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Friday, 12 August 2011

“Entitlements” in Republican Crosshairs

category_bug_politics.gif Before I get into this post, a word about a word – entitlement. In the ignorant way of certain American politicians and too many in the media, the meaning has become twisted into the opposite of its definition. When they say “entitlement,” they almost always give it a negative spin especially when declaring Medicare and Social Security to be the causes of the budget deficit.

This may stem from a common phrase used to describe people who are overly self-involved or narcissistic: we say they have a “sense of entitlement.”

Contrary to common public usage, however, entitlement is something one is guaranteed to receive or entitled to have.

We are entitled to Social Security because we paid into it all our working lives. We are entitled to Medicare because we also paid into that program since it began in 1965. To further clarify, Medicare, as too many believe, is not free. We pay premiums for Part B and Part D and both may, depending on individual coverage, involve deductibles and copays.

Got that? Okay. Moving on.

A couple of days ago, I republished Saul Friedman's excellent and eloquent explanation of why Social Security is not, as some Republicans assert, a Ponzi scheme.

Nevertheless, you will continue to hear that lie, among others (Republican presidential candidate, Texas Governor Rick Perry is fond of this one), in the coming months and all through next year's election campaign.

Another lie is equating the costs of Social Security and Medicare with the causes of the recession. Early this week, Senator Scott Brown (R-MA) met with a group of Chinese and Russian elders at a Jewish community housing development in Brighton, Massachusetts. As reported in the Boston Globe:

”US Senator Scott Brown today warned seniors worried about Medicare and Social Security cuts that their benefits could be slashed because 'we’re in a financial emergency right now...'

“'If anybody’s telling you that “Everything’s OK, and don’t worry about it, and you’re going to get all your benefits, and everything’s fine,” then they’re not really telling you the truth.'”

When asked what the potential is for cutting Social Security,

“Brown responded that 'it was difficult to say' what might be cut until a new deficit-reduction panel in Congress releases its recommendations later this year. But he said his job was 'to try to push them toward looking at everything in a thoughtful, structured manner.'” [emphasis added]

Oy. It's going to be a rough year for truth, and scaring the piss out of old folks will be high on Republican candidates' agenda.

The “deficit-reduction panel” Brown referred to is the Joint Select Committee on Deficit Reduction enacted with the debt ceiling legislation and as of yesterday, Congressional leaders finished appointing the 12 members, six from each party and six from each House of Congress.

The committee is tasked with finding $1.2 trillion in tax cuts by Thanksgiving and if they fail to come up with a plan that can pass Congress, automatic cuts of $600 billion each in defense and non-defense (read Medicare/Medicaid) will be triggered.

Fortunately, Social Security is not included in those automatic cuts, but that does not mean the Committee will not try to take a whack at it in their deliberations. And don't forget that the Committee legislation requires an up-or-down vote in Congress with limited debate and no amendments.

The facts of Social Security will undoubtedly be mangled between now and Thanksgiving so here are a few important points to have at hand when politicians, pundits and reporters try to bamboozle us with false, exaggerated and uninformed assertions. Such as:

We Must Raise the Retirement Age to Save Social Security
When raising the retirement age is broached, remember that it is already being gradually increased. For example, I was not eligible for the full benefit until age 65 and 10 months. Full retirement age for Social Security will be 67 for everyone beginning in 2027.

During the 2010 election, I lost track of the number of candidates who said we must raise the retirement age to 67. Some, now having been set straight, have upped their proposed age increase to 70.

The Deficit is Caused by Social Security Costs
The Social Security tax, FICA, is a dedicated tax – that is, revenue collected from employees and employers goes into the Social Security Trust Fund, not into the government's general revenue fund. Therefore, by definition, it does not affect the deficit.

Current benefits are paid from the Trust Fund.

The Trust Fund is Empty
Actually, the Social Security Trust Fund is currently carrying a surplus of $2.6 trillion.

It is true that Congress and every president since at least Ronald Reagan has borrowed from the Social Security Trust Fund to pay for wars, education, highway programs and anything else they wanted that was not specifically funded.

The amount they borrow is replaced by Treasury securities that earn interest and the Trust Fund will continue to grow every year by about $1 billion until 2020.

The Trust Fund is Just Useless IOUs
Only if you believe the Chinese buy U.S. bonds and T-bills to paper their walls.

Although the securities in the Social Security Trust Fund are non-marketable, they are no different from the Treasury securities held by individuals, corporations and foreign governments, backed by the full faith and credit of the U.S. government which is obligated to pay them back with interest.

To default on the securities held in the Social Security Trust Fund is as unthinkable as defaulting on any other government debt.

Any thinking person should know that Social Security is the least of our nation's problems. The shortfall that will hit the program in 2037 can easily be fixed by eliminating the salary cap and a couple of other small tweaks that would not be painful.

And Medicare? The simplest and most productive way to fix it is to enact universal coverage, Medicare for All. This chart from Jared Bernstein's Blog is worth a look.

”[L]look at the below list of countries that both maintain a triple-A rating from S&P (though some are on their downgrade watchlist) and have some version of universal health coverage, in other words, an 'entitlement' that goes much further than anything we’ve got over here.”

