The Chained CPI

Changing the way Social Security cost of living adjustments are calculated will reduce benefits but it will not help lower the debt.  Social Security has never added one cent to the debt.

But if you switch all government calculations to the chained CPI you will also lower VA benefits.  That will save the government money but screw over veterans.  And tax brackets will adjust more slowly so a small raise may push you into a higher tax bracket even if you only make $20k a year.

Talking about Social Security and COLAs and the debt is either just a disingenuous – or stupid – way to cut Social Security benefits without helping the debt at all, or it’s a smokescreen to cover cutting veterans’ benefits and increasing taxes on the poor and middle class.

Or it could be all of the above.

It’s not all about me

I use my family as an example because I know the details about us, but this isn’t all about us, it’s about anyone and everyone who is in similar circumstances for whatever reasons.

Our specific situation is unusual, but there are other people who are in bad shape financially because of disability as well.  We’re a minority, there are millions of us, but we’re a small percentage of the population.  So if anyone has a threshold of suffering that needs to be crossed before they can’t sleep at night, rest easy.

Except the disabled aren’t the only ones who will need a social safety net.  My wife and I would have been OK if we had been able to keep working.  We can’t save for retirement now because of health issues.  But there are a lot of people who don’t get sick, work their whole lives and still aren’t able to save for retirement because they just don’t earn enough.  It isn’t just when things go wrong that people need help.  This may be the richest country in the world but that doesn’t make everyone rich.  If you’re doing fine financially, good for you, but there are people who need help. 

They don’t need help because they did something wrong or because they’re lazy, they need help because the poor and working class live paycheck to paycheck and wages for the middle class have been stagnant.  Sometimes there just isn’t enough left over to save enough to retire, or save anything at all.  Even with the programs we have now some people will keep working until they die.

We should be talking about improving what we have, not trying to cut it because it’s expensive.  What’s a human life worth, anyway?  What’s a little dignity worth?  Why is compassion not worth the expense?

I’d like to think we’re better than this.  Maybe it’s time we showed it.

Of course I worry about my wife and myself, but we’re not alone.  We help others when we can.  I don’t understand why we can’t do that as a nation.  We’re not just individuals, we’re a community.  When did we forget that? 

Maybe Sandy can remind everyone.

The $800 billion question

Why do people want to get rid of Social Security?  Why would anyone spend decades of their lives and tens of millions of dollars to get rid of Social Security?

If we eliminate ignorance or stupidity, sheer evil or a desperate need for someone to suffer so you can feel better about being rich, what could be the answer?

After all, Social Security is a very successful program that helps millions of people, is guaranteed for principal and interest, and has never added, and never will add, a cent to the debt.

The answer is simple - money.

How much money are we talking about here?  Well, more than $800 billion was put into the Social Security Trust Fund in 2012.

So the plan is to give your Social Security money to Wall Street.  That gives you increased administrative costs plus fees for managing your retirement money.  That money will be put into risky investments where you can lose everything and have no money left for retirement.  But don’t worry.

Wall Street bankers will get an extra $800 billion a year, so everything will be OK.

Optionally disastrous

I mentioned the proposed changes to Social Security and Medicare, and you might be thinking that these changes won’t hurt them because it’s just a way to offer people options of how to save for retirement.

First of all, even if the proposed changes worked, my wife and I are both under 55 and can’t work.  There’s no way we can save enough for retirement.  If you’re 54 years old could you save enough for retirement in 10, or even 15 or 20 years?  If you can, good for you, but most people in the country can’t.

Social Security and Medicare weren’t created because everything was working great for seniors.  Seniors were sick and living in poverty, that’s why those social service programs were created.

But the changes would destroy these programs.  They work as they were designed, with some minor adjustments, but these changes will push millions of people out of them.  Reducing the base of people paying into them will run Social Security and Medicare into the ground very quickly.

Social services aren’t there just for the fun of it, they exist because it’s simple human decency to make sure that people don’t die sick, in pain, and starving.

Any talk of a grand bargain is talk of abandoning seniors because they just aren’t worth it to the people who run the country.  It’s just profit over compassion.

Social Security

And isn’t it nice that they say they won’t touch Social Security to balance the budget. Which is really nice because it almost make me think they aren’t complete idiots since, repeat after me,

SOCIAL SECURITY DOES NOT, NEVER HAS AND NEVER WILL ADD TO THE DEFICIT.

Reality

This is not a plea for sympathy, I’m just using myself as an example because I know the numbers. This is an explanation of how people find themselves living at the whim of others. A position I often see taken against Social Security and Medicare is that people should have the sense to save for the future.

Now, aside from the obvious problem that many people don’t earn enough to save let alone retire, there are other possibilities.

I was 46 when I got critically ill and almost died. Did you have enough saved for retirement at 46? I don’t mean enough to retire after 20 more years of work, I mean enough to retire at 46 and then live off of for the next 30 years or more.

