Seniors "Running Up" Medicare and Social Security Tabs? In Fact, Too Many Risk Going Bankrupt

"Maybe Elizabeth Warren - a Boomer- will finally raise taxes on her generation which is running up the tab on Medicare and Social Security" -  Joseph Sternberg, WSJ, Sept. 13, p. 15A

"Yeah, I'm turning 65 next year.  Can't wait to go broke  trying to make ends meet with Medicare coverage. I worked 40 plus years paying into a system that will - at some point - kill me.  Yes, I can afford supplemental insurance at this point, but sometime in the future I may not be able to because of deteriorating health as I age."- Denver Post letter writer, Nov. 2, 'The Needs Of Our Seniors', p. 3K

It may stun many people to know that Medicare is by no means a "freebie" or entitlement. First, people have paid into it over a life time at the rate of 1.45%  in FICA taxes per paycheck. This is what appears on your W-2 tax form as "Medicare wages". It is that amount deducted from your pay for Medicare. Thus, it is most certainly not "welfare" and I'd even argue that it cannot be called an "entitlement". 

Second, no genuine "entitlement" would require a beneficiary to cover extra expenses like eye glasses and dental - two aspects that cannot be ignored and can come to thousands of dollars a year.  In addition, no entitlement makes increasing claims on one's budget  - as the Denver Post letter writer complained about - in regard to having to buy supplemental insurance. 

To fix ideas, my Medicare Part B supplemental (Part  B) insurance premium has just gone up to $144 a month.  This is in addition to my private supplemental insurance (which covers hospital procedures and tests Medicare B doesn't) which has now gone up another $30 a month to $273 a month. or $3,276 /yr.  At the same time Janice's private supplemental insurance has similarly gone up to $250/ month. So the total for both of for a year, with just supplemental insurance costs alone is now $5,004 + $4,728 =  $9, 732 for next year.  The Medicare supplemental insurance is offset by increasing the Social Security monthly payments in tandem, but all that means is that there is negligible benefit from any Social Security cost of living (COLA) increase, see e.g.

The Social Security cost-of-living increase is a cruel fraud ...

 

And:

The Mythical Social Security Cost Of Living Increa...


It is clear then, as the LA Times report notes, that current cost of living increases to Social Security are simply "cruel frauds" - i.e. if they can be wiped out with a simple offset.  "Here you go, sir, your Social Security increase for the new year....But...your Medicare supplemental (Part B) is being increased too - just  that amount -  so will be deducted from your COLA to pay for it!"

Lastly, one needs to enroll in a Medicare Prescription Drug Plan (Part D),  critical since you only get one shot getting lower cost access to prescription drugs. Even if you're not currently on any drugs per se, counselors assure you that the best bet is to at least sign into one, in case you have to rely on a prescription (say for blood pressure) later.  Right now I am on a blood pressure med (amlodipine besylate) and a statin (prevastatin) both of which I need to control a tendency to malignant high blood pressure, plus control the condition of hyperlipidemia - the tendency to collect too much fat in blood and liver.  

Fortunately, I can get both as generics so keep the total drug costs down to about $15 a month.  But at the same time, the plan provider (Humana) has now announced  the third monthly annual premium increase in a row - from what used to be ($18 / month), to now $60 a month.  Hence, the monthly premium is now four times what I pay for the actual meds. For Janice the factor is a bit smaller as she takes more meds, but the monthly increase is no less painful. So for prescription drugs alone we are talking about another $1,440 a year.  

Added to the cost of supplemental insurance - and leaving out the Medicare supplemental because it's offset by deduction from the Social Security COLA - that comes to: $7, 716 total.   But this doesn't include any dental or glasses etc. which easily adds another $2, 500 a year for both of us. That makes a grand total of $7,716 +  $2,500 =  $10, 216 a year in premiums and procedures etc. not covered by Medicare.  I show all this to also indicate what costs would be like for anyone who "buys into" Medicare.

Clearly, such proposals on offer from one or more Dem candidates need to be put into realistic perspective that people aren't just going to buy into the program and get a freebie. Not any more than those of us already in the Medicare program.  It can't be otherwise.  As for the 'Medicare for all' pipedream which claims all premiums can be wiped out for millions,  I will believe that when I see it. 

Adding up all these  Medicare -related costs up it is clear Joseph Sternberg (top quote) is talking twaddle when he claims seniors are "running up the tab".  In fact, the tab is being run up on us (including via the Medicare Advantage program which is bleeding traditional Medicare into insolvency.  All one need do is run the numbers to see, in fact,  that Medicare as we now know it fails to work for many retirees, leaving them in danger of going bankrupt.   The corporo-media tends to give that short shrift.  

