donkey_and_elephant

Yesterday was a remarkable day for unity.

The instant President Obama announced the inclusion of Chained CPI in his budget, there were Democrats/Progressives across the country who angrily responded, “Don’t you dare change that!” Meanwhile, as an agreement was reached with Senators Pat Toomey and Joe Manchin on bringing expanded background checks to debate in the Senate, Republicans/Conservatives across the country angrily responded, “Don’t you dare change that!”

President Obama has indeed brought bipartisanship to Washington DC…in a chorus against change.

It’s easier to be harder on Democrats and Progressives because we expect more from them than the binary-minded Republicans/Conservatives.

Change can be scary. Especially, when one focuses narrowly on it. Perspective is always helpful and hysteria is always detrimental but it is not an unusual reaction when learning that something that has been a certain way for a long time may change.

Let’s look at the expanded background checks first. Notice that they aren’t referred to here as Universal Background Checks because that was part of the compromise obviously needed to get this bill placed into debate against a filibuster. The gun show loophole will be closed but a massive “private sale” loophole has been preserved so, as the NRA wants, a convicted murderer can legally be sold a gun by his friend, a convicted mugger. Yet, Right Wingers wail that this change is taking away their 2nd Amendment rights. I suppose that is because they all must be friendless, orphaned criminals.

The gun show loophole that terrorists and madmen could have and probably are exploiting to buy deadly weapons…a loophole closing that no non-criminal American would have been impacted by in terms of buying whatever gun they wanted…looks like it could be eliminated and yet it inspires paranoia and terror in those insecure, gun humpers on the Right who only know what Fox and Rush tell them, that ANY change is an attack on them and a prelude to a totalitarian government taking away their guns and forcing them to gay marry.

Looking Left, the terror over changes to future raises to Social Security under Chained CPI has inspired similar fear that changing anything about Social Security is a slippery slope to destroying it and leaving all of us to wrestle against stray cats on the streets for scraps of food when we retire.

First, a few clarifications. Chained CPI doesn’t refer to nor change the calculations of what you will receive in Social Security at the time you retire. It only refers to a lower Cost of Living Adjustment with each raise you would receive. How much? Using the average SS income amount of $1400/mo, it would mean receiving $3.50 less in monthly raises. For example, if there was a 2% raise before Chained CPI, one would have received a $28/mo raise but would now receive a $24.50/mo.

It does in fact mean less money to recipients beginning at $3.50/mo ($42/year) and will be compounded in future years and raises. So were Seniors better off 5 years ago before Chained CPI was just a faraway dream of Repubs? If one looks narrowly at this area alone, yes, but if one looks at the big picture of what Seniors would be receiving next year from the government, the answer would be no.

Put 2010 and 2011 aside, in those years Congress deprived Seniors of any raises, so those years were worse than any year could be under Chained CPI (zero vs. $24.50/mo) which would make Cost of Living Adjustment raises automatic instead of controlled by Congress. Let’s take 2008 then for an example. The raise was 2.3%, an average of $32/mo. Compared to being under Chained CPI, one would instead receive $28.70, or $3.30 less a month.

However, the Affordable Care Act was not in place then. So the $39.60 in an additional annual raise a Senior received in 2008 would have been dwarfed by the hundreds or thousands a Senior would have spent each year on annual checkups/preventative care, donut hole costs on prescriptions, etc.

So just as a mathematical fact, even with Chained CPI in place (and considering Cost of Living Adjustments are automatic and not at the whim of Tea Party Republicans in Congress), Seniors in 2014 would be far better off than they were five years ago.

None of this is saying Chained CPI is a good thing or preferable, just trying to paint a realistic economic “You Are Here!” on where next year’s Seniors would be as opposed to where they were five years ago.

The Republicans’ key problem in their failure at governing is their lack of desire to and disinterest in compromise, a dirty word in their vocabulary (though “bestiality” seems to always comfortably be on the tip of their tongues). Democrats have had to live with compromising on their side for so long, some may be suffering from Compromise Overload. Even so, there is an absolute when dealing with an opponent which is fearfully adverse to collaborating…there must be compromise.

President Obama has said adamantly that unless its part of a balanced deal including stimulus spending, closing of tax loopholes for the wealthy and adding taxes on tobacco and the wealthy, he would never agree to Chained CPI. Republicans continue to whine that they already gave Obama his tax hikes (Reality Translation: Some of the Bush Tax Cuts that were passed as temporary cuts…became temporary cuts as planned) and they won’t give anymore.

