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November 2010, Week 3

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Portside Moderator <[log in to unmask]>
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Tue, 16 Nov 2010 21:24:33 -0500
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Reader Comment on Ten Reasons the Social Security Proposal 
Should be DOA

From Martin Morand
November 16, 2010

The "Ten Reasons..." is great but seems limited to a
defensive mode. It does little to stir the hearts and mionds
of younger workers who generally see their SS payroll
deductions as money down the drain. They agreed with GWB when
he proposed to let them invest their own money, i.e.
privatize. The market crash may have pushed that notion aside
for a while but the negativity about what SS means to them
remains.

Issues for the young re SS.

1- Delaying retirement eligibility increases unemployment for
younger workers. French kids know that; Ours can learn.

2- F'get about future value for a moment.   The Current value
of SS to the average young worker with spouse and kids is
over a half a million dollars worth of term life insurance.
(This would be more self evident if we used the name of the
law, Old Age, SURVIVORs and DISABILITY INSURANCE - which
shifts the emphasis from what everyone assumes is the sole
purpose of SS - old age.)

3- The SS payments should be and be seen as ENOUGH to live on
even if and as the employer provided pensions go down the
drain (or up in smoke.) SS payments could be raised without
RAISING the regressive payroll tax on the wrker (and the job-
killing match by the employer - money which otherwise miht
have stayed in the workers pay envelope). How?

(a) NOTE that the payroll tax for Medicare was UNcapped 16
years ago - with barely a murmur. Doing the same for SS
would cause an outcry Only from those who through government
regs and laws got excessively wealthy.

(b) Warren Buffet says his taxes are at a lower rate than his
secretary's BECAUSE his income in the form of UNearned money
is UNtaxed for SS. UNearned going UNtaxed is UNfair nd
UNAmerican.

(c) This is a consumption driven economy.  As the economy
prospers IRS collects more $$. My SS check goes straight to
the butcher, baker and banker.  They pay taxes as do their
employees and suppliers of goods and services. Yhat portion
of GDP which the Treasury collects ONLY because we SS
recipients spend every penny we get belong to the SS TRUST
Fund.  Return it!

(d) Americans leaned recently that Canada managed to do
things with health care better than we do.  Wouldn;t they
love to learn that Canadian workers retirement income comes
from payroll taxes like ours PLUS a stream of $$ from the
general revenues.

There are other ideas nbut these would suffice to put to rest
FOREVER the nonsense about SS Trust Fund being INsecure.  And
make SS a real goal toward which we all work and enable all
of us to quit working earlier thus opening up the job market.

= = =

On Fri, Nov 12, 2010 at 11:53 PM, Portside Moderator
<[log in to unmask]> wrote:

Ten Reasons the Social Security Proposal of
the Fiscal Commission Co-Chairs Should be DOA

http://strengthensocialsecurity.org/Dead-On-Arrival

The Fiscal Commission Co-Chairs’ Social Security
proposals are an equal opportunity disaster. So soon
after an angry electorate has expressed its frustration
with a Washington political class that does not appear
to be listening, it totally ignores the will of the
people. Poll after poll has shown that Democrats,
Republicans, and Independents reject the punitive cuts
in America’s economic security that the co-chairs have
proposed. Their proposal:

1  Deeply cuts the benefits of middle-class families.
  The proposal would cut retirement benefits by as
  much as 36% for young people entering the workforce
  today. Today’s 20-year old workers who retire at age
  65 would see their benefits cut by 17% if their
  wages average $43,000 over their working lives, by
  30% if their wages average $69,000 over their
  working lives, and by 36% if their wages average
  $107,000 over their working lives, according to the
  Social Security Chief Actuary.1 The proposed cuts
  would apply to retirees, disabled workers and their
  families, children who have lost parents, and widows
  and widowers.

2  Closes Social Security’s long-range funding gap
  primarily by cutting already low benefits, rather
  than by raising taxes on those who can most afford
  to pay. Ninety-two percent of Social Security’s
  projected funding gap is closed by cutting promised
  benefits, according to the proposal. The benefit
  formula change eliminates 45% of the projected
  shortfall, raising the retirement age eliminates
  21%, and reducing the COLA eliminates 26%.2 Social
  Security's benefits are already inadequate -- just
  $13,000 a year on average3 -- and should not be cut
  further. Instead, Social Security’s long-range
  funding gap could be closed, as most Americans want,
  by requiring those employees (and their employers)
  who make more than $107,000 a year to pay Social
  Security taxes on all their wages, as the rest of us
  do who earn less.4

3  Raises the retirement age to 69. This is a 13%
  benefit cut on top of the 13% cut already made when
  the retirement age was increased from 65 to 67,
  according to the Social Security Administration.5

4  Raises the early retirement age to 64. Most
  Americans claim Social Security benefits at age 62
  even though the benefits are currently reduced by
  25%, when they do so.6 Millions take early
  retirement because they work in physically demanding
  jobs, have health problems, or can no longer find
  work. Raising the early retirement age will shut
  them out of the system when they are most
  vulnerable, potentially forcing them to seek
  disability benefits or welfare.