Point of fact: . A study published this year by Gallup and West Health, a research organization dedicated to lowering health care costs, showed that people over 65 had withdrawn an estimated $22 billion from long-term savings accounts in the previous year to pay for health expenses Medicare didn’t cover.  This is why T. Rowe Price and other investment centers emphasize a retiree today needs at least $250k saved just to cover medical expenses.

Few may recall that Medicare Advantage is the privatized spawn of the  "Medicare Modernization Act" that Billy Tauzin and his Reepo criminal congress forced through back in 2003 - to the cheers of Big PhRMA.  It was no wonder that soon after it passed, Goldman Sachs estimated the benefit to PhRMA ( in terms of corporate welfare), would be over $13.7 b over ten years. It's probably even more now.

Indeed, another vile aspect of the 2003 law was that it barred Medicare from negotiating for lower drug prices like the VA does. The law actually left the negotiating to private insurance companies and pharmacy benefit managers. The very existence of this refuse denied Medicare the ability to drive down prices - and indeed control prices. 

But then many of us at the time suspected the Bushies were behind this recklessly expensive, bogus law as a means to rush Medicare toward insolvency - the better to privatize it. They even embedded a Trojan horse in the law called "Medicare Advantage" which is now spending $12b a year more than traditional Medicare.

Moreover, our money is daily being pilfered, "borrowed" from the Social Security Trust Fund to pay for military -defense spending, as well as other national budgetary incidentals.  The total now owed is estimated at $3.4 trillion.  So it is outrageous that Sternberg could even suggest higher taxes on Social Security beneficiaries.    But this is the skewed political landscape we inhabit now. 

 It's no surprise Sternberg would try to make a specious case to tax Medicare and Social Security given the 207 GOP tax cuts have sent deficits soaring.  So the Reep defenders want some way of replenishing the revenue lost by the reckless tax cuts. But no one with even  a normal intelligence is biting. 


See also:

10 Reasons Medicare Advantage Plans Will Never Meet Our Needs

Healthcare Policy | Insurance

http://www.smirkingchimp.com/thread/diane-archer/81747/10-reasons-medicare-advantage-plans-will-never-meet-our-needs


And:

Social Security

Dean Baker

Article Tools E-mail | Print Comments (0)

Social Security

A Bold Plan to Strengthen and Improve Social Security Is What America Needs

Why Social Security Privatization Cannot Be The Solution To Economic Inequality

With the roaring Bull going past ten years now it was only a matter of time before  one once again beheld the siren song of the Social Security privatization nabobs.

Sure enough, a definite snake oil pair (Jeff Yass and Stephen Moore) recently emerged with their misinformational op-ed 'Conquer Inequality With Private Social Security Accounts' (WSJ, July 26, p. A15)

As usual, and ever since this misbegotten idea was first touted by Gee Dumbya Bush, the two current hucksters promise it will relieve or solve all current and possible future financial ills - and there's no doubt their pitch is to the Millennial demographic.  After all, it is this group which has been told over and over that their wages are subject to FICA taxes to help support those "greedy Boomers".  So why not have their own money in their own accounts? Well, plenty of reasons.

The biggest lie is that accepting such a scheme will ensure that "workers will become owners".  Nothing is further from the truth.  You will no more "own" your money than you own your 401 (k), meaning you cannot do whatever the hell you want with it without penalties.  There will inevitably be a Wall Street outfit that controls your funds so you are only under an illusion of ownership.

Just as 401(k)s have misled millions into believing they are really finance mavens and savvy investors, so Messrs. Moore and Yass seek to have you  believe just having a private Social Security account will pave the way to wealth.  As they put it:

"Each individual account (would take 10 % of payroll taxes)  be invested in a low fee index fund of roughly two thirds stocks and one third bonds and would mature at the federal retirement age.   This way every working American  - from the minimum wage waiter to the truck driver to the store manager-  would become a genuine owner building real wealth for himself and his family with each paycheck."

Not so fast there, buckeroos!  First, as the authors of The Great 401k Hoax (Wlliam Wolman and Anne Colamosca) have observed: 401ks were never set up to be investment vehicles, but savings vehicles!  Ditto for Social Security monies.  They were never ever intended to be  paycheck "seed corn" to buy equities or gamble in Maul Street's casino but to supplement pensions in the retirement phase.  Financial specialist Steve Rattner, who I daresay has more educational heft than the two WSJ clowns, has put it best:  "Just as I would not be so kunckleheaded as to perform my own surgeries, I would not be so addled as to believe I can do my own investments. Not unless you are a skilled financial expert or planner:."  And from the annals of most Americans' saving experience and use of money 9 of 10 are not - finance mavens that is. Hence, they have no more business managing their Social Security FICA monies in investments, than they do for 401(k)s.    Certainly not putting money in stocks in any 'index funds" - or more fully managed funds.    Look, you can lose your ass with a bear market just as easily in the first as in the second.

