The Hill: Liberal groups worry president will cut deal on 'crown jewel' Social Security

BY: Alexander Bolton

A broad coalition of labor unions and liberal groups has launched an intense lobbying campaign directed at the White House in advance of President Obama’s State of the Union address.

These groups are concerned about Obama’s taciturn response to the proposal by his fiscal commission to gradually increase the retirement age and use a different calculation for cost-of-living adjustments.

Coalition partners held a conference call with liberal bloggers on Thursday afternoon to expand the public-relations campaign directed at the White House and Congress.

The Strengthen Social Security Campaign includes more than 200 member groups such as the AFL-CIO, AFSCME, SEIU, Campaign for America’s Future, National Women’s Law Center, USAction and MoveOn.org.

Many of the groups were members of the Health Care for America Now campaign that worked alongside Obama to push healthcare reform through Congress.

Now that Republicans control the House and Obama is facing reelection, the political dynamic is different and liberal groups fear the president might be willing to cut a deal on Social Security. Labor unions and liberal groups worry Obama could endorse a boost in the retirement age or a change in cost-of-living adjustments when he discusses strategies for reducing the federal deficit later this month.

“Everybody and their cousin is talking to the White House about this,” said a Democratic strategist involved in the lobbying campaign. “Nobody in the progressive world thinks the president ought to endorse the Bowles-Simpson Social Security stuff. People feel very strong about it and have been working it very hard.

“No one knows for sure where the White House is,” said the strategist. “Social Security has been the crown jewel of progressive policy over the last century. Just because so many people voted for the Bowles-Simpson plan and Obama hasn’t said anything specifically about the Social Security recommendations, groups are doing an all-out push.”

The Campaign for America’s Future plans to release polling data next week conducted by Stan Greenberg showing public attitudes about Social Security and the economy.

In December, former Clinton White House Chief of Staff Erskine Bowles and former Sen. Alan Simpson (R-Wyo.), the chairman of Obama’s fiscal commission, released their final recommendations for Social Security as part of a comprehensive proposal to reduce the deficit.

Eleven of the 18 members of the bipartisan commission, including Senate Democratic Whip Dick Durbin (Ill.) and Senate Budget Committee Chairman Kent Conrad (D-N.D.) voted for the final debt-reduction proposal.

Kingson said the liberal coalition is also in the midst of planning a nationwide grassroots campaign to press members of Congress not to support cuts to Social Security.

He estimated the coalition’s budget is “a couple million” over the next six months, but that does not include the substantial resources that unions such as the AFL-CIO will allocate to allied activities, such as educating their members on the issue.

"In late January, President Obama will make his annual State of the Union address. It is important that he use the speech to send a clear message to those who want to cut Social Security — Hands Off!" stated an e-mail sent this week.

Hickey warned that if Obama embraced the Bowles-Simpson recommendations for Social Security, it would “split the Democratic Party.”

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It really is this simple.

Harper supports new COLA formula for Seniors, rejects pay raise for himself.

U.S. Representative Gregg Harper renewed his call for the passage of H.R. 5305, the “CPI for Seniors Act” following today’s announcement that Social Security beneficiaries will not receive an increase in payments for the second consecutive year. Harper is one of five original co-sponsors of this legislation.

“I am excited about working with Members of Congress to enact this important legislation that will have a positive impact on Mississippi’s seniors,” said Harper, a freshman Republican who represents Mississippi’s Third Congressional District. “This formula would better measure seniors’ expenses, most of which are living on a fixed income and battling this economic downturn.”

The current index that is used by the U.S. Social Security Administration (SSA) to determine a cost-of-living adjustment (COLA) is the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). For the second year in a row, this index has not increased over the 2008 level, which is the last year seniors received a COLA increase.