5  Discriminates against lower-wage workers by raising
  the retirement age. Over the last quarter century,
  life expectancy of lower-income men increased by one
  year compared to five years for upper-income men.
  Lower-income women have experienced declines in
  longevity.7 Yet, the higher retirement age applies
  to rich and poor, healthy and sick, alike. In
  effect, the proposal says to lower wage workers that
  they must work longer because the rich are living
  longer!

6  Reduces the annual Cost of Living Adjustment (COLA)
  for Social Security beneficiaries. The "chained CPI"
  proposal would reduce benefits by 0.3% a year on
  average.8 This will result in a 3.7% cut in benefits
  after 10 years in retirement beginning at age 65 and
  a 6.5% cut after 20 years, according to the Social
  Security Chief Actuary.9 If anything, the COLA
  should be increased because it does not adequately
  take account of skyrocketing medical costs, which
  hit seniors and people with disabilities hardest.

7  Hurts current retirees, contrary to promises made by
  the Co-Chairs. The change in the COLA calculation
  would begin in 2011 and affect all beneficiaries,
  not just retirees.

8  Breaks faith with our nation’s veterans and service
  members. Social Security benefits are veterans’
  benefits -- 43% of veterans receive Social
  Security.10 Our men and women in uniform (and their
  families) will see their Social Security disability
  benefits cut deeply if they are seriously injured in
  combat. If they die in combat, their survivors’
  benefits will also be cut substantially. And
  veterans’ retirement benefits will be cut
  significantly just like for all other Americans.

9  Harms our grandchildren the most. In the name of
  helping our grandchildren, the proposal cuts their
  benefits the most. The younger a person is the
  deeper the cuts because of the increase in the
  retirement age and the changes in the benefit
  formula.11

10  Breaks Social Security’s promise with hard-working
  Americans. Social Security belongs to the people who
  have worked hard all their lives and contributed to
  the program. It is based on a promise that if you
  pay in then you earn the right to guaranteed
  benefits. The Co-Chairs’ proposal would break that
  promise.

1- Social Security Administration (SSA), letter from
Stephen C. Goss, Chief Actuary, to Fiscal Commission
Staff,
"Fiscal Commission Plan 2a: Tax Light Plan," pp. 4, 5,
November 9, 2010. The wage amounts are in constant 2010
dollars.

2- Co-Chairs’ Proposal, "Restoring Social Security
Solvency," p. 48, Nov. 10, 2010. Available at
http://www.fiscalcommission.gov/sites/fiscalcommission.
gov/files/documents/CoChair_Draft.pdf.

3- Average monthly benefit amounts calculated by
multiplying by twelve from SSA, "Fast Facts & Figures
About
Social Security, 2010, " p. 15. Available at
http://www.socialsecurity.gov/policy/docs/chartbooks/fa
st_facts/2010/fast_facts10.pdf

4- Polling data available at
http://strengthensocialsecurity.org/sites/default/files
/SSSCHighlightsofKeyPollingQuestionsonSocialSecurity.pd
f

5- Social Security Administration, "Effect of Early or
Delayed Retirement on Retirement Benefits," 2010.
Available at
http://www.ssa.gov/OACT/ProgData/ar_drc.html. Each one-
year increase represents a cut of 6% to 7%.

6- Social Security Administration, "Retirement Benefits
by Year of Birth." Available at
http://www.socialsecurity.gov/retire2/agereduction.htm.
The 25% reduction applies to people who claim benefits
at their 62nd birthday when the normal retirement age
is 66. People accepting benefits later in their 62nd
year have
slightly lower reductions.

7- Harry C. Ballantyne, Lawrence Mishel and Monique
Morrissey, "Briefing Paper #273: Social Security and
the
Federal Deficit, Not Cause and Effect," Economic Policy
Institute, August 6, 2010, p. 8. Available at
http://epi.3cdn.net/99133adf653fd78719_qym6b95et.pdf

8- SSA letter to Fiscal Commission Staff, footnote 4,
p. 4.

9- Social Security Administration, letter from Stephen
C. Goss, Chief Actuary, to Rep. Earl Pomeroy, "Table 3.
Indexing Cost of Living Adjustments (COLA) to a Chained
Version of CPI-W," October 18, 2010. Available at
http://waysandmeans.house.gov/media/pdf/111/SSA_Actuary
_BenefitsExample_Letter.pdf
Using this lower COLA would cut benefits by $108
billion over 10 years, according to the Congressional
Budget
Office, "Budget Options: Volume 2," August, 2009, p.
147. Available at
http://www.cbo.gov/ftpdocs/102xx/doc10294/08-06-
BudgetOptions.pdf

10- Social Security Administration, "Military Veterans
Paper Tables Updated CPS 2009," 2009.
11- SSA letter to Fiscal Commission Staff, p. 4.

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