Friday, May 13, 2016

Trump Is Right About Leaving Social Security And Medicare Alone

As we heard the "news" that the meeting yesterday between Paul Ryan and Donald Trump was "encouraging" (mainly from a Ryan sound bite clip) it is also true that the corporate media got much wrong when it came to Trump's stance on "entitlements". (A term the Neoliberal uses with abandon to make people believe that they are entitled to no social insurance at all.)

For example, on several talk shows - including MSNBC's  'Morning Joe'  the claim was made that Trump doesn't want to do anything about "fixing Social security" (transl. cutting it) because "he wants it to go bankrupt". However, this is a widely circulated canard and myth given Social Security can't go bankrupt because it has no creditors. So Trump is correct to at least leave it be, free from cuts, even if he doesn't increase it. The true fact here is that Social Security is OWED money from the federal gov't which borrowed from it, it doesn't OWE money to anyone.

As I've shown in earlier blogs:

the corporate media continues its effort to brainwash Americans with drivel and propaganda - mainly  on the value of the "IOUs" (actually Treasury bonds) the government has issued as it has raided Social Security monies.

As my Swiss friend Rolf has noted, "if the United States government reneged on paying out those Trust Fund bonds, the Swiss would interpret this as meaning that 'full faith and credit' in any U.S. financial instruments could no longer be counted on" . In his words, from an e-mail in 2002 - after the former Bush Treasury Secretary (Paul O'Neill) averred the SS Trust Funds "contained no real money":

"If they let that happen to their own people, what's stopping them from doing it to foreign bond holders? Nothing! What kind of demonstration is that of full faith and credit? None! At least here in Switzerland we believe it a terrible omen and message to send the international bond community. If you renege on your own people, you can certainly do it to us. So why should we not cash in our bonds when the Social Security betrayal of American citizens arrives?"

What would follow would be a mass withdrawal from all securities: treasurys and monies invested, and by not only Switzerland but all EU nations, and most likely Japan and China too.

Splitting hairs about bond definitions is a fool's errand, because in the end, none of these foreign investors, finance-business types will buy it. At least those with whom I'm acquainted. To them, a bond is a bond is a bond. Whether an IOU from the U.S. gov't to its own people, or an IOU to a foreign investor, or interest on foreign debt..

The following data shows how much has been raided each year just up to 2011. The data from the same Trust Fund sources and GAO:

Year:  ................Amount raided

2011.................$67.0 billion

2010.................$87.0 billion

2009...............$137.0 billion

2008...............$180.2 billion

2007...............$186.0 billion

2006...............$185.5 billion

2005..............$173.5 billion

2004..............$151.1 billion

2003.............$155.6 billion

2002.............$159.0 billion

2001.............$163.0 billion

2000.............$151.8 billion


While it is absolutely true that Social Security can't go bankrupt, it is possible for it to become insolvent if those Trust Fund monies aren't repaid in a timely fashion and the Social Security Administration ends up spending more in the short term than it takes in. This is also why the payroll tax cuts we saw a few years ago are not a beneficiary's  friend because they weaken Social Security's fiscal position. 

As for Medicare, it may stun many people to know that it is by no means a "free" entitlement. First, people have paid into it over a life time at the rate of 6.2% in FICA taxes per paycheck. This is what appears on your W-2 tax form as "Medicare wages". (A smaller  amount deducted from your pay for Medicare Pt. A, which adds to its insolvency. All of it ought to go or 6.2% not 1.3 %)). Thus, it is most certainly not "welfare" and I'd even argue that it can't be called an "entitlement".

Second, Medicare is not free even when you begin receiving it! It is in fact, damned costly! Having been enrolled in a Medicare Part F Supplement plan (which covers what Medicare Part A, and the Plan B don't) I am now finding regular monthly premium increases as I approach my 70th birthday. While Part A, which covers basic care and hospital stays, it only accounts for  80% of these. You still have to find a way to pay the rest. Outpatient and similar services are covered under Plan B, and that is usually deducted from your Social security check - or, if you haven't begun S.S. yet, it comes out of your own income or bank account.

This is why most financial advice media tell seniors they need to have at least a quarter of a million stashed away to cover medical expenses that Medicare doesn't.

So Donald Trump is spot on correct to leave these programs alone!

Paul Ryan, on the other hand, had advocated cutting Social Security then using the monies for tax cuts for the wealthiest (and military buildups) which won't do one scintilla to fix the national debt. As for Medicare, his Ryan plan ("premium support plan".)  is to issue "vouchers" to seniors.  In the best cases this would come to perhaps $10,000 a year and the senior would have to cover from this: all premiums, i.e. for all parts of Medicare used (Part A - standard Medicare, Part B co-insurance, Part D (prescription drugs), and Part F plus any actual copays for medical services provided.

Currently for me the cost of all the premiums is roughly $400 a month for a total of $4800 year. Medical services from a Ryan plan would have also had to include paying for a colonoscopy myself ($1,800) and a soon to be done gall bladder surgery (maybe $5,400).  In other words, I'd have had to pay $2,000 more out of my pocket to get the medical services needed, and we aren't even including all the money shelled out for dental work and eyeglasses, exams.

Even a broken clock is right twice a day, and Donald Trump is at least correct in his stance on the two primary social insurance programs that benefit millions of Americans.

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