Let's explore this aspect. Investment and finance specialist William J. Bernstein in a MONEY magazine interview in 2012 went through the biggest retirement investing mistakes - most of which violate life cycle investment principles. (MONEY, Sept., 2012, p.  97).  His rule of thumb which thorough research has validated is that the ordinary person needs "20 to 25 times the residual living expenses - the yearly shortfall you have to make up after Social Security and any pension".

So, let's say you do the math and find out on retirement - say at 67 - you will need  $3,500 in monthly living expenses, to pay utility bills, meds, groceries, Medicare supplement premiums, etc.  Then if you know Social Security will pay you $2,000 a month that leaves $1,500 to cover with savings, or safe investments. (Bernstein advises safe assets such as U.S. Treasury Inflation Protected Securities)  12 times that is 12 x   $1,500 = $18,000 per year.  And 20 times that 'magic number' is $360,000.  This is the yearly shortfall to make up  if, say at age 67,  you project the probability of living 20 more years.  The increased (5) factor, e.g. the yearly amt. by 25,  provides a greater safety margin. Hence, the more advisable saving total outside of Social Security is $450,000.

Bernstein is also adamant that the older the worker is the greater the need to pull back from equities.  The reason for that?  The closer you are to retirement, the more difficult it will be to make up the lost earnings - say if you find yourselves in a prolonged bear market, or a major stock crash. Yass and Moore take no account of this in their blather about "owning" private accounts.  The outcome if this is not taken into account?  "There's a significant chance you're going to be eating Alpo when you're 85." according to Bernstein.

WSJ letter writer Don B. Stuart, responding to the cockeyed nonsense of Moore and Yass (p. A14 yesterday) noted a similar concern:

"Is this plan only for those with 40-plus years remaining? What about those with only a decade left?  Their risk may be too high."

Which was exactly Bernstein's point and why the individual person's "life cycle" horizon must be reckoned in, else it's a pile of foolishness.

Do you really think Yass and Moore give a hoot if you're eating Alpo daily at 85? Of course not. They're merely interested in snatching FICA taxes to stuff into the maw of Maul Street to support a stock market investment scheme that has absolutely no assurance of avoiding losses.  Interestingly,  the WSJ authors dodge who will compensate you if a bear market comes along and you lose half of your invested money.   (Let's also bear in mind you'll need a 100 percent gain to get to breakeven after a 50 % loss.)

Letter writer Stuart also points out, reinforcing Steve Rattner's earlier observation about people not doing their own surgery either:

"Yes, wealth is created saving and investing over a long period of time. But this is hard for individuals on their own."

Especially in the stock investment sphere! Speaking for myself, I self-studied finance, stocks, mutual funds and bonds for over five years before investing in Janus Worldwide Fund once we left Barbados and moved to the U.S. in 1992.   This was in a 401(k) provided by the (then) radiotherapy software corporation for which I was a technical writer and regulatory specialist.  The insight provided by education paid off and this Janus fund racked up huge returns for the time I was in it (pulled out in 1996, before leaving the company) and as fate would have it, before the Fund earnings tanked.

The point is not everyone in a 401(k) will have the time or energy to study investment strategy, the ins and outs of mutual funds and their expense ratios, whether 'front loaded' or 'back loaded',  and the nature of P/E ratios. Hence, they won't be able to make an informed decision - as Mr. Bernstein puts it -  "To know when to take the money off the table".

Again, this is why the 401(k) was designed as a savings vehicle, not an investment one, and neither is Social Security.  Imagine, for example, if you're a truck driver at age 45 and could take the WSJ hucksters' advice of diverting your FICA taxes into a private account. What if a bear market or stock crash hits 5 years before you retire?  Think you will escape that Alpo at age 85? Think again.

The value of Social Security is precisely because it provides a stable income stream that will not go down the next month or the one after.  Retirees can make financial decisions precisely because they know what this income flow will be.  Indeed, a second WSJ writer (Robert J. Sartorius, an FCA) also takes issues with the authors noting:

"The 10 percent to which Messrs. Yass and Moore refer is simply not available to be saved and invested because Social Security is currently funded on a 'pay as you go' basis."

The writer adds that in order to make a stable transition to the private accounts scheme invoked by Yass and Moore, would require "an additional federal debt approximating $800 billion per year."

This would be needed "to pay current benefits no longer covered by the 10 percent of payroll being diverted."

Interestingly, this is a critical aspect  - the addition to the deficit - most of the snake oil salesmen ignore.   One therefore wonders if they just expect current retirees in the existing system to just suck salt....or eat Alpo.

In ending, may I also remind people, that  if they DO have 401(k) money in equities they are referred to as "dumb order flow" and "chickens to be plucked" by the Maul Street wizards, quants and casino operators? (Referenced in a WSJ piece from 2010). Like the 'Wizard' in the land of Oz, these folks never want you to see what actually goes on behind their curtains, including the high frequency trading (done by special algorithms) which triggered the "flash crash" of May 6, 2010.

