Threats to Social Security, Medicare?
The Gang of Six plan to cut the federal deficit calls for changes to both but doesn't spell out many details.
You've heard of the Gang of Six by now -- the bipartisan group of senators who have crafted a plan to get the nation past the looming default crisis and into long-term deficit-reduction mode. (We should all be grateful for their hard work, even if we don't agree with them.)
Their proposal is to slash the federal deficit by $3.7 trillion over 10 years. From The Washington Post:
It also calls for raising more than $1 trillion over the next decade by reducing a variety of popular tax breaks and deductions, including breaks for home mortgage interest and employer-provided health care. While some of those savings would be dedicated to debt reduction, the rest would go toward lowering tax rates for everyone, with top individual and corporate rates dropping to at least 29 percent, down from 35 percent.
That got your attention, no? But what exactly would happen to Social Security and Medicare, which, by virtue of their size and growth rate, must be a part of any discussion? (Here's the official plan outline (.pdf file), which we recommend you read in full.)
The Gang of Six is essentially leaving many of the specifics to congressional committees to work out. However, some are included in the outline. Post continues after video.
Social Security
Any changes to Social Security would be separate from deficit reduction but must keep the program solvent over 75 years. "Proponents today are emphasizing that savings from Social Security reform -- means testing is a possibility -- are to be plowed back into the Social Security system," wrote Political Insider blogger Jim Galloway at The Atlanta Journal-Constitution. "They wouldn't be applied to the deficit."
Cost-of-living increases to Social Security benefits would be tied to the "chained" Consumer Price Index, which some consider a more realistic measure of how inflation impacts household spending. That would mean smaller annual increases -- estimated at 0.25 of a percentage point less per year -- for seniors when the cost of living goes up. SSI would be exempted from the shift for five years.
Medicare
Medicare and Medicaid as we know them would continue -- pretty much. The outline calls for some hefty cuts "while maintaining the basic structure of these critical programs."
The steps include:
- Limiting spending increases to a target rate. The Hill explains:
The health law's 15-member IPAB would recommend Medicare provider cuts if the program grows faster than a target rate; Congress would have to propose savings of the same magnitude or the IPAB proposal would become law by default. The board was created as a stopgap to force lawmakers to control Medicare spending, something they have historically failed to do.
- Fixing the flawed system for reimbursing doctors, called the Medicare Sustainable Growth Rate formula, at an estimated cost of $298 billion over 10 years, plus find another $202 billion in heath care savings.
- Adopting medical malpractice reform.
- Cutting waste and fraud, which could amount to a lot. "The GAO tells us that we spent last year $50 billion in improper payments in Medicare," Sen. Tom Carper, D-Del., said.
Finally, the Gang of Six proposes to repeal the CLASS Act, a voluntary insurance program to provide in-home care to those who become disabled, including the elderly. It was set to begin in 2012.
What do you think? The chained CPI idea has already drawn lots of criticism. Alex Becker at The Huffington Post wrote:
According to the advocacy group Strengthen Social Security, the chained-CPI could lead to annual Social Security benefit cuts of $560 for those aged 75, $984 for those aged 85 and $1,392 for those aged 95.
The "gang" is composed of Sens. Saxby Chambliss, R-Ga.; Tom Coburn, R-Okla.; Kent Conrad, D-N.D.; Mike Crapo, R-Idaho; Dick Durbin, D-Ill.; and Mark Warner, D-Va.
More on MSN Money:
Is it only me, that thinks the FED, should repay the SS Trust Fund the $2+TRILLION, they have stolen (sorry borrowed) back?
AND perhaps;
Immediately, QUIT TAKING IT.
Take off the people that have NOT paid into it
STOP making Anchor Babies, INSTANT CITIZENS, that are dependant on it.
Would this not shore up this fund, for it's PURPOSE?
It sure beats the Hell out of telling people that have paid into it for 40-50 years, (by NO choice of their own) they do not get, what they were promised!
Congress and the Administration taking a pay cut would be a great idea and step in the right direction and setting a fine example of "walking the talk." What's good for us should be a requirement for our gang of six and their kind.
