Prominent blog opposes Social Security and Medicare reform
January 30, 2013 at 4:43 pm in News by Dustin Siggins 12 Comments
Last night, Tea Party Patriots highlighted some policy ideas by liberals that are designed to prevent some overspending as the cost of entitlements continues to soar. These proposals all had significant flaws, but they were a good reminder that the fiscal facts are not lost on all proponents of Big Government.
Unfortunately, some still refuse to acknowledge the fiscal facts. From a front-page post on the prominent blog Daily Kos, which commented on the attempts by Republicans to bargain on entitlement reform:
Is the Republican strategy to try to create leverage for entitlement cuts a pipe dream? Not when Democrats keep offering them up as deal sweeteners. So far, it’s just been the insanity of an extreme Republican House that’s too distracted by trying blow things up to recognize when the Democrats are giving them a big, juicy, gift.
This post (slight language warning if you follow the link) highlights the major flaw in certain political circles: entitlement reform is a “gift” to Republicans. However, the post’s author – Daily Kos Senior Policy Editor Joan McCarter – ignores a number of basic financial facts:
1. First, as Senator Rand Paul (R-KY) pointed out last year, entitlement reform is not a gift to, or compromise with, Republicans. It is simple mathematical necessity. Compromise takes place when opposing principles or ideas collide, and both sides must back down from hard and fast positions. The unaffordability of the entitlement state is not an issue of compromise or gift-giving, and for McCarter to frame it as such is inaccurate.
2. It’s not just fiscally conservative Senators who are calling for changes to retirement programs. According to the Treasury Department, not reforming Social Security and Medicare will be costly:
Between 2022 and 2039, however, increased spending for Social Security and health programs6 due to continued aging of the population and anticipated rising health costs is expected to cause the primary deficit-to-GDP ratio to steadily deteriorate, reaching 2.3 percent of GDP in 2039. After 2039, the ratio is projected to slowly decline to 1.7 percent of GDP in 2087 as the impact of the baby boom generation retiring dissipates.
Note that these estimates do not include interest payments, which were over 12% of the budget in 2011. Treasury expects interest payments to rise dramatically over the next few years and decades.
3. What is the cost of delaying reforms? According to Treasury, timing is very important:
It is estimated that preventing the debt-to-GDP ratio from rising over the next 75 years would require some combination of expenditure reductions and revenue increases that amount, on average, to 2.7 percent of GDP over each of the next 75 years. The timing of changes to noninterest spending and receipts that close this “75-year fiscal gap” has important implications for the well-being of future generations. For example, relative to a policy that begins immediately, it is estimated that the magnitude of reforms necessary to close the 75-year fiscal gap increases by nearly 20 percent if action is delayed by 10-years and for more than 50 percent if action is delayed 20 years.
In plain English, Treasury is saying that today’s efforts to reduce future deficits would have to total 2.7% of $15.6 trillion, or about $421 billion, every year, for 75 years – and as inflation and GDP grow, this number would have to rise.
This is equivalent to cutting over 10% of the federal budget every year.
Each poster at Daily Kos is an independent writer, so there is infrequently disagreement among the front page writers when it comes to policy. However, most posts on Daily Kos addressing the topic of deficit reduction fit into four categories: It’s not a problem and thus doesn’t deserve attention, cut military spending, raise taxes on the wealthy, and cut benefits for wealthier Americans. While Tea Party Patriots supports cutting military spending where possible, and even agrees that means-testing is acceptable (short of Social Security privatization or handing Social Security and Medicare over to the states, that is), means-testing is unlikely to be able to solve the problem on its own. Neither will cutting military spending – the amount of federal spending on the military has dropped significantly over the last few decades, in almost a reversal of the growth in entitlements.
The most popular solution for deficit reduction on Daily Kos seems to be raising taxes. Yet even if taxes had gone up in the fashion upon which President Obama campaigned, the increase in revenues would not have been enough to cover even 90 days of spending. Additionally, as Walter Williams noted in a column last year, taxing the so-called “rich” at 100% wouldn’t even come close to funding one year’s worth of federal spending:
Households earning $250,000 and above account for 25 percent, or $1.97 trillion, of the nearly $8 trillion of total household income.
