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May 31, 2005

A Plan for Social Security

Among left-wing bloggers, there's a general consensus that Democrats would be foolish to offer a competing plan for restructuring Social Security. This consensus is right (I refer the unconvinced to the Gospel of Matthew), but it leaves open the question of what to say when we're asked what our plan is, or why we don't have a plan.

There's a simple plan we can lay out here: Balance the budget, and no matter what happens with Social Security over the next 40 years, we'll be able to take care of it. Balancing the budget will put America into a sufficiently good financial position that we'll be able to shore up Social Security no matter what goes wrong. If Social Security needs a little extra money to keep going, we'll be able to come up with that.

The best thing about this strategy is that it allows us to segue immediately into talk about Republican fiscal incompetence. Here's where you start talking about tax cuts for the rich, or if you're in an anti-spending environment, big corporate giveaways like the ban on negotiating lower prices for Medicare prescription drugs. It's probably an especially good thing to say to people like Russert, since earnest talk about deficit reduction makes you look all principled and bipartisan in centrist environments.

--Neil the Werewolf

May 31, 2005 in Social Security | Permalink

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Comments

Er, actually balancing the budget would probably be a disaster -- keeping the deficit a point or so below the rate of growth would do just fine -- but point taken!

Posted by: Brad Plumer | May 31, 2005 10:44:13 PM

And by "disaster" I mean "bad idea." Must learn to stop overstating...

Posted by: Brad Plumer | May 31, 2005 10:47:14 PM

A disaster? Or, I mean, a bad idea? When we balanced the budget in 1999 or so, did anything really bad come of it? I was of the impression that balanced budgets are a fine thing to have (as well as a fine thing to talk about).

Posted by: Neil the Werewolf | May 31, 2005 10:49:20 PM

But why do it? There's no need for it, I think. Keeping the debt-to-GDP ratio stable seems perfectly fine; so there's no sense in hiking taxes and cutting spending extra to get to balance.

Posted by: Brad Plumer | May 31, 2005 11:14:54 PM

I do accept that a budget where expenditures exceed revenues might be optimal under current circumstances.

Posted by: Neil the Werewolf | May 31, 2005 11:16:11 PM

(I actually posted that last thing before seeing your 8:14 post. I think we are in agreement.)

Posted by: Neil the Werewolf | May 31, 2005 11:21:00 PM

Social Security discriminates against black males. The average lifespan of Black males is 65 years old. Many Black males pay Social Security tax their entire working lifespan and then die before they ever collect one penney. Their wife's and children get sqwat. This is unfair and would never be passed today. Many Black women, like Star Parker, say that Personal Savings Accounts (PSA) correct this racist flaw.

Former Senator Bob Kerrey (D-NE) said, "It looks like Bush is targeting wealth to the poor. Reform with Personal Savings Accounts also corrects a discrimination problem that Social Security has with some minority population groups." Well that's an understatement. Black women also have shorter lifespans than White women.

What about Medicare? Same problem with discrimination against Black males. Black males spend a lifetime paying Medicare Tax and then die before they get their first covered Medicare dollar. Social Security and Medicare are a complex wealth transfer scheme from all minority groups to White people. The only way it can be supported is through propaganda and disinformation.

The political debates will be interesting to watch in 2006. I can just imagine Star Parker saying, "Personal Savings Accounts for the reforming of Social Security (SS) should be patterned after the Health Savings Accounts (HSA) that are already in existing federal law. If a Black male dies at 65 all PSA balances should go to his wife, exactly like a tax free HSA. Also, HSAs have no limitation or restrictions to only 5 investment options. HSAs have the freedom of investments that are FDIC insured at the bank or may be invested in any mutual funds. PSAs should be exactly the same way. Please no more Nanny State because we all know it's a Plantation if you look at these "Entitlement Programs" properly."

Hispanics have shorter lifespans too. How will Democrats defend the current discrimination of Social Security and Medicare to those who have shorter lifespans?

Posted by: Ron Greiner | Jun 1, 2005 9:16:40 AM

Ron, I think Democrats can begin to defend the current discrimination by pointing out that your claims of discrimination are a myth. However, for purposes of your argument, it should suffice to point out, just because the average life expectancy of a given sample of the population is 65 years, that does not mean that everyone in that sample is dropping dead at age 65.

Posted by: E-mart | Jun 1, 2005 10:22:41 AM

I agree. I would also like to say that interjecting race into every issue is a crock as well, regardless of which side of the aisle you fall on.