The “CPI for Seniors Act” was introduced by Representative John Duncan Jr. of Tennessee and would establish a new Consumer Price Index for Seniors (CPI-S) so that annual Social Security COLAs can be more fairly determined. This legislation would direct the Bureau of Labor Statistics (BLS) to finally determine a new CPI-S formula for seniors that more accurately reflects the costs incurred by older Americans, specifically individuals in the United States who are 62 years of age or older.

Many seniors have complained that Members of Congress received a pay raise for 2010 and 2011 while their benefits remained the same. Although the Employment Cost Index (ECI) – the formula used for Congressional pay adjustments – calculated a total three percent increase for 2010 and 2011, Congress denied the additional pay with Harper voting for no increase in his pay in both years.

“With nearly one in 10 Mississippians out of a job and seniors being denied a COLA, it would be completely inappropriate and irrational for me to accept a pay raise,” added Harper. “Congress should not delay consideration of this legislation that will provide more precise payments to our senior citizens.”

H.R. 5305 was referred to the House Subcommittee on Health, Employment, Labor, and Pensions on June 29, 2010.

No Cost of living Increase in Social Security Payments for 2011

As if voters don't have enough to be angry about this election year, the government is expected to announce this week that more than 58 million Social Security recipients will go through another year without an increase in their monthly benefits.

It would mark only the second year without an increase since automatic adjustments for inflation were adopted in 1975. The first year was this year.

"If you're the ruling party, this is not the sort of thing you want to have happening two weeks before an election," said Andrew Biggs, a former deputy commissioner at the Social Security Administration and now a resident scholar at the American Enterprise Institute.

"It's not the congressional Democrats' fault, but that's the way politics works," Mr. Biggs said. "A lot of people will feel hostile about it."

The cost-of-living adjustments, or COLAs, are automatically set each year by an inflation measure that was adopted by Congress in the 1970s. Based on inflation so far this year, the trustees who oversee Social Security project there will be no COLA for 2011.

The projection will be made official on Friday, when the Bureau of Labor Statistics releases inflation estimates for September. The timing couldn't be worse for Democrats as they approach an election in which they are in danger of losing their House majority, and possibly their Senate majority as well.

Last Friday, the same bureau delivered another painful blow to Democrats: The United States lost 95,000 jobs in September, and unemployment remained stubbornly stuck at 9.6 percent.

Democrats have been working hard to make Social Security an election-year issue, running political ads and holding press conferences to accuse Republicans of plotting to privatize the national retirement program.

This week's announcement about Social Security benefits raises more immediate concerns for older Americans whose savings and home values still haven't recovered from the financial collapse. Many haven't had a raise since January 2009, and they won't be getting one until at least January 2012.

"While people aren't getting COLAs, they certainly feel like they're falling further and further behind, particularly in this economy," said David Certner, AARP's legislative policy director. "People are very reliant on Social Security as a major portion of their income, and quite frankly, they have counted on the COLA over the years."

Social Security was the primary source of income for 64 percent of retirees who got benefits in 2008, according to the Social Security Administration. A third relied on Social Security for at least 90 percent of their income.

A little more than 58.7 million people receive Social Security or Supplemental Security Income. The average Social Security benefit is about $1,072 a month.

Social Security recipients got a one-time bonus payment of $250 in the spring of 2009 as part of the government's massive economic recovery package. President Obama lobbied for another one last fall when it became clear seniors wouldn't get an increase in monthly benefit payments in 2010.

Congress took up the issue, but a proposal by Sen. Bernard Sanders, Vermont independent, died when 12 Democrats and Sen. Joseph I. Lieberman, Connecticut independent, joined Senate Republicans to block it. Sen. Olympia J. Snowe, Maine Republican, was the only GOP senator to support the second bonus payment.

Mr. Sanders said he expects older voters to be angry when they learn there will be no increase for the second straight year.

"I do think there's going to be political fallout," Mr. Sanders said. "Many seniors who are spending a lot of money on health care and prescription drugs really are going to find it hard to believe that there has been no inflationary costs to their purchasing needs."