Reduce their benefits, increase their time of service before they can retire and tax their campaign donations as income. No more self voted salary and expense account increases silently slipped into stealth legislation. Transparency vs. slip and side. Wow, that would fly like a lead balloon!
Balance our budget and come up with an "real" debt reduction and not a temporary deficit fix or no paycheck until it happens.
Who knows, anything's possible but I won;t hold my breath too long on this one.
Social Security is solvent and can pay 100% of it's benefits through 2032 and has 2.4 TRILLION in (God forbid) U.S. treasuries. Medicare too is solvent until 2024. The government has given the middle class a 2% tax cut by cutting the FICA taken out of paychecks so the dates had to be re worked downward to these dates recently.
The wealthy (those making more than $380,000 taxable income) have the lowest tax rate in history. Those are the folks that are being protected from a tax increase. They also now have the lowest capital gains tax...15%!
I get the picture now! Our congress is protecting the truly wealthy from the old, the ill, the lame and all of those nasty peons.
Hey Jackson... YOU will be an older American a whole lot sooner than you think. When you get there without medicare, you will be totally screwed. Don't take my word for it, call your health plan and see what they want for a decent policy for someone 65 without medicare, not to mention 70 or 80. I doubt any private insurance company would even cover an 80 year old at any price. Remember, the insurance industry bases coverage and rates strictly on RISK evaluation. You will be right about the plan not being there when you reach the age of need as long as you vote and support what your told by the self serving private insurance industry, the U.S. Chamber of Commerce and the so called NEWS spin machine media blitz against medicare. Business has resisted medicare since it's inception. Everyone dislikes medicare UNLESS your on it, then republican or democrat, ALL say don't mess with medicare. As far as social security goes you are dead wrong. As the system is set up right now, it will pay out 100% for nearly 30 years before any cuts would have to occur. With some minor doable changes, social security will be solvent for another 75 years. Again both republicans and democrats agree on that premise. the only disagreement is on how to do it. You don't have a clue about what your ranting about, if you don't support BOTH these programs you are only helping corporate America SCREW you.
I am proposing to add next year in election ballots, to bring all politicians to social security instead of their own pension plan, which is 100% of their present salary for life with the same benefit , and it should include every politicians including POTUS.
I also propose all persons to get medicare based on cuts in doctors, hospitals, and insurance payment to a realist numbers, not paying $200 for administration of Tylenol type of garbage.
I also propose to evaluate Medicaid to give benefits to genuine people who really deserve, and eliminate all illegal, and people who have never worked and don't intend to.
The tax should be shared by every one. If we all are citizens then we should share our tax burden also instead of 50% people getting free ride.
And finally I also propose to add in next year's ballot to have a mandatory balanced budget for all states as well as fed.
There is one OTHER thing that NEEDS to be tied to ANY budget that gets passed this year that would prevent this sort of thing from EVER happening in the future, that is :
...pass a law that says that "anytime there is a deficit of more than 3% of GDP all sitting members of congress are ineligible for reelection.”
@The Rules of the Road
"We have lived in an entitlement society too long (I am only 32) and want everything handed to us. I have my own financial retirement planner and do not have a section for social security income. I am not counting on one cent!"
----------------------------------------------------------------------------------
The fact that you don't expect one cent from S.S. because it is an "entitlement" makes you an idiot plain and simple (sorry for the name calling, but there is no help for it here). The government MADE ME AND my employer pay $8k to $12k per year into S.S. over the last 25 years, with the promise of a retirement benefit (I even get an estimate of that benefit each year based on my contribution amounts!). That is not an entitlement in my book (welfare is!). I am paying for a forced retirement plan for my own good (it was for those not disciplined to save for retirement on their own).
I'll be glad to forgo this "entitlement." Just give me back my $250k, plus interest, and then I won't expect a cent either when I retire. WAKE UP MAN! FYI - S.S. checks only make up about 20-25% of my initial retirement planning, but it would be nice to know that I will get what was promised. Maybe if the politicians could stop stealing from the SS fund, and stop the mismanagement, SS would be solvent.
Every financial advisor will tell you to crank up your 401k contributions as you get older. What would be the problem with "cranking up" Social Security withholdings as we get older?
I can only think of one argument against this: it would take too much play money away from the Wall Street gamblers.
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