Posted by: Robert Zimmerman | Jun 1, 2005 11:10:07 AM

E-mart, suggesting that because Black children get a larger percentage of survivor benefits in Social Security than the percentage of Black children in the general population is a poor arguement. But I do understand it's the only one you have. Next you will say that Medicare doesn't discriminate against Black males because Black children may get a higher percentage of S-CHIP funds. But you can't find someone else to do your thinking for you on Medicare's discrimination on Black males.

When you say - it is sufficient to say that all Black males don't drop dead at 65 years of age - That means nothing.

Also Ezro, you said // big corporate giveaways like the ban on negotiating lower prices for Medicare prescription drugs.// For your information the federal government does not negotiate lower prices on prescription drugs for federal employees either. Nor does the federal government negotiate lower prices on prescription drugs on the childrens' S-CHIP program. The private health plans do the negotiating, exactly like will happen on the Medicare prescription drug benefit. I know just because no one has ever corrected you with these statements doesn't mean you are correct. Democratic candidates that use these sloppy arguements might find a knowledgable candidate in the 2006 political debates.

Due the math. Medicare part B premium is taken directly from the Social Security check. Medicare part B premiums have been going up 15% a year and Social Security goes up by the CPI which is much lower. If you extend the trend lines at some point the Medicare part B premiums become larger than the average Social Security check. So when young people believe that they will not get a Social Security check they may be correct.

Posted by: Ron Greiner | Jun 1, 2005 11:29:55 AM

Robert, you agree with what? I understand you would prefer not to discuss what former Senator Bob Kerry (D-NE) said about minority population groups.

Social Security is a ponzi scheme and most young people, yes even Democrats, believe it needs reformed. In the future there will only be 2 working citizens taking care of 1 retired citizen. There is no "insurance" with Medicare. All expenses come out of taxes on current workers. So 2 workers in the future will be paying Social Security benefits for 1 retired worker. Also these same 2 workers will be paying all Medicare expenses too on 1 retired worker.

Social Security and Medicare are both "pay-as-you-go" social programs. Former Senator Pat Monyhan (D-NY) said, "Social Security is not anywhere near as big a problem as Medicare." Both programs need reform.

Posted by: Ron Greiner | Jun 1, 2005 11:42:44 AM

Ron, I quote from the bill, via CAP:
"In order to promote competition under this part and in carrying out this part, the Secretary (1) may not interfere with the negotiations between drug manufacturers and pharmacies and [prescription drug plan] sponsors; and (2) may not require a particular formulary or institute a price structure for the reimbursement of covered Part D drugs."

What happens when people aren't covered by private health plans?

Posted by: Neil the Werewolf | Jun 1, 2005 12:32:53 PM

Ron, I link you to other information because your tired argument with respect to Social Security is one that has been repeatedly refuted, including since January when you made the same argument on the Dead Parrots Society (oh, and Dr. Jose Pinera calls them "personal savings accounts" now because privatization didn't poll well - you do know that his Project on Social Security Choice with the Cato Institute was until recently called the Project on Social Security Privatization). There are a number of points rebutting the fallacious "bad deal for blacks" claim, including the basic fact that any discussion of "rate of return" depends upon statistical spread of mortality within racial category as compared to contributions made and total benefits realized, including survivor and disability benefits. Your post posits a black male who works to age 65 and dies before collecting any retirement benefit (and inexplicably qualifying for no survivor benefit). Between (a) the progressive scale for benefit calculation, (b) the disproportionate participation in disability and survivor benefit programs by blacks, (c) the differing spread of mortality (i.e., higher percentage of blacks dying younger than whites, with an attendent flattening out of life expectancies among racial categories as age approaches retirement), and (d) the fact that blacks tend actually to take retirement benefits earlier, and therefore have a shorter contribution period, "rate of return" is actually comparable, if not better, for blacks (and Hispanics too, who actually have longer life expectancies than whites, according to every statistic I've seen cited by the GAO and the SSA).

Your arguments as to Medicare are based upon the same strawmen, "Black males [who] spend a lifetime paying Medicare Tax and then die before they get their first covered Medicare dollar." Besides, your comment misrepresents the notion that Part B premium could swallow up the entirety of a social security check over time in the case of current retirees. The Part B increase is limited to the COLA increase by law. By my napkin-math, even based upon your 15% trend line (which is historically restricted to the last few years and is very high), base benefits for an average future retiree (adjusted for wage-index, not CPI) would not be outpaced by increases in Part B premiums for 27 years. Take into account the fact that part of the extraordinary percentage increase in Part B premium seen since 2000 is the shortfall in general revenue available to support non-hospital medical payments, and I think the point of Neil's post is buttressed - fix the federal budget and see general revenue available for such good programs increase.

I would urge you to explore some information beyond Star Parker's comments on this issue.