How influential is flash or high frequency trading? According to a The Wall Street Journal   article from 9 years ago: ('Fast Traders Face Off with Big Investors over ‘Gaming’, June 30, 2010, p. C1) it accounted for two-thirds of total stock market volume. All other things being equal, that meant unless one had access to a flash trade system or algorithm himself, he had a 2 in 3 chance of being victimized by flash trade.  That probability is even higher now given the much greater extent to which HFT is used. 

Yass and Moore mention none of this, nada, they only expect the semi-educated and gullible  to take their word that they have the ticket to transcending inequality. 

Don't believe it for a nanosecond!

A Retirement Crisis By 2030? It Doesn't Have To Be

In the June 30th  TIME article: '2030 - The Year Retirement Ends' - we are asked to believe the money will have run out for Medicare already (by 2026) and will be three years from doing so for Social Security. "Generation X-ers will begin moving out of work into their Golden Years" - but only to find out they don't have enough money to live on, and will have to return to work - if even as janitors or Walmart greeters.  And as for those Boomers, well they will be getting the last of the good 'pickings' before the Trust Funds run dry.

All of which is nonsense. Indeed, the very thought the richest nation in the world could even allow a "retirement security crisis" to unfold such as TIME described, is absolute balderdash. The only reason it may come to that (since I am not discounting the greed and egos of our politicos) is the willingness to just sit and do nothing. Oh, and by the way, let's eliminate the 'blame the Boomers' bullshit right now. In that case politicos (actually Reagan and the congress) did do something by increasing the FICA taxes specifically to deal with the projected Boomer onslaught. So what happened? The additional money generated was most spent by the Bushies on their wars of choice and tax cuts! But that's not on the Boomers, it's on the Bushies!

The following data shows how much has been raided each year, the data from the Trust Fund administrators 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

Now, any person with a single neuron for a brain would realize that it doesn't matter if you fill a one gallon bucket with a cup every day (equal to 6 oz.) if there are massive holes in the bottom that let out 12 oz. in the same time! 

Thus, the worker-to -beneficiary ratio is a red herring meant to deflect attention from the REAL problem which is the yearly raids on monies received from payroll taxes and intended to go to future beneficiaries! So long as these raids continue unabated, NO solution or "re-tooling" of the program will work, not raising payroll taxes, not making cuts, NOTHING!  The raiding has to stop first.
Despite this, TIME proffers little but the usual, standard "solutions", including:

1) The government should force workers to contribute more to their 401ks

2) The "entitlements" (Social Security and Medicare) need to be "dealt with" and the system changed.

3) People most affected need to work longer.

4) The 401k needs to be re-tooled

Let's take (2) first and why it is wrong. In nearly all cases "entitlement reform" implies cuts (e.g. "chained CPI") not increased benefits, yet is the latter which is needed. First, Social Security and Medicare are NOT "entitlements" because workers have paid into them over 40 years or more. In many cases, the 6.2% payroll tax is the biggest tax hitting most of the working poor. But they do it because down the road, after their backs are nearly broken from toil and their hands can barely grasp a buck from arthritis, they will have some residue of dignity in their old age. Some semblance of financial independence. (TIME also admits that half of all those over 65 today would be poor if Social Security was eliminated.)

Even then, there are no gifts or freebies! The seniors still have to cough up nearly $100 a month for Medicare premiums, which are deducted from their Social Security, making it even less - say if it's the only income they have. Next, we know that Medicare premiums have risen over 136% the past ten years while Social Security cost of living adjustments have increased barely 30% over the same time. In other words, seniors are losing out by having to shell out ever more which one can consider a de facto cut.

Another support aspect the media conveniently forgets, which is dragging us toward a putative crisis, is the $244 billion lost because the payroll taxes were intentionally discontinued for two years. Incredibly, this move was engineered by the Democrats (mostly Neoliberals, to be sure). At the time I wrote several blog posts excoriating them for deliberately undermining Social Security and hence the retirement security of millions, given Boomers were piling into S.S. (According to TIME, by 2012, 13% of all Boomers had signed up for Social Security).

Now let's look at (1). This is a useless solution because in most cases the inability to max out or even contribute to the 401k is because disposable income isn't enough to allow it. After groceries, utilities and mortgage (or rent) all grab their share, workers find there isn't enough left to put aside - given the meager wages too many Americans earn. Hence, having the government force workers to contribute would merely compound the existing outrage of a pathetic national minimum wage. Unless the government -congress increases the minimum wage to a living wage it has no business trying to force workers to save more on any front - whether for health care, or S.S.