So, I got sick at 46, I can’t work, I had 6 months at 40% pay (a benefit I appreciated, but not a way to get rich), I had a year where I had no money at all coming in (my insurance company didn’t believe my doctors), now I am dependent on various forms of insurance (that I paid for) that give me about the same amount as I made in the early 90s. I also have medical expenses that are more than 3000% higher than they used to be – that is not an exaggeration.

My out of pocket medical expenses are just over 28% of my income. That’s with two forms of decent insurance. Is it a surprise that people go bankrupt because of medical debt?

By the way, when I got sick it cost $1.3 million dollars to save my life. Does anyone honestly question a need for good insurance for everyone?

I haven’t given up trying to find a way to get back to some form of work, but I may not be able to and there are people who are in worse shape than I am.

Social Security and Medicare are called social safety nets for a reason. Sometimes, no matter how well you plan, illness and accident and age will catch up with you. My wife got cancer, was hit by a reckless driver and can’t work. I got sick and almost died and can’t work. Who can plan for that?

Do you know what your health will be like when you reach 65 or 70 or 80 – or tomorrow?

Are you ready for anything like this in your life?

It’s always been about the money

The reason they keep talking about Social Security is because the money in the trust fund has been borrowed by the Federal Government over the past 10 – 15 years. If they don’t kill Social Security they know they’ll have to pay off the loan and the only way to do that is to raise taxes.

They don’t want to raise taxes. They don’t want to repay the money. They want to steal it.

Well, some people are just ideologically opposed to Social Security, but for the rest …

Forget the chained CPI, it hurts now

There has been no Cost of Living Adjustment for Social Security in 3 years. All the talk about changing the way the cost of living is calculated fails to mention that. People on Social Security don’t have to wait for it to get worse.

On top of that Medicare premiums have increased – and that comes out of your Social Security payment.

People on Social Security also got a tax increase last year. The Making Work Pay tax credit applied to some people on Social Security. The so-called payroll tax holiday doesn’t apply to people on Social Security. So 2010 saw a tax hike for people on Social Security.

Everyone on Social Security is already paying more while trying to get by on a fixed income, though in reality it’s a shrinking income.

I sure hope those billionaire hedge fund managers don’t have trouble getting by.



Did I mention that Social Security doesn’t contribute to the deficit? Cutting benefits won’t cut the deficit by one penny.

Medicare

Currently the average couple on Social Security pays about 10% of their income for Medicare premiums. Proposed changes would make that closer to 30% for private insurance instead.

In my area, if they will sell it to you and there are no pre-existing conditions to get in the way, health insurance for a couple at retirement age will cost you $18,000 a year for a policy with a $2,000 deductible.

The new plan proposed to replace Medicare will give that same couple just under $12,000 to buy that $18,000 private insurance policy (which sends more tax dollars to private companies).

The average Social Security income for a couple is less than $22,000 a year.

That means after they buy insurance and pay their deductible (22 + 12 – 18 – 2), a couple will have $14,000 left over for everything else. That everything else includes, among other things, food, shelter, heat, co-pays and co-insurance. That’s assuming they don’t get sick. Take my wife and me as an example. We get more than that average. Still, for us, basic non-discretionary living costs and high out-of-pocket medical expenses mean that we would have about $6,000 a year to live on.

Can you live on $6,000 a year? How about after 15 years of inflation?

Please understand that cutting Medicare or Social Security isn’t about balancing a budget, it’s about people’s lives.

Social Security

Yes, Social Security, again, because people are still talking about cutting it.

First, repeating, Social Security does not, never has and by law never will add one dime to the deficit.

Second, Social Security can keep paying 100% of benefits at current levels until 2037. After that it can keep going at 80%, which adjusted for inflation is almost the same level as today.

Third, Social Security can keep paying at 100% of benefits at current levels until at least the end of the century if the payroll tax cap is raised. The tax was originally meant to apply to 80% of the population. Today, because of growing income inequality, it doesn’t apply to that much of the population. If the cap is raised to $180,000 from the current $106,000 it will be enough to cover benefits at 100% until the 22nd century.

What that means is that people who make $180,000 a year will pay the same percentage of their income in the tax as people who make $106,000, or those who make $50,000. In other words, right now the rich are getting a tax break that they can only keep if seniors and the disabled pay for it. Take the cap off entirely and there are no problems at all.

People who say that Social Security benefits need to be cut to reduce the deficit are lying.

Deficits

I'll say it again - Social Security does not, will not and by law can not increase the deficit. Not by a single cent.

Anyone who tells you otherwise is lying.

Very predictable and totally expected

I hear a lot of people talking about how when Social Security was started there were few people covered and it was never planned to cover as many people as it does today. As if they had no idea how things would change in the country.

That’s total BS.

The actuaries who worked on Social Security were frighteningly accurate. They calculated population growth, mortality rates and the percentage of population that would be eligible for Social Security and they got it almost exactly right. They were actually a small percentage over in their estimates on number of retirees.

I do not understand actuaries. They frighten me sometimes. I think the stories written about strange men in dark suits who control our destiny are inspired when an author meets an actuary. But they know their business, and they got it right.

Social Security is not in crisis and does not and never has added one dime to the deficit.