirement. Six years later, after billions in tax cuts, an unfunded war, and a Republican-led Congress that followed the president's "borrow and spend" lead, we now face record deficits. Washington will have to make difficult choices to repair the fiscal damage. But serious healthcare reform and strengthening Social Security should be the priorities, not destroying these successful programs that are critical to any strong industrialized nation.

BARBARA B. KENNELLY Washington, D.C.
The writer is CEO of the National Committee to Preserve Social Security and Medicare.