As for getting people to work longer (including delaying social security payments until the person turns 70), that's all well and good if they have a comfy job where their aging bodies can withstand more years without excess wear and tear. A writer, for example, will do ok, so will a taste tester, a 'mystery shopper', a librarian, or a food critic.  A heavy laborer (e.g. coal miner), or even a custodian or trash collector, not so much. Hence, it is foolishness to expect any of the latter group to work to 70 or past it. Nor is there a need to ask them if the country infused its social insurance programs with the money needed - or at least stopped the incessant raids!

The last, re-tooling the 401k, is not much of a solution either - given the 401k is in large measure responsible for the whole retirement security problem. As the article notes (p.43):

"The fragility is  in large part due to the massive shifts in the American retirement system since 1980. That's when the 401k plan was invented by a benefits consultant working on a cash bonus scheme for bankers, who had the idea to take advantage of an obscure provision of the tax code - allowing for deferred compensation of individuals to be matched by their company. The result was the 401k, a savings account that lets employees contribute pretax income from their paychecks. But unlike the traditional pension it doesn't promise a specific regular payment on retirement."

The last sentence is most important and what too many Americans fail to grasp. That is, in order to get regular payments per month which would be like the original defined pension - THEY have to create it themselves! That is, they'd have to have saved enough in their 401ks to generate an amount of money to purchase an immediate fixed annuity which in turn will pay them a steady amount monthly.

But let's understand why the 401k was created in the first place: in order to relieve companies of having to shell out defined pensions indefinitely for their employees - thereby cutting into their bottom lines.  Thus, the 401k emerged as a deliberate device to shift risk from corporations to their workers. And hey, if the workers couldn't amass enough - tough luck!

Another factor: most Americans got into trouble with their 401ks by trying to use them as investment vehicles when they were always designed only for conservative savings. Because of this investment meme - pushed also by the companies - workers often lost money when each Bull market came crashing down (as it did in 2008 and as it will again) or when major corrections occurred.

The best expose of this was perhaps by William Wolman and Anne Colamosca in their book 'The Great 401k Hoax', (2002), which offered the best advice on recognizing real returns as opposed to the bubble variety. With their solid arguments they showed, for any given fiscal environment, what a realist investor could expect to make. As they noted, one needed to look carefully at the percentage profits returned by X, Y or Z company. If it is averaging 1.3% a year, then that is the real return you can expect.  The stock hawkers bejabber of 10% annualized returns, or more often, 7 percent, is purely designed to lure the unwary into stock investment.

The authors' arguments were further reinforced about 6 years later in a London Financial Times article (‘A Metaphorical Proposal’, Mar. 13, p. 11A, 2008) by Michael Skapinker. He cited remarks by Joseph Berardino – chief exec of Arthur Andersen- who noted how the existing reporting system “failed to communicate essential information about the real risks facing companies” to the small investor.

Given that most workers already had problems navigating the complex investment choices most companies offered in their 401k plans, it was easily understood how they were set up to lose money.  This suggests that the 401k either needs to be removed, or radically revamped.

If it is removed what will replace it? The best idea yet comes from legislation pushed through by Kevin de Leon of California which would guarantee a living wage to every Californian working in the private sector, on retirement. De Leon's approach, called the CSC or the California Secure Choice Retirement Savings Program, was signed into law in 2012 and combines the best aspects of defined benefit plans with what used to be the 401k.

Another option would be similar to the proposed MyRA of Obama, which would be expanded to let all middle class workers save in a fund administered by the U.S. Treasury. Such a fund would be 'safe' - meaning the risk factors that we now see dogging 401k plans would be eliminated.

Another solution to any future retirement crisis, is to simply raise the income subject to the payroll tax - say from the current $117,000 to $600,000.  This would extend Social security's lifetime to at least 2075 and with a minimum of pain. (Doing the same for the Medicare FICA taxes, as well as increasing their absolute amounts - say to 4.4 percent would do the same.). Keeping the incomes subject to payroll taxes so low is a fool's errand anyway, given that so many of the wealthiest still insist on taking their 'cut' because they "earned it". So why not increase the income level to reflect that? It is pure political chicanery that it hasn't been done up to now!

Lastly, TIME cites experts (e.g. Paul Taylor) who insist communal living of different generations is the answer. Grandma and Gramps can live with their kids, John and Jill (in their 40s) and their own kids- Rudy and Trudy. Well, maybe - maybe not. It depends whether all living under the same roof can get along harmoniously, at least most of the time. But one thing we mustn't do is "force communal living", i.e. by forcing seniors to delay receiving their Social Security until 70 - so they are compelled to live with Junior and wife (and kids) til then.  That draconian solution is so fraught with peril it doesn't need explanation.

What I don't subscribe to is Taylor's glib pronouncement that:

"There's a growing sense, for all the generations, that no one has been spared and everyone has to suffer to some extent".