Posted by: E-mart | Jun 1, 2005 1:44:21 PM

The 2:1 worker to retiree ratio is true, but its yet another strawman arguement toward the gutting of the SS program. Only at the beginning of the program was the ratio quite high, 16:1. This was only because there was barely anyone drawing benefits at that time! Through the 80s-90s, the program has seen a 3:1 ratio and has sustained itself just fine through the use of the trust fund. The loss of one more worker is indeed a problem, but its nothing we can't fix by some combination of benefit cuts/tax raises or whatever people are proposing.

The difference in life expentancy is 7 years and 5 years for women and men respectively between whites and African Americans. There is, however, more reason for this other than the fact that they are different races. Instead of erecting the life expectancy strawman, ought you not be addressing THOSE REASONS why life expectancy is less for Hispanics and African Americans? Poverty and Disease, and ultimately, Education. The straight lifespan comparison also doesn't take into account higher than normal infant mortality and homicide rates for these groups. And Hispanic actually have an EQUAL life expentancy to whites AT RETIREMENT AGE, a more accurate metric to take into account. That is, Hispanics who live to 65, have an expentancy of 23 and 20 for women and men respectively.

There is, of course, other measures to use in addition to expectancy, such as the fact that SS also pays out disability, a metric irrelevant to lifespan, or the fact that a larger proportion of African American children recieve survivor benefits from the SS Program.

Ron, you clearly have done some research. And indeed, both programs are in need of some reform, SS less so. But the problems' causes and effects are much more than the few catchy ones off a Republican talking points memo. Medicare's problems are traced to burdeoning healthcare costs, something I'm curious how Republicans or privatizers choose to address, considering we ALREADY have a private healthcare system in this country.

Posted by: Adrock | Jun 1, 2005 1:53:07 PM

I see E-mart beat me to the bunch and did a much better job than I! :thumbsup

Posted by: Adrock | Jun 1, 2005 1:54:39 PM

Ron, you either don't know what you're talking about or you're being intentionally deceptive. Example: "The average lifespan of Black males is 65 years old. Many Black males pay Social Security tax their entire working lifespan and then die before they ever collect one penney." This is so wrong! Where did you get this erroneous impression? You confuse life expectancy AT BIRTH with life expectancy AT AGE 65. Average life expectancy at birth is now 68.8 years for a black male. The average life expectancy of a black male who lives to age 65 is 79.6 years compared to 81.6 for white males. And the gap between whites and blacks has been narrowing for decades. Bush and his ilk are always using the life expectancy at birth figure to imply that black men who reach 65 will drop dead and "not get a penney" of benefits from SS, and they are obviously lying. Don't join in their deception.

See Table 27. Life expectancy at birth, at 65 years of age, and at 75 years of age, according to race and sex:
United States, selected years 1900–2002.
from the CDC's National Center for Health Stats.

GAO has also said "In the aggregate, blacks and Hispanics have higher disability rates and lower lifetime earnings, and thus as a group tend to receive greater benefits relative to [Social Security] taxes than whites."

How is that discrimination against black or hispanics?

Posted by: SteveH | Jun 1, 2005 5:24:45 PM

E-mart, Dr. Jose Pinera called Chile's PSA which was started in 1980 "Pension Savings Accounts." I don't really care what Cato called their program.

As far as your link saying Medicare part B premiums are limited to COLA increases is wrong. Your own link from AARP says part B premiums are increasing by 9% a year. Then you say increases have been even larger the last few years, so which is it? You know the title of your link is incorrect.

Star Parker doesn't have much to say about Medicare. I do know that Medicare is a 2008 Presidential issue. In Iowa all politicians have been complaining about that Iowa has the lowest reimbursement rates in America for Medicare. Everybody pays the same Medicare tax yet Iowa was getting the lowest reimbursements. That's not fair. In Tampa Medicare HMOs advertise no premiums and include Rx. Medicare HMOs are not in central Iowa because the reimbursement is so low. All Iowa seniors must purchase a Medigap insurance plan and my mother is spending over $170 a month. When the government is in charge New York City and Boston are going to get large amounts in Medicare and Iowa is going to get very small amounts. Sure MA, NY and FL have more representatives to gather more federal funds but the Medicare tax is the same nationwide. Maybe Hillary will go to Iowa and demand that Iowa seniors get as much in Medicare as New York City seniors. Don't hold your breath.