This is the real world, you can’t have your cake and the cake that’s in Republican hands and eat it too. Yes, there are far better ways to keep Social Security working past the 20 or so years it can currently sustain. The contribution cut off at $113,700 for earnings could be raised or removed. The Federal government could appropriate complimentary revenue. There could be means testing for wealthier Americans. Republicans could be taxed every time they say, “liberal media”.

But thinking such things could be passed with a Bagger House and with Bagger Senators who can filibuster in The Senate is simply living in Fantasyland. It simply won’t happen (if Dems had a 60 vote majority in The Senate and control of the House, perhaps, but you saw what happened with passing health care reform even with those advantages, even that wouldn’t assure passage).

So, shall we throw tomatoes at Obama for not insisting on terms that would never be agreed to? What we should also consider is, what harm would come if Obama insisted on not compromising at all on Social Security and would the results be better or worse for Americans and in particular, Seniors?

The big picture here is that Obama is trying to make Republicans an offer they can’t refuse (though I would prefer putting a turtle head in their bed…any volunteers in the Senate?) in order to negotiate a “Grand Bargain” that would get rid of the devastating sequester cuts to social services and spending  and form a sensible and productive budget/economy. It also has politics in mind, this move makes Obama and the Dems seem like the real moderates and problem solvers, willing to sacrifice and compromise while the Repubs look like intransigent, useless jerks. It would be naive not to recognize how this could help Dems in the 2014 elections (and maybe get them closer to re-taking the House?)

The Republicans’ plan is for the economy to continue spiraling down for all but the wealthiest Americans, providing them with a desperate and cheap workforce and a nation of people so discouraged with their society and government that they give up on them. Keeping the sequester cuts in place helps the Republican objectives of strangling government and impoverishing the American people, they’re just fine to keep it in place (though some Repubs with military industries in their states are not so happy at what the cuts are and will be doing there).

The real dynamics here are, will Seniors be better off keeping the annually escalating $3.30/mo they would not receive under Chained CPI but living in a deteriorating society and economy or not receiving that amount but living in a better functioning society and economy? And aren’t Seniors doing better financially than they were whatever happens with Chained CPI thanks to the passage of the ACA?

The whole point of a compromise is to give up something you don’t want to give up in order to make the other side give up something they don’t want to give up and ultimately, making a deal.

In the end, those who are so adamant that all they care about is that Social Security raises should stay just as they are (once again, that’s insisting that Rand Paul, Paul Ryan, etc. continue to have the power to decide when raises are given) and that Obama is betraying them by proposing this, should also recognize that they are taking the position that they want the sequester cuts to remain in place, our economy to remain stagnant for most and our infrastructure to continue crumbling.

This is a package deal. We can’t get Republicans to compromise on increased revenues if we don’t compromise on something they want, like reducing expenditures on entitlement programs. So standing immovable on entitlements means insisting on the status quo of the sequester, which the Congressional Budget Office has said will cost America 1.5 million jobs and reduce economic growth by 1.25%.

And those jobs include first responders like police and firemen. It can and will affect how quickly a response comes  to aid a Senior with a health emergency, a fire, a crime in progress, real world emergencies of all kinds. It means grater unemployment for many Americans which has a domino effect on small businesses and stores closing and more people sliding into poverty. It means less teachers and bigger classrooms, cuts in cancer treatment to those who aren’t insured or wealthy and cuts to pre-K enrollment, reduced government and social services in most every direction.

The Greatest Generation was most known for their willingness to sacrifice for the greater good. Nowadays, whether on the right or left, there is a prevailing sentiment that sacrificing is what the other guy needs to do. Even though, as I noted above, Seniors will be in a better financial position even with Chained CPI than they were 5 years ago, there needs to be more of a willingness to make reasonable compromises on those things that impact us in order to make society better as a whole and for others. Is it worth $3.50 a month to reduce poverty, rebuild our infrastructure, create jobs for 1.5 million Americans and more, improve and strengthen our economy, bring more tax fairness and give the next generation the chance to have at least as much as we had?

And a strong likelihood is that none of this will pass anyway since John Boehner and other Republican parrots have been squawking that they won’t pass any more bills that increase revenue. So supporting this sacrifice would reflect well on those who do so, showing that they walk the walk on doing the right thing even if it imposes difficulties on themselves and meanwhile, it may never be imposed on them because of Republican intransigence. As mentioned, this can also make a difference in swaying public opinion to put Dems back in charge of The House.