But it doesn't have to be that way! If the country made the right choices and especially ceased to involve itself in stupid wars and wasteful nation building projects - there'd be enough money to cover the Millennials' student loans, Gramps' medical ills, and John and Jill's mortgage payment.  Also, as I showed above, the less painful solutions are there - but we have to get our cosseted rich folks to sign on to them - in their own interest.

Would these rich folks really want to live in a nation that's being torn apart by revolution similar to what we see in the Ukraine or Iraq? If we aren't prepared to cut back our yen for empire,  or elicit the one percent to contribute to the commonweal, we will see ever more suffering at home....and even....as author David Cay Johnston put it in a recent salon.com interview, civil distress so severe it might even incite a revolution  that will be "the bloodiest the world has ever seen".

(See: http://www.salon.com/2014/05/22/bloodiest_thing_the_world_has_seen_david_cay_johnston_on_inequalitys_looming_disaster/

Instead of bitching about "socialism" and "takers",  the richest need to see their welfare is as much at stake as those deluged by debt and job loss. As John F. Kennedy once put it:

"If a free society cannot help the many who are poor, it cannot save the few who are rich."

See also:
http://www.smirkingchimp.com/thread/richard-eskow/56585/a-secret-plan-to-close-social-securitys-offices-and-outsource-its-work

Social Security & Medicare : "An unjustified transfer of wealth from the young to the elderly"? NO!

Once more an undereducated know-nothing is provided a privileged stage on which to spout his insufferable, uninformed bollocks. Woe is me! Woe is us! And it’s all the fault of them damned greedy geezers with all their blinkin’ excessive benefits! 

In this case, indignant Sunday New York Times letter writer, Daniel Bronheim, reaches full throated pitch and bile as he writes:

 “The rising cost of Social Security and Medicare has for a generation crowded out adequate government investment in infrastructure, education and research. It has meant a huge and unjustified transfer of wealth from the young to the elderly, especially when it’s being funded by borrowing from the future”.

 

After reading just this portion one is left to wonder how much more false grievance can be expressed in one letter of 150 words – but there’s a lot. I merely note his next sentence is that “insult is added to injury to realize the poor die so much younger and this transfer benefits is to those who need it the least.”

 

Where did this dolt get this misinformation? One must ponder seriously that question, given 44% of seniors have only Social security to live on and certainly aren’t among those “who need it the least”.  As for the “poor dying much younger” – yes, so how about the poor seniors I noted in McDowell, WVA in my post skewering the idiot Abby Huntsman?

How many times and in how many venues must we educate these twerps to grasp what is going on here?  Bronheim gets his perceptual panties in a twist over the elderly, but in fact, if he had more brains or common sense he’d recognize it’s the expanded military industrial complex which now consumes 58 percent of current expenditures. THAT is what’s responsible for leaving his young generation with debt, poor job outlook, and transferred wealth.

 

Does he not know, for example, that the Bushies pilfered Social Security monies from 2001 on to pay for their illegal, neocon-inspired wars in Iraq and Afghanistan? It is estimated that over a trillion bucks went for that purpose, with the Bushie architects trying to conceal the size of the actual deficits by raiding S.S.   But let’s add the total gov’t yearly grabs up from 2001-08, as extracted from GAO and Trust Fund data – as I reported in my blog post responding to Huntsman:

2001    -  $163 billion

2002   - $159 billion

2003   -$155.6 billion

2004   - $151.1 billion

2005   -$173.5 billion

2006   -$185.5 billion

2007   - $186 billion

2008   $180.2 billion

-----------------------------

TOTAL:  $1.353 trillion

 

Oh, and does the illustrious Master Bronheim have sufficient education to also know how the Bushies ramped up unnecessary spending from Medicare? Does he know, or is he even faintly aware, that the Medicare Modernization Act passed in 2003 was really designed as a corporate welfare bonanza for Big PHrmA and other Bushie campaign donors?  This bill interjected the “Part D” or  Prescription Drug Plan – when there was already one in place (as part of Medicare Part B). It also introduced Medicare Advantage which introduced private plans much more expensive than standard Medicare and which have been creating deficits of around $12b each year, leading the program toward insolvency – even as it caused premium for regular Medicare beneficiaries to rise.

 

From assorted Denver Post 2003 editorials (e.g.  ‘Medicare Drug Plan Confusing Sign Up’, p. 6E, Nov. 13) and articles we learned the following:

 

- Drug companies would see $139 billion in benefits (read ‘corporate welfare’) via this bill over a decade

 

-        There would be no bargaining or leverage allowed by the government to control prices, as in the case with the VA. (Saving an estimated $200b over ten years)

 

-        All "re-importation” of drugs from Canada would be outlawed- hence eliminating a REAL source of drug savings. (an estimated  $11b a year)

 

-        Private HMOs would be able to compete directly with Medicare and those in the latter program will eventually have to make up the difference out of their pockets as private costs soar. (And taxpayers, YES – would have to shell out more to help out – paying attention there, Daniel?)