If Congress imposed a 100 percent tax, taking all earnings above $250,000 per year, it would bring in about $1.9 trillion.
That would keep Washington running for 190 days, but there’s a problem because there are 175 more days left in the year.
The profits of the Fortune 500 richest companies come to $400 billion. That would keep the government running for another 40 days, to mid-July.
America has 400 billionaires with a combined net worth of $1.3 trillion. If Congress fleeced them of their assets, stocks, bonds, yachts, airplanes, mansions and jewelry, it would get us to at least late fall.
The fact of the matter is there are not enough rich people to come anywhere close to satisfying Congress’ voracious spending appetite.
It is the admirable, if unaffordable and unattainable, goal of McCarter and many of her fellow proponents of Big Government to have the federal government expand its size and cost for the benefit of the American people. Right now, though, the federal government has expanded beyond its constitutional limits, and far beyond the limits of affordability. If McCarter wants Social Security and Medicare protected for generations to come, she ought to praise those Democrats who are willing and able to work with Republicans to reform those programs. Without reforms, they are going to collapse before this year’s retirees reach their full life span. With reforms, they may be able to provide at least some assistance to those who have paid into them for decades.
We need to get rid of entitlements welfare and Medicaid!
I agree. The fools that helped put him in office are those lazy ones who want entitlement programs/social justice. We are heading the way of Greece and Spain all because of Obama and his policies. Cut the pork and stop spending. AND do not cut the military budget and leave US defenseless in these tumultuous times.
It is easy to say “get rid of welfare and medicaid”. However, what do we do? Leave people to die in the clinic waiting rooms? Do we refuse to feed the hungry and house the homeless? This is such a dilemma for me. We have to spend way too much for welfare and medicaid, but do we “pass by on the other side of the road”? Or are we the “good Samaritan” who binds the wounds and arranges for care? How do we get past this dilemma?
The only real reform we need to SS and Medicare is to stop giving it to people who never paid into the system. It is now being used as a supplemental welfare system. That’s where the biggest drain is. With the basics of most seniors, food and fuel being 300% higher in the past four years – more seniors are having to turn to food stamps and charity programs in order to have decent food. Not steaks and prime chicken and pork cuts – just fresh vegetables and fruit.
YES!!!!!
It’s about time someone besides me screamed about this.
The Democrats have hijacked Social Security and turned it into a catch-all welfare program. When their welfare is threatened, they threaten the benefits of everyone who actually worked and paid into the Social Security INSURANCE program.
I want to hear just one politician in Washington say this:
IF YOU DIDN’T PAY INTO SOCIAL SECURITY, YOU DON’T GET ANYTHING FROM SOCIAL SECURITY.
Now that we’ve fixed Social Security, what other problem do you have?
What gets paid into S.S. is taxes, and the money goes into the general fund and gets spent, just like any other tax revenue.
What gets paid out to S.S. recipients is tax money from general revenues.
S.S. never was anything other than another welfare program.
If benefits to those who never paid in are stopped (including survivor’s benefits to widows?), then the people currently getting “undeserved” S.S. benefits will simply be transferred to some other welfare program.
Isn’t the real problem that the government has usurped a power to decide who gets money that is taken from the productive sector? Wealth transfer of all sorts, even S.S., is simply unconstitutional.
I don’t think it was a welfare program in the beginning. People paid into a Social Security INSURANCE program. After they retired, they collected th ebenefits they paid for. That isn’t welfare.
Welfare is receiving benefits that the recipient didn’t pay for. The only reason I can see for payment to anyone who didn’t pay into SSI would be for survivor benefits. A mother who raised her children while her husband worked is due survivor benefits. A child who’s father, who paid into the SSI program, who dies or becomes disabled (actually disabled, not what is called “disabled” today) is due benefits until the age of 18, or the last day of primary education, whichever comes last, with a cutoff of on the 20th birthday.