Federal law requires the Social Security Administration to base annual payment increases on the Consumer Price Index for Urban Wage Earners and Clerical Workers, which measures inflation. Officials compare inflation in the third quarter of each year — the months of July, August and September — with the same months in the previous year.

If inflation increases from year to year, Social Security recipients automatically get higher payments, starting in January. If inflation is negative, the payments stay unchanged.

Social Security payments increased by 5.8 percent in 2009, the largest increase in 27 years, after energy prices spiked in 2008.

But energy prices quickly dropped. For example, average gasoline prices topped $4 a gallon in the summer of 2008. But by January 2009, they had fallen below $2. Today, the national average is roughly $2.70 a gallon.

As a result, Social Security recipients got an increase in 2009 that was far larger than actual inflation. However, they won't get another increase until inflation exceeds the level measured in 2008. The Social Security trustees project that will happen next year, resulting in a small increase in benefits for 2012.

Social Security spokesman Mark Lassiter said the agency has no leeway to increase payments if the inflation measurement doesn't call for it.

Rep. Earl Pomeroy, North Dakota Democrat, who is chairman of the Ways and Means subcommittee on Social Security, has introduced a new bill to provide $250 payments to seniors if there is no increase in Social Security. Maybe, he said, there will be more of an appetite in Congress to pass it after lawmakers hear from voters in November.

"Costs of living are inevitably going up, regardless of what that formula says," Mr. Pomeroy said. "Seniors in particular have items such as uncovered drug costs, medical costs, utility increases, and they're on fixed incomes."

Washington Times

John Boehner Would Like to Have an “Adult Conversation” With America About Entitlements Just So Long As That Conversation Contains No Solutions

BY:  Peter Suderman

The GOP’s House Minority Leader, John Boehner, appeared opposite Chris Wallace on Fox News Sunday over the weekend and doubled down on last week’s pledge to avoid talking about any sort of actual policy proposal to deal with the unsustainable growth of entitlement spending. He said he wants to have an “adult conversation” about runaway entitlements, but apparently that doesn’t include any discussion whatsoever of what he and his party propose to do about some of the biggest drivers of federal spending and deficits. Here’s the key exchange:

WALLACE: But forgive me, sir. I mean, isn't the right time to have the adult conversation now before the election when you have this document? Why not make a single proposal to cut Social Security, Medicare and Medicaid?

BOEHNER: Chris, this is what happens here in Washington. When you start down that path, you just invite all kinds of problems. I know. I've been there. I think we need to do this in a more systemic way and have this conversation first. Let's not get to the potential solutions. Let's make sure Americans understand how big the problem is. Then we can begin to talk about possible solutions and then work ourselves into those solutions that are doable.

The “adult conversation” line is really laying it on thick considering that what he’s actually demonstrating is that, at best, the GOP wants to baby voters through the basics of the entitlement situation before actually broaching the topic of specific policy changes.

Obviously many Republicans are afraid of political blowback from any proposal that could be portrayed as a cut to Medicare or Social Security, both of which have large constituencies that vote consistently. And to some extent that’s a legitimate fear, at least from a purely political standpoint; after all, one of the most effective (if frustrating) Republican attacks on the new health care law was that it cuts Medicare. But this fear fails to realize that proposals to control spending on entitlement programs are in fact proposals to preserve and strengthen those programs. Paul Ryan’s Roadmap, whatever its flaws, wouldn’t change Medicare a bit for anyone who is within 10 years of entering the program, and, perhaps with some adjustments, would at least set the program (as well at the federal budget) on a rough path to long-term sustainability.

In a way, though, Boehner is correct that “this is what happens here in Washington”: Voters become angry about government debt and spending. And so they turn to the GOP, which runs on a loud but vague campaign to cut spending and then, once in power, follows through by cutting taxes but not spending, thereby making the problem worse.

Reason

Government Spending Definitions: Social Security: Pass it On

Social Security was started by President Roosevelt in 1935 to provide a savings account for retirees and help the disable, widows and fatherless children. The program has grown to become the largest government program in the world.