 

In the end, as articles in the Post and other assorted press sources (NY Times, Baltimore Sun etc) observed, the misbegotten Bushie  Medicare law was a “crazy quilt”  - engineered and written by the likes of HMO lobbyist Billy Tauzin, by  “trying to please too many potential voters”.  But as I noted in a letter to the Post editor, it also tried to bamboozle as many potential voters as possible with smoke and mirrors ploys. Dangling a benefits’ “carrot” but delivering mostly hot air and glazed eyes.

 

Indeed, as the  years rolled by, the Post and other papers lost track of how many seniors had fallen into the infamous “donut hole” – where they ended up having to shell out full price for all their meds, many actually forced to choose between food and meds.

Bronheim advises  “making all Social security income taxable and the market value of Medicare taxable to its recipients”? What kind of half wit moron is this guy?  (Does he even know the average income for Social Security beneficiaries is $12,000 a year?) More accurately I am trying to understand how this Jasper even managed to put two coherent sentences together – if he understood so little of what he was yapping about.  Taxation? You fucking idiot! People receiving these benefits paid in 30 years or more via FICA taxes! (And let's bear in mind the richest 1 percent don't have to shoulder the burden on most of their income.)

And even now those benefits are taxed in subtle ways. Social Security taxes rise to over 30%  (i.e. 1/3 of S.S. is taken back) for many elderly recipients still trying to keep roofs over heads by working.  Medicare taxes are more indirectly applied, generally through steady increases in premiums.   And on account of the Affordable Care Act (ACA) $500 billion stands to be cut from Medicare over the next ten years, much of it in terms of hidden costs (such as allowing hospitals to accept patients under 'observation' instead of full admission) as well as cuts to Medicare providers. Already, as assorted letters in The Denver Post have noted, many seniors have been dumped by their doctors who want no more of the paperwork if their remuneration is to be cut even 2%.  That means those seniors go without care or have to go to charity clinics.

 

Medicare premiums -expenses have increased 133% over the past 6 years compared to only a 31% increase in paid benefits (COLAs suspended for over 3 years) hence amounting to a pure benefits cut- or de facto TAX.

 Sadly, it appears little can be done – short of brain transplants-  to get the likes of these simpletons to understand the current economic dynamic which is also based on past history. The latter includes how the previous administration misused Social Security monies for their “wars” (to hide deficits)  and implemented an expensive new Medicare law that wasn’t needed.

 

If those like Daniel Bronheim really want greater investment “in infrastructure, education and research” they first need to know WHO is benefiting from the status quo.  (“Oh wait, yuh mean there is a status quo?”)

 

Hint, hint: It isn’t seniors, and letters like Bronheim’s only serve to foment more inter-generational conflict – which is exactly what the asshole neocons and Neolibs want!  Way to go playing into their feral hands, Danny Boy!

The People Have Spoken: But Will the Neoliberal Elites Listen?

"The American economy is no longer based on competition among more or less equal private capitalists. It is now dominated by huge corporations that, contrary to classical economic theory, control demand rather than being responsive to the demands of the market."  - 

D. Stanley Eitzen and Maxine Baca-Zinn, In Conflict and Order, p. 343.

That is the question that must be asked in the wake of an Associated Press- GfK poll on public attitudes toward Social Security, with the primary finding that 53% would rather see taxes increased than benefits cut. Only 36% opt for cutting benefits, by comparison. Well, duh? What would you expect when more than 48% currently rely on Social Security as their sole source of income, and 95% of these people (most infirm, disabled or well over 70)  wouldn't be able to work to make up lost benefits if their lives literally depended on it. So, we can say - according to the time honored cliche - they know what side their bread is buttered on.

In the words of one elder, 77-year old widow Marge Youngs, from Toledo, Ohio ('Poll: Raise Taxes to Save Social Security', Denver Post, today, p. 14A):

"Right now it seems that we're taxed too much, but if that would be the only way to go, I guess I'd have to be for it to preserve it. It's extremely important to me, it's most of my income."

Indeed. But let's first clear up one of Marge's misperceptions: we are NOT "taxed too much". This is imbibing the Repubs' (especially Grover Norquist's) kool aid. As a percentage of GDP taxes are their lowest in nearly 50 years.  Excluding Chile and Mexico, the United States raises less tax revenue, as a share of the economy, than every other industrial country.

THIS is the reality! So, common sense and rational response dictates that raising revenues- taxes would be the primo and foremost solution beyond making cuts which would have devastating effects. In fact, there are good arguments that Social Security benefits ought to be increased. (Especially with a large swatch of retirees not earning squat on interest bearing accounts, and food prices set to soar next year.)