I want to hear just one Republican say these words:
IF YOU DIDN’T PAY INTO SOCIAL SECURITY, YOU DON’T GET ANYTHING FROM SOCIAL SECURITY.
When I hear that, I will know at least one person in Congress is actually serious about salvaging Social Security.
DB – It’s true we need to get the deadbeats off Social Security and Medicare, but we are still be in the red even if we got rid of these people. My point is the numbers don’t add up when the vast majority of recipients receive much more than they ever put in. Someone is making up the difference.
I agree. Given fluctuations in additions to the population, it is almost impossible to come up with a steady tax rate that will achieve a steady-state condition for Social Security income versus payout over the long term. However, it is not so difficult to project ten or twenty years into the future, and adjust a tax rate accordingly.
But, nothing will work as long as the government takes all the money from Social Security for other things and pays Social Security out of the general fund. Because the FICA tax is collected solely for Social Security, Social Security should never be part of any discussion concerning the overall budget. The FICA tax and Social Security should be in its own steady-state system.
And, if you didn’t pay into Social Security, you don’t get anything from Social Security.
That will fix Social Security.
I just don’t hear anyone in Washington uttering this obvious solution.
That needs to change. That was just another reason we should have booted Boehner out of the Speaker’s Chair. He’s just another big government Democrat.
Again social security works on paper like any other socialistic policy when it is sold to its people.After you give up your money for security you give up your ability to direct those funds for yourself. Capitalism takes over as it always wil. Obama is now the worst kind of Capitalist. He is deciding to whom is the need and to whom has the ability.On the other end and in the middle people learn to jump through hoops to qualify that were not recrded on the paper when the Idea was sold to the people and the polticians and lawyers Capitalize on expanding the free stuff for votes.
In reality the government deciding for you how you spend your money in the future amounts to Slavery for the lost time and treasure. Expanding it in the new form will require more slave time. It will only get worse never better as you can see by watching our debt clock. The only way to fix our Economy is to pull the plug on the lawyer feeding pools of money that everyone sees as a way to pilage for themselves.I know I payed in and I know I would deserve and probably get more than I payed in. Remember some die before retirement that never get a dime. There is no good reason that it shouldnt work exept the ones I’ve mentioned above. ALL CORRUPTION and likely will always fail from it as recorded throughout history. Please consider delivering your children from slavery by giving up your earned justification and I do mean earned as you played by the rules but I think its time to acknowlege it is heading for a ruinous end. The legitimate use of taxes is ti provide for the common defence and promote the general welfare not provide the general welfare and promote our security through the UN. Promoting general welfare is educational as to where jobs are and trumpeting good products among our states and internationally.Slavery runs out of product buyers as they cant provide jobs to people they have to pay and unemployed free people cant buy slave goods. Abraham Lincoln said ” we will all be free or we will all own slaves” depending on the outcome of the cival war. Looking at the situation today I think he would ajust his remarks to, We will all be free or we will all be slaves.
This is crap! Whjy is this a blog entry!
This is Daily Kos!
Of course the will have an article like this!
This is being acknowledged as a “prominent blog?”.
They are freaking COMMUNISTS!
They do not deserve our attention here, as if they are a leading anything other than crap!
Social Security is not an entitlement, as a conservative as die hard as they come, the GOP needs to STOP referring to it as an entitlement.
I pay into it every single paycheck. Unless I receive back the money I put in, adjusted for the amount invested income would have gone up then I don’t want to hear the words SOCIAL SECURITY & ENTITLEMENT together coming out of the mouths of my elected officials.
Welfare = Entitlement
Food Stamps = Entitlement
Medicaid = Entitlement
Social Security, Medicare and Unemployment are NOT entitlements.
With social security espescially I resent being told I MUST pay into this system with these “rules” then being told later Oh yea.. you cant retire for 7 more years…