New York City gets billions of federal dollars annually for healthy seniors on Medicare HMOs. Iowa gets nothing for healthy seniors because traditional Medicare is a reimbursment progeram. Rivers of federal funds flow into New York City for healthy Medicare HMO enrollees. The amount annually per senior would blow your mind. Then after 10 years when the old New Yorker gets cancer the Medicare Rights Center switches seniors back to traditional Medicare for the tax payers to pay the $500,000 cancer bill anyway. Biggest scam in America. Maybe you can find some liberal talking points that address this issue but I doubt it. You will have to use your own minds.

Ezra, is the Rx coverage in Medicare administered by a private health plan or can the government administer it?

Posted by: Ron Greiner | Jun 1, 2005 6:14:52 PM

Steve, you said,// "The average lifespan of Black males is 65 years old. Many Black males pay Social Security tax their entire working lifespan and then die before they ever collect one penney." This is so wrong! //

This happens to lots of people Steve. My own sister, who paid more in Medicare and Social Security tax than you ever will, died recently at 64 years of age and didn't collect her first penny. Black males also have higher rates of diabetis too. Black males paying a lifetime of Social Security tax then dying before they collect a penny happens all the time.

Wouldn't it be better if a Black male died at 62 years of age his wife could get his PSA balance and go on a cruise?

Besides PSAs in Social Security is simply an option. A simple little option couldn't hurt anybody. In Chile it wasn't manditory and PSAs had 95% participation. If people want to stay in traditional Social Security they can. If some would prefer PSAs because their grandfather and father both died in their 50's, it would be a nice option or choice for them.

I know some say raise the retirement age again so rich millionaires who live so long can be the only ones to collect but that sounds counter productive to me. I say Otto Bismark was just plain wrong with his 19th Century Social Security scheme.

Posted by: Ron Greiner | Jun 1, 2005 6:30:57 PM

Ron, you wrote: "New York City gets billions of federal dollars annually for healthy seniors on Medicare HMOs."

You know that's wrong. NYC doesn't get anything, private HMO companies get that money. Further you know that rural areas of the country, like Iowa, don't have Medicare HMOs. If you know how to get Medicare Choice to work in low population density areas, be sure to write CMS and let them know. They're still trying to figure it out.

While you're at it, tell me why the GOP agreed to pay more for HMOs to cover healthy Medicare beneficiaries than would be spent to cover them with regular Medicare? I'm still trying to figure that one out.

Posted by: SteveH | Jun 1, 2005 10:46:49 PM

Ron wrote: "This happens to lots of people Steve. My own sister, who paid more in Medicare and Social Security tax than you ever will, died recently at 64 years of age and didn't collect her first penny."

And your sister was a black male? Just kidding, but how does that illustrate racial discrimination? My house has never burned down, but I've been paying insurance on it for years. Was that a waste?

Posted by: SteveH | Jun 1, 2005 10:49:43 PM

The political genius of Ronald Reagan and George Bush lies most in their recognition that they could buy success by cutting taxes without cutting spending -- indeed, while increasing spending. Everyone gets cake! No one has to pay! And it works, politically, until it doesn't. If the American people really wanted balanced budgets, Walter Mondale would have beaten Reagan in 1984.

If you want to make the GOP pay for its fiscal irresponsibility, you have to beat them up for their fiscal irresponsibility, not stand up and offer everyone the chance to take their medicine.

Posted by: Tyrone Slothrop | Jun 2, 2005 12:32:21 AM

Steve, you wrote: "You know that's wrong. NYC doesn't get anything, private HMO companies get that money. Further you know that rural areas of the country, like Iowa, don't have Medicare HMOs. If you know how to get Medicare Choice to work in low population density areas, be sure to write CMS and let them know. They're still trying to figure it out."

HMOs are in the Des Moines market for those under the age of 65. I could write and suggest that Iowa HMOs should pocket the same amount as a NYC HMO on each person in Medicare. This would be a waiste of postage funds. If Iowa seniors only knew what was really happening in Medicare they would go insane. Same with all seniors in America without a Medicare HMO option.

The NYC, Boston and Tampa's economies are enhanced as untold billions of Medicare dollars flow into these cities on healthy seniors. In contrast, no money flows into Des Moines for healthy seniors.

Steve, you also wrote: "I've been paying insurance on it for years. Was that a waste?"

In an article about HSAs in Medicare Patrick Rooney said that some cities get $1,000 a month for each healthy senior on Medicare. For the sake of round numbers let's say that's $20,000 per year, per couple, on a Medicare HMO in NYC. You and I are Medicare tax payers. After 10 years the couple is 75 years old and tax payers have spent $200,000 for this NYC couple. Then the husband gets cancer. The Medicare Rights Center used to brag about how they help seniors switch back to traditional Medicare. If this cancerous NYC old guy switches back to traditional Medicare then tax payers pay another $500,000 into the NYC economy and the NYC HMO is laughing all the way to a NYC bank.