Besides, the simplest solution of all would simply be to expose more of income to payroll tax collection. Currently, only the first $110,000 of income is subjected to the FICA (withholding tax). Obama in 2008 advocated raising the bar to all incomes over $250,000, but even this is chintzy given Social Security's projected shortfalls. The program is facing serious (but not overwhelming, like Medicare) long term problems, most engendered by congress critters pilfering and raiding the program - to the tune of more than $2.56 trillion -plus over the decades, mainly to cravenly hide the actual deficits. (See attached graph.)

The Neoliberal,  lying elites meanwhile want to blame the now retiring millions of Boomers for the Trustees' projection that Social Security will only be able to pay out 75% of benefits by 2033, but they are wrong. The "Boomer" problem was actually solved back in 1983 at the behest of then Fed Chairman Alan Greenspan, and agreed to by Ronald Reagan. To that end, the FICA taxes were increased to 6.2%. But the Neoliberal scum would have you believe that this was never done, or as Robert Samuelson once wrote me in a response email when I noted it in a letter sent to him: "That was nearly 30 years ago, look at all the inflation since." Oh yeah? How 'bout instead looking at all the massive thievery from the program the past 11 years? (See bottom green inset table for amounts raided since 2000).

Why do I refer to Neoliberal scum? Because that is what these miscreants are! They peddle the propaganda that "markets" must rule over all and sundry, but as the quote at the top discloses, "free markets" are a myth and have been since the 1920s-30s, or maybe earlier. Never mind, the Neolibs don't want anyone violating their precious Pareto optimality conditions, meaning no one ought to be collecting diddly simply by meeting a certain age requirement or breathing.

Perhaps the best summary take ever on the Neoliberal vermin was penned by Baltimore Sun columnist Jay Bookman more than 15 years ago ('The New World Disorder Evident Here, Abroad')

"The global economy has been constructed  on the premise that government guarantees of security and protection must be avoided at all costs, because they discourage personal initiative. In times of crisis, however, that premise cannot be sustained politically. In times of trouble it is human nature to seek security and protection and to be drawn toward those who promise to provide it. That is how men such as Adolf Hitler, and Vladimir Ilyich Lenin came to power, with disastrous consequences. "

This correctly sums it up, and why the Neoliberal -"pro market god"  Elites will likely ignore the latest poll, as they've ignored others. Thus, look for the Neolibs in both parties to recommend instead adopting a disgusting revision of the COLA, probably in the form of the despicable "chained CPI" which assumes when prices of say bacon go higher, the elderly will turn to Spam, when Spam prices go higher, they will turn to small pieces of beef jerky, and when those latter go higher, well they will turn to cat food. In other words, we call it the "Catfood Progression Indicator" COLA. You "progress" to cheaper and cheaper options as your grocery bills keep increasing.

In terms of who is trusted more to protect Social Security, Obama and Romney poll almost neck and neck with the Mittster getting 44% support and Obama 47%. I suspect Obama is within the measured uncertainty mainly because of his ill-advised "Deficit Commission" which played directly into the Neolibs' disgusting hands and onto the Repuke -Norquist wicket. (Tabbing two Neolib whores, Alan B. Simpson and Ernest Bowles, to head this commission didn't help) Worse, was when Obamanites remotely mentioned using the Chained CPI as a "solution" - confirming many oldsters' worst fears that Obama might not be as protective of Social Security as he'd earlier let on. This has died down for now, but we are still reading of ominous news items that - if re-elected- Obama intends to "cooperate more" with Republicans next year on getting legislation passed. I thought we already proved that's a non-starter, Mr. Prez. I say if you win, use your "political capital" and tell the repups to fuck themselves. Drop the Nice Guy persona already! Keep up the Chicago tough guy shtick. You're gonna need it!

Sadly, too many of the young under-30 sprats have imbibed too much kool aid. One guy named "Jeff Victory" quoted in the D. Post piece blabbed, ignorantly:

"Barack has already shown he's going to give anything free out to everyone he possibly can. I'm going to go with Romney on that one."

Oh yeah? Then you deserve to suck on the shit balls that Romney will serve up and which you will be expected to live on, if you make it to 65 or 69 (if the Rs get their way and increase the age for full benefits). Another thing this moron misses is that Social Security is NOT welfare, it's not "free" - we have paid into it our whole working lives! Maybe we can make excuses that this moron saw the moronic new movie "Obama's America 2016" or some title to that effect. (What I couldn't believe is the report in today's paper that it reached number 8 at the box office with a $6.2 million take. I could not believe that many stupid people were willing to shell out good money to watch propaganda, especially from a Neoliberal hack named Dinesh D'Souza.  Then I realized most had to be Repubs, or Ayn Rand Groupies.

The bottom line is if Obama is re-elected, as he ought to be, he needs to lay out a serious plan to save Social Security and one that doesn't entail using "Republican " solutions! That would not be why we re-elected you, Sir!