To be clear, President Obama has insisted that none of the reductions of Chained CPI would impact those who are most in need, those to whom $3.50/mo may represent having or not having meals over one or more days. With that protection in place and despite our desire for far smarter and sensible approaches to balancing Social Security in the long term, is this not a sacrifice we should be willing to make for the welfare of our society as a whole?

Or should we fight against any changes to Social Security, come hell or high water…and by doing so, hasten the approach of both?

 

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SallyT
Member

From another persective on CPI not here not now. Not meant to argue. This presents better than I can.
Nine Things They Don’t Want You To Know About The Chained CPI
http://crooksandliars.com/richard-rj-eskow/nine-things-they-dont-want-you-kn

8 Deficit Reducers That Are More Ethical – And More Effective – Than the “Chained CPI”
http://blog.ourfuture.org/20121218/nine-chained-cpi-alternatives-that-are-more-ethical-and-save-more-money

The “Bump” That Breaks the Chain: Illustrating a Social Security “Fail”
http://blog.ourfuture.org/20130411/the-bump-that-breaks-the-chain-illustrating-a-social-security-fail?

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funksands
Member

Never underestimate the power of needing to do “something” when “nothing” is going on.

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KillgoreTrout
Member

What bothers me is the insistence in DC to refer to SS as an entitlement program. It is NOT an entitlement. People pay into SS all their working lives. Even those on disability have paid into SS before they became disabled.

Personally, I wouldn’t sweat 3.50 a month if it would indeed help all Americans in different areas of spending.

As far as making an offer the repubs can’t refuse, wasn’t that what the sequester was supposed to be? Making a sequester look so bad that even the GOP would compromise before allowing such cuts to take place?
I think that backfired in Obama’s face.

Well, I guess we’ll see what happens pretty soon. I know the sheepish GOP base will go along with whatever republicans in DC decide, even if such a decision is against their best interests.

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SallyT
Member

KT, that is one of my main concerns by putting SS on the table and especially a table for the budget. Social Security is a paid benefit and not part of the budget. Any adjustments, if necessary, should be discussed separate and on its own merits. Throwing it in here as a bargaining chip is dangerous. Just as you said, the sequester was suppose to not happen because the GOP wouldn’t let such cuts hit. Well, it did. And, regardless of how you figure this adjustment, no one knows for sure how ones life will be 10 years from now.

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funksands
Member

Ad, this is a really good, thoughtful, difficult piece to read. I’m planning on publishing my own Chained CPI article that deals a bit more with the mechanics of SS and Chained CPI, but your political take on this is very helpful and I think will compliment and significantly enhance what I have to say.

It’s not mathematically or actuarially (this is a word right?)complicated:

1. Social Security already employs 3 ‘bend points’ to determine your Primary Insurance Amount at benefit election.

2. At 62 each year’s earnings are tallied up & indexed for inflation, & your highest 35 years of earnings are averaged out. ‘Bends’ are then applied.

3. The ‘bend’ points determine what your Primary Insurance Amount (SS payment) will be at your full retirement age.

4. For someone making an Avg. Monthly Income of $8k over that 35 years, here’s how this breaks down:

5. The first $767 of monthly income has a 90% benefit applied to it. The next $3857 of income has a 32% benefit applied. Next $3376 – 15%…

6. Or:
*$767 x .90 = $690.30
*3,857 x .32 = $1,234.24
*3,376 x .15 = $506.40
For a total benefit of $2430.94 per month at full retirement age.

7. So lifting cap on incomes subject to SS tax would involve simply adding another “bend” to higher incomes.

8. Lower income SS recipients already receive a much higher proportional benefit to their incomes. Nothing substantive needs to change.

9. Someone making $500k a year for example would still have ALL their income applied to a benefit, but have a “bend” of .001% (for example) applied to their monthly income above a certain amount of monthly income.

This keeps SS from becoming a welfare program, keeps the program solvent, and doesn’t subject a higher earner to any higher proportion of payroll tax than their lower-earning counterparts.

Easy. Just not politically easy as you have ably explained.

