Saturday, April 18, 2015

Chris Christie's Social Security "Solution" Will Get Him Fried On The "Third Rail"

Chris Christie probably thinks he's innovative with his just announced Social Security proposal, but in fact, he's just committed political suicide. He obviously doesn't take seriously the warning of Social Security being the "third rail" when it comes to presidential politics. If he did he'd have paid attention to polls showing that even 58% of Republican base voters do not want the eligibility age for Social Security increased (or their Medicare touched). This in contrast to the Republican donor class, who do.

Thus on Tuesday, did Christie - following the edict of the donor class-  propose the following:

- Reducing Social Security benefits for seniors earning more than $80,000/yr.

- Eliminating Social Security for anyone earning more than $200,000

- Raising the retirement age for Social Security from 67 to 69.

- Increasing the age at which seniors qualify for Medicare from 65 to 67.

The last two, make no mistake, would be especially disastrous, and even Mike Huckabee knocked them - but then he's more in touch with the Reepo base.. Christie, meanwhile,  seems oblivious to the fact that the 1983 Social Security enactment -amendment- which effectively phased in a two year increase in the full retirement age from 65 to 67 - has already lowered benefits by about 6.5 percent.  When fully phased in, the delay of 2 years to defined "full retirement"  effectively cuts the benefits to those born in 1960 or later by around 13 percent. Christie's proposals would nearly double these cuts over time, plus - as Robert Reich pointed out on Chris Hayes' 'All In' last night - ensure even fewer working class Americans live to collect a dime. (For some reason, the hardest working among us - coal miners, sanitation workers, argri-laborers, don't live as long as hedge fund managers and investment bankers. Hmmmmm.....wonder why!)

Christie's proposals don't even (apparently) reckon in the fact that up to 85 percent of Social Security benefits have been taxed for some individuals with incomes in excess of  only $34,000, and  $44,000 for couples. It is almost as if the benefits are given with the right hand and taken away with the left hand of gov't! Worse, because these  thresholds are not adjusted for inflation,  the reduction in benefits increases over time. The effective cut was, on average,  6 percent in 2012  and will be 8.8 percent by 2030 and 9.5 percent by 2050.

As for his Medicare -qualifying age delay, that would render our health care bills even higher. Christie probably believes that those between 65 and 67 will find relief in the existing health care markets but don't buy it.  First, NO health insurance companies are going to compete for senior health care! They only do it now because the Medicare Advantage plans are paid more for their services than the government pays in standard Medicare. Hence, contributing to the standard program’s insolvency (by an excess $12 billion a year according to the GAO).

Second, you can bet your sweet bippy that those 65- 67 year olds will face sky high premiums even for bare bones, high deductible plans. Given their increased health problems (higher blood pressure, cholesterol, weight, type II diabetes, cancer probability) they will likely see premiums of $1,500 a month or more. Many of these oldsters will also already have been laid off jobs to make way for the young Turks, and hence not have the money to purchase anything worthwhile. Thus, they will likely wait for treatment or to see a doc - until their problems become unmanageable. Then WE will have to cough up for their ER visits. But I guess this is what Christie wants. Just like most conservos prefer the bulk of low wage workers go on food stamps rather than increase the minimum wage to a living one. ($15/hr)

As Economics Professor Fiona Scott Morton aptly put it  in respect of another Repuke plan on changing Medicare three years ago (Paul Ryan's "premium support" malarkey):

"The Republican plan is not solving the problem. It’s solving the problem of the cost of government health care. You have people who can’t afford it and they’ll just die. Economists call that demand shedding”.

As for Christie's other proposals:  to cut Social Security for those getting $80k a year or more and eliminating it for those getting $200k a year or more, let's look at some data on Social Security recipients' income distribution to get a grip.  These are from the excellent book 'Social Security Works' by Nancy J. Altman and Eric R. Kingson:

 - 72.5% have less than $50,000 /yr.

- 18.5% have from $50,000 - 99,000

- 5.3% have $100,000 - 149,999

- 2.0 % have $150,000 - 199,999

- 1.9% have more than $200,000

In other words, barely 9 percent of elderly - or 1 in 11, has more than what is regarded as a middle class income. Only 1.9 percent are receiving the cut off point threshold for Christie's proposal. Only about 12 percent if that, would be affected by either Christie's reduction or total elimination proposals.

Given roughly 40 million retired workers are receiving S.S. benefits at a total cost of about 52 billion monthly, Christie's reductions or cuts would have minuscule effect. The math savvy can work it out to a savings of around $4 billion, if that.  Worse, the reductions and cuts for high earners would have exactly the negative effect we can't afford: turning Social Security into a de facto welfare program. 

The solution to solving Social Security shortfalls is simple, but clearly Christie and the Right won't go there. As Robert Reich noted last night, it is simply to raise the payroll tax cap  from its current $118,000 level. 

Christie's recently stated bollocks:

"Frankly Washington is afraid to have a conversation about Social Security with the people of our country. I am not."

Is flat out bull crap, since all "Washington" is afraid of is putting forth real solutions to the problem as opposed to trying to stuff Neoliberal solutions down the throats of an alert and aware populace - who understand that any "entitlement cuts" will even further increase the gulf of inequality.

As the authors of 'Social Security Works' put it (p. 4), our politicos may have polarized us  on just about every issue - from immigration reform to taxes-  but on one we are fiercely united: we support Social Security. This unity forges our future security and is something the Neolibs and their conservo austerity cousins dare not mess with. Hillary also needs to take note and come out four square for Social Security expansion. As Reich observed last night on 'All In':

"What Hillary Clinton can do is completely the opposite. She can acknowledge, because of widening inequality, a lot of working class people don't have enough Social Security and we ought to actually raise Social Security benefits - instead of getting into this debate on whether we should cut them."

 Else prove to us skeptical libs she really is a Neoliberal in progressive clothing. 

Further facts on Social Security:

1) Social Security's  Trust fund has historically taken in more money than it pays out in benefits. Currently it is at $2.76 trillion and continues to grow.

2) Without making any changes whatsoever, current projections show Social Security will be able to pay full benefits through 2033.

3) With just a minor tweak to the payroll tax cap - raising it to a mere $300,000, full benefits would be able to be paid through 2100.

4) The system could easily be rendered 100 percent secure, even with higher disability benefits paid out, if congress would cease raiding Social Security moneys for current expenses, including wars.

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