So Steve, yes, we waisting our tax payer money on NYC HMOs when tax payers pay for the cancer anyway.

Just look at who funds the Medicare Rights Center.

Posted by: Ron Greiner | Jun 2, 2005 7:18:44 AM

Ron, I hate to keep saying this, but you're wrong again. "For the sake of round numbers let's say that's $20,000 per year, per couple, on a Medicare HMO in NYC. You and I are Medicare tax payers. After 10 years the couple is 75 years old and tax payers have spent $200,000 for this NYC couple. Then the husband gets cancer. The Medicare Rights Center used to brag about how they help seniors switch back to traditional Medicare. If this cancerous NYC old guy switches back to traditional Medicare then tax payers pay another $500,000 into the NYC economy and the NYC HMO is laughing all the way to a NYC bank."

The HMOs are not spending $20,000/year on services for that elderly couple. They are pocketing $20,000/year, or most of that and spending very little of that in NYC. As you know, most Medicare HMOs are for-profits and you can't pretend that the profits they make on healthy Medicare beneficiaries are staying in NYC. Most HMOs are national, not local.

You could also ask why switching back to traditional Medicare is advantageous for the beneficiary with cancer. Why is the GOP so anxious to push people into Medicare Advantage when, as you imply, HMOs supply substandard care to those who need treatment?

On the other hand you're right about one thing: differential Medicare payments based on location are unfair, but the courts have already ruled on that and said they're legal.

Posted by: SteveH | Jun 2, 2005 9:49:08 AM

Ron would like to go on a cruise with his insurance money. See, he doesn't understand what Social Security reall is. Its INSURANCE, Ron. NO, you troll, you don't go on cruises with insurance money, unless you are a scam artist.

BTW, just because someone is against Bush's versions of private accounts, doesn't mean they are against PSAs all together. Most liberals just don't want to see SS gutted to pay for these PSAs. Feel free to ask your legislator to propose a bill for ADD ON PSAs, no ones that allow you to opt out of SS, and I would be willing to go along.

As far as HSAs, I'm willing to listen to any proposal that will fix the seriously problematic Medicare system. But I think its funny you are blaming Medicare for something the HMOs are doing and then turning around and claiming we need to privatize that system as well. Private companies are the problem.

None of this takes into account Medicaid which will be gutted by these Republicans even though it takes care of people who could not afford HSAs in the first place. Feel free to try and sell that to the voters.

Posted by: Adrock | Jun 2, 2005 10:41:06 AM

Steve you wrote: "The HMOs are not spending $20,000/year on services for that elderly couple. They are pocketing $20,000/year, or most of that and spending very little of that in NYC. As you know, most Medicare HMOs are for-profits and you can't pretend that the profits they make on healthy Medicare beneficiaries are staying in NYC. Most HMOs are national, not local."

If you are suggesting that all of the $20,000 per couple is profit, why were HMO's closing up shop in Medicare? NY doctors, nurses and hospitals are all generating income because of NYC HMOs. To suggest that all HMO Medicare money leaves the state is goofy.

Insurance 101: To sell individual insurance in the state of New York the insurance company must be domiciled in New York. Name another state that does that. New York is very savvy and prefers money flowing one direction, to New York. To suggest that Empire doesn't have NY bank accounts is silly too.

Steve you also wrote: "On the other hand you're right about one thing: differential Medicare payments based on location are unfair, but the courts have already ruled on that and said they're legal."

Thank you Steve. It just shows you how the government can legally stiff Iowa. The last thing Iowa needs is more government control over health care. Iowa is the place to go to become President and Iowa has some politicians who are pretty savvy too. Representative King (R-IA) is trying to block Viagra sales in Medicare's part D as a covered expense. Tax payers will save $2 billion dollars. As you know Medicaid was giving 800 sex offenders Viagra. Sex offenders are a very small percentage of total Medicaid Viagra usage. Most private insurance plans don't cover Viagra but government plans do, it's crazy.

Just because something is legal doesn't make it right. Group Health Plans terminating young women with ovarian cancer, after a short COBRA, is legal but it still is disgusting. President Bush wants an individual deduction for the purchase of health insurance. Senators John Kerry and John Edwards didn't like that idea because Group Employee plans would lose market share. At the very same time these 2 Senators don't pay any taxes on their own tax payer supplied health insurance. But they insist that young Iowa families pay taxes on their health insurance.

I would like to find a Democrat who did have a clue on health care. Maybe you could suggest one.

Posted by: Ron Greiner | Jun 2, 2005 11:00:20 AM

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