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SueInCa
Member

FYI
I posted this to FB a few days ago and I thought I would add it here as well. I just got through watching the documentary, Heist – How they stole the American dream and I am madder than ever now but I will either get over it or do something about it. I think the time is now, like never before. Anyway I would recommend the docu and here is some stuff as a result of that docu too.

http://www.nationofchange.org/1983-strategy-behind-today-s-social-security-attacks-1365514721

http://en.wikipedia.org/wiki/Mandate_for_Leadership

http://reclaimdemocracy.org/powell_memo_lewis/

They are all good reads and feed back into the Heist docu and what is going on today and has been for the past 30 some years.

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SallyT
Member

Wow, that was enlightening! It will take the people speaking out to make a difference. Those speaking out now are not weirdos, goofs, or left-tea baggers. And, passion has brought about good changes, too. It is so upsetting to me that people are so quick to throw names at people on their own political side that disagree with the President on one issue. (Why weren’t people shouting when President Clinton was making his mistakes? Or did it take 10 years for them to speak out? And, too many went along with President Bush!) He can make mistakes, as everyone has. If people take the time to listen and read additional information, it will be made clear that they are certainly not Tea Baggers. These people have active brains with different opinions. I would think the President would have realized by now that you can’t negotiate with the GOP. It certainly hasn’t worked for him before with them. Don’t slow down, Sherlock! I will go rent Heist!

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kesmarn
Admin

AdLib, what a great service you’ve done with this article. Thank you so much! This is exactly what I’ve been looking for and I wish I could distribute it personally to the many millions who really need to read it. But I’m just a wee bit short on spare time and toner in the printer at the moment to be making up and distributing handbills. 😉

It really is difficult to get plain facts, and that’s just what you’ve done here, for which I am grateful. It’s amazing how many times folks on the left have thrown in the towel on trusting the President’s good judgment, intelligence and compassion — only to find out later that he was calmly steering the ship of state on a steady course and knew exactly what he was doing the whole time. This cycle of misjudgment, hysteria, and then reassurance loops over and over it seems.

At this point in time, I think I’m inclined to just assume that the man is up to the job, and that he’ll not forget the poor, the elderly, the little school kids who need to be safe, or the underdog. In retrospect, it doesn’t seem that he has yet. And I don’t get the impression he’s about to start now.

That may sound more intuitive than scientific/rational — a route I don’t normally like to go — but intuition is part of politics too, I think. And right now, my intuition says PBO has no intention of selling us out.

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SallyT
Member

There is not a problem with the “left or progressives” speaking out against the President’s budget. If more had spoken out before President Clinton and President Bush went along with things, well, maybe things would be different.
There is no reason why Social Security should be on the table. It is earned benefits and should not be a “bargaining tool” in the budget or blamed for the deficit. Yes, there should be a discussion about Social Security and the concerns that face it in 2037 but it should be separate from this! More jobs and raising the income cap will take it into the next century. Using it now as a carrot by the President to get the Republicans to cooperate is not going to produce anything. They are not going to go along with him unless he gives more. Why even give them an opening into Social Security? The Republicans are hurting themselves by doing nothing that we don’t need to help them by shooting ourselves in the foot!

http://www.masslive.com/politics/index.ssf/2013/04/democratic_sen_elizabeth_warre.html

http://civic.moveon.org/signon/reichvideo.html

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Nirek
Member

Ad, I said before that I’m willing to give up some of my big increase in Social Security. (It was non existent for some years). Just as long as the loopholes that the filthy rich use are closed.

At any rate , Social Security has nothing to do with the deficit. Not one cent of the deficit is due to Social Security. It is funded by the workers and their employers in the form of payroll taxes.

The only people who are hurt are those who depend on SS.

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SueInCa
Member

Adlib

I respect and appreciate that you have laid this all out for people to understand and I do understand it quite well now. You say it is time for people to walk the walk and share the burden but the only ones being asked is seniors. If, as you say we should be ready to walk the walk then why not share that percentage with us? How about current workers take half of that percentage and pay a higher rate into SS? Why not share the burden? I know people think 3.50 a month is not much but think about it, $1400.00 a month is all you have, and puts you below the poverty line(after taxes and medicare), why are you asking that poor people pay more?

Had there been some shared sacrifice, I could have gone along with these cuts to SS but the only ones sharing the sacrifice are seniors, some of who get way less than that average $1400.00. Could they make up the difference over the years with regular increases? No one can say because there has never been a yearly COLA increase for seniors. All the increase numbers are supposition not fact.

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