The costs of Social Security might be the straw that breaks the camel’s back. In this case, the camel is The United States Economy. Due in large part to irresponsible management of the Social Security Trust Fund, the account where social security tax dollars are deposited.

How did this happen? Let’s keep this in a real world scenario by using the example of a large family of five.

Five kids are all working. Each one chips in $500.00 per month to an account for their retired parents. The parents receive $2,500 each month to live on which is amble amount for them to eat and live. Several years later, three of the kids also retire. These kids didn’t not have children of their own. They can no longer afford to chip in $500.00 per month to the parents retirement account. Thus, the parents account shrinks to $1,000 per month to live and eat on. However, the three kids also need to live off of the $1,000 per month. Now five adults are living off of $1,000 per month to live and eat.

This example is much better than what has happened to Social Security in this country. Since 1935, workers have had money taken out of their paychecks to be put away in a Social Security savings account for them to retrieve when the worker retires. However, the government spent all the money on government programs. Since the Social Security Account is empty, Congress has borrows or prints the money to put money back into the Social Security Account for the benefactors to receive payments each month.

To illustrate what our government has done, lets use our family as an example again.

When all five children were working they put $500.00 per month into a retirement account for the parents to live on. Instead of giving the money to the parents, the children borrow $2,500 each month. They used the $2,500 per month in cash to pay for the loan payments which at first only cost a few hundred dollars a month. This way they had extra cash in the account each month. So they used the extra money to help other elderly couples in the neighborhood pay their expenses.

Soon, the interest payments on borrowing $2,500 per month grow to equal the $2,500 in cash the kids put into the account. Thus, the cash put into the account only paid for the interest on the loans. The bank stopped lending money and parents suddenly lost their $2,500 per month retirement checks to live on.

Where are we today with the Social Security System? Say three of the kids retire. They can’t afford put in $500 per month. Thus, the cash account that received $2,500 per month and was being used to pay off the $2,500 per month in loans payments is not going into a cash negative position. With three kids retiring, they can't put $500 per month into the account. The account and bank payment is now a negative $1,500 per month due to their retirement.

The bank will soon be looking to foreclose on the kids assets like taking their homes to pay off the loans. The situation is even worse. The parents have no money to live on. The three kids have no money to live on. The two remaining kids are going to retired soon as well with no money to live on.

That's good way to illustrate the state of our Social Security Account today.

The kids made a very bad mistake that effected their retirement. Taking out the loans to pay for other elderly neighbors is valiant and moral ideal, but their actions resulted in dire consequences in the long-term for themselves.

The United States Government is facing a similar scenario. They spent all the Social Security tax money on government programs. They borrowed money to pay for the recipients Social Security benefits. Today, the tax money taken in each year is now less because more people are retiring. Thus, Congress has to borrow more and more money to pay for benefits and interest payments.

This situation will add trillions of dollars to the National Debt, that is if we can borrow and print this much money. If we can’t, take a look at Greece today.

Social Security to See Payout Exceed Pay-In This Year

The bursting of the real estate bubble and the ensuing recession have hurt jobs, home prices and now Social Security.

This year, the system will pay out more in benefits than it receives in payroll taxes, an important threshold it was not expected to cross until at least 2016, according to the Congressional Budget Office.

Stephen C. Goss, chief actuary of the Social Security Administration, said that while the Congressional projection would probably be borne out, the change would have no effect on benefits in 2010 and retirees would keep receiving their checks as usual.

The problem, he said, is that payments have risen more than expected during the downturn, because jobs disappeared and people applied for benefits sooner than they had planned. At the same time, the program’s revenue has fallen sharply, because there are fewer paychecks to tax.

Analysts have long tried to predict the year when Social Security would pay out more than it took in because they view it as a tipping point — the first step of a long, slow march to insolvency, unless Congress strengthens the program’s finances.

The New York Times