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.

Gracious! Social Security Disability Trust Fund to Go Broke By Next Year? What Will People DO?

Leave it to deficit scolds like David Walker (former Comptroller of the U.S. - often mistakenly referred to as a "former Social Security official") to throw the fear of "the Lord" into millions of disabled folks by hinting their disability benefits will likely expire by next year.

That would leave an estimated 11 million people and their families (often with caregivers)  in the lurch. Walker, in a recent interview on CNBC, claims it's inevitable as there is no real "trust fund" money left to pay benefits, only "debt". Technically, that would mean by early next year all payments would either cease, OR the monthly benefits would have to be severely cut - perhaps by 50 percent or more.

Walker testily asserts the only way out would be for the gov't to take money from the Social Security retirement trust fund and apply it to the disability trust fund. But he more or less compares such a move to musical chairs. Besides, he avers, that doesn't help the problems in the retirement trust fund which is also laden with "debt" only, no real instruments of worth to pay beneficiaries. To which I call bollocks!

Make no mistake that the enemies of Social Security - and there are many, like David Walker - continually go back to the same old tool box to make attacks- hoping that some of the shit will stick, and alas, a lot of it has- including that the Trust Fund is full of useless IOUs. But this is why smart people need to do themselves a favor and inform themselves on the facts. No better book can be found right now than 'Social Security Works' by Nancy J. Altman and Eric R. Kingson, which in their Chapters 8, 10 totally demolishes this "IOU" nonsense, showing these bonds carry the same weight as those dispensed to other countries, including China. In other words, they carry "the full faith and credit of the U.S. government" and - if ever betrayed - will show this nation can't be trusted to pay its just debts. 

Does this former "comptroller" process any of that? No! Because it's easier to try to scare the Bejeezus out of vulnerable people and get their knees shaking. But because Walker is described (by CNBC) as a "former Social Security official" we are asked to take his warning seriously. But why should we when the bozo goes on to claim the general trust fund is approaching bankruptcy. Another wild canard since it is impossible for a program to go "bankrupt" if it has no creditors. On the other hand, Social Security is a creditor to the rest of the gov't - which has taken Social Security monies !

The following data shows how much has been raided each year through 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
----------------------------

TOTAL:  $2.63 TRILLION

This is what is now owed Social Security, and just as bonds comprise a form of instrumental debt owed, say to pay for a new school construction in a community  - so do the treasuries the gov't owes to Social Security. 

Yes, technically Walker is correct that the gov't will transfer S.S. bonds to the S.S. disability fund, but don't for a minute believe the trust fund for Social Security is a  sham or worthless. This is just what Social security's enemies want you to think  so we may conclude on that basis David Walker is an enemy of Social Security. He is certainly no friend with his snide and manipulative misinformation.



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.

Social Security Expansion: Americans Need It NOW !

I just received in the mail yesterday news on a Social Security Expansion bill (S. 567) which I believe is desperately needed. But more on the reasons why a bit later. (Which I only learned about myself from a new book on Social Security I've been reading,   )

This expansion bill called the "Strenghthening Social Security Act" was actually introduced in the last congress by Sen. Tom Harkin. This landmark legislation would:

1) Gradually increase benefits by approximately $70 a month by changing the way the Social Security benefits are computed.

2) Ensure all retired Americans get a fair and larger Social Security COLA - one that truly reflects the cost of living, including medicines, food and fuel.

3) Extend the long term solvency of Social Security by almost two decades simply by finally making millionaires pay their fair share into this program (since most millionaires still demand their own .S.S. cut).  The change would be to the payroll tax cap and would mean someone making $3 million a year would pay the same percent as an ordinary bloke earning $30,000 a year.

Why the need for this expansion? Because we are already suffering from cuts that are working their way toward rendering every ordinary senior on a track to cat food. I wasn't aware of this until reading the book, Social Security Works by Nancy J. Altman and Eric R. Kingson.  A few of the findings that blew my mind (pp. 60- 61):

1) The 1983 Social Security enactment -amendment effectively phases in a two year increase in the full retirement age from 65 to 67 and has already lowered benefits by about 6.5 percent.  When fully phased in, the delay of 2 years to defined "full retirement"  will effectively cut the benefits to those born in 1960 or later by around 13 percent.

2) It does not matter whether you claim benefits at 62 or 70 or somewhere in between you can never 'catch up" and the cuts will wreak their havoc over time year by year.

3) Decisions made in 1983, 1993 to treat a growing portion of Social Security benefits as taxable income will effectively lower benefits by 9.5 percent in 35 years.

The last is especially nasty. Prior to 1983, Social Security benefits were tax free. Since 1984, up to 50 percent of Social Security benefits have been counted as taxable income for individuals in excess of $25,000/ yr. and couples in excess of $32,000/ yr.

Since 1993, additionally up to 85 percent of Social Security benefits have been taxed for some individuals with incomes in excess of $34,000, $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 the above 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.

Did you know about any of these existing cuts? I didn't - other than the first threshold for benefits cuts via taxes.

How bad it can get was recently described in an article in MONEY magazine (March, p. 42). They use the example of a retiree in the 15% tax bracket who is taxed 50 % on his Social Security. If he earns another $1,000, his "combined" income rises that much too, subjecting another $500 of Social Security to income taxes. So, the tax bill on that $1,000 will not be $150 (15 percent of $1,000) but $225 or an effective tax rate of 22.5%.

All of this in concert screams for an expansion of Social Security and the sooner the better. Otherwise seniors will be subject to an ongoing "race to the bottom" - and that's assuming the billionaires like Peter G. Peterson don't get their way in cutting it further via a "chained CPI".