Hthcare_aaa2

We have our work cut out for us. The National Committee to Preserve Social Security and Medicare had this to say on Thursday about the Joint Deficit Committee:

”Half of these Committee members have pledged to keep revenues out of the solution, and even more than half are on the record with statements about the need to consider cuts to Social Security, Medicare and Medicaid.”

There is no post at The Elder Storytelling Place today. More next week.


Posted by Ronni Bennett at 05:30 AM | Permalink | Email this post

Comments

...but no one seems to point out that certain tax deductions and credits have become entitlements to those who can use them.

Thank you for a great post. Saul Friedman would be so proud.

I am forwarding it to everyone on my e-mail list because many of them are believing the lies being spewed from the the Republicans.

...and what about the health care and retirement benefits that our politicians enjoy? Would be interesting to have the spotlight shined on that subject...

Excellent summary of where we sit and what we face. Thanks.

Printing this out and keeping it handy.

Well done and right on the money. It's gonna be a busy time and I'll be joining the fight.

We have to write letters, circulate petitions, and campaign to save ourselves and our future. It's war -- plain and simple.

There is a surplus in the SS trust fund at this time Ronni? I thought there was either earlier this year or late last year but that the recession caught up with it and government borrowing from it currently put it in the red.

Or are you factoring into your estimate the treasury securities that are there to cover what's been borrowed

Larry...
There is a surplus of $2.6 trillion in the Trust Fund held in Treasury securities.

Until this year, all Social Security benefits were paid from current FICA revenue with excess going into the Trust Fund.

That is how the $2.6 trillion surplus was built up due to farsighted legislation during the Reagan administration which increased the FICA tax to account for future baby boomer retirees.

For the first time this year, thanks to high unemployment, FICA receipts are down and SSA has dipped in to the Trust Fund to make up the difference between current FICA revenue and benefit payments owed.

According to the trustees, this will be necessary for another year or two, then revenue will cover benefit payments for some more years.

The Trust Fund is nowhere near in the red.

Thanks Ronni.

I knew the treasury securities would back up anything that had been borrowed from the trust fund but I was referring to this information from social security.gov that says "Social Security expenditures exceeded the program’s non-interest income in 2010 for the first time since 1983."

To me this says that actual non-interest revenues were exceeded and we had to dip into our reseves to make benefit payments. Perhaps that is what you were saying too and I just didn't catch it.

But yes you're right. With the interest the system gains from putting its surplus into an interest earning account, SS is solvent until at least 2036, which after that time, if nothing is done to correct for the influx of baby boomers on the system, beneficiaries will still get up to 75% of their entitled benefit for at least another 20 years.

I apparently said essentially what you did in your response to me so shame on me for not focusing more on your comments.

A very well-written and succinct look at Social Security and Medicare. I especially like your clean and clear explanation of the word "entitlement", and its current mis-use.
Thank You!

Great informative post! Am sharing with my adult children to buttress their perspective since they live in seedbeds of right extremism, including some of their in-laws, too.

Regretfully, too many adults I know have frozen minds and would not welcome or read this if I were to send it directly to them. For many, it would have to be through snail mail any way and would create resentments (would trash without reading.)

Locally, those remaining would lock me out as occurred years ago when I provided practical and emotional support for a mutual friend who entered a same-sex relationship with another, long after divorce from an alcoholic husband.

My challenge always is to get others to listen to facts and views alien to them. Straight forward presentation of facts, or confrontation in even a non-threatening manner, is not effective with most.

Too often, as with my blog, I end up reaching only those who already agree -- the others cease reading me. There's little value in preaching to the choir other than sometimes helpful new observations, corrections (hopefully few,) and support for my perspective which is valuable and welcome.

In reaching those I want to hear, focusing on what we have in common with a gradual evolution into more controversial topics sometimes helps. Certainly listening to what they have to say with conversation in a civil manner is a challenge, though I remain calm (not always possible for some as their emotions run high, especially when they inject contentious social issues.) Humor is a plus.

When writing, simply name-calling, inference about the level of their intelligence is counter-productive (or questioning the degree of their patriotism as many of them like to cite; also alluding to biblical moral issues.)

Any suggestions about how to effectively draw in extremists, those with conflicting views, other doubters and followers of the misleading media spouters, could benefit me and many others, I think.

It's all about more than just facts if we hope to make a difference.


As I see it many conservatives share a similar worldview: "my mind is made up so don't confuse me with facts". My brother and I are several years apart in age. We were raised by two parents in an intact, '50's-style, strongly Republican family. Yet, we're polar opposites politically. In order to remain in communication with each other (we reside in different states), we've reached an agreement that politics simply cannot be on the table. That's how deep the divide runs, as some other readers have observed.

He's 100% convinced that President Obama's election was one of the worst things that ever happened to this country. Needless to say, I don't agree (although I have been a bit disappointed in the President's apparent unwillingness to stand up to the tea partyers and other right-wing extremists). It would be to no avail to share this post with my brother. No matter how much we may disagree, he has every right to his views. I just wish the concrete hadn't quite set.

Thanks Ronni for another cogent posting. I too forward these far and wide. Good thoughtful questions about how to approach those conservatives who swallow the Republican swill. Every time another Repub. idiot joins the presidential melee, I wonder what country we can migrate to....and yes, let's get "entitlements" tagged to corporate and rich guy loopholes!

Where is your comment Lois?

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