In the coming days and weeks we'll be hearing a lot of misinformation about the Trustees Report from the Social Security Administration. It's time to separate the myths from the realities:
1. Myth: "Social Security and Medicare have a cost problem."
Fact: Medicare has a financial problem. As this chart shows, the cost of providing Social Security benefits is not out of control or skyrocketing.
Fact: That's a headline we saw repeated across the country in anticipation of the Trustees Report, but it's wrong. What's "straining" Social Security and Medicare today is the unequal distribution of income and a broken regulatory system for Wall Street that has put the entire economy under stress.
Social Security was actuarially stable after it was overhauled by the Greenspan Commission in the 1980s. The baby boomers were all alive and (mostly) working by then. So what really happened?
First, a radical upward shift in income toward the "1 percent" -- and the "0.0001 percent" -- meant that more and more of the nation's income was above the payroll tax cap threshold. That reduced the revenue for Social Security (and much of Medicare) from a projected 90 percent of national income to a figure that's closer to 83 percent.
Secondly, a financial crisis brought on by reckless and under-regulated Wall Street banks crashed the economy in 2008. For millions of Americans it has never come back. Joblessness, along with wage stagnation for the "99 percent," further depleted the programs' revenues.
3. Myth: We need to place limits on Medicare spending and cut its benefits.
Fact: That's like saying the way to end forest fires is by firing Smokey Bear. Benefit cuts and spending caps won't solve our health cost problem. There has been an explosion of for-profit hospital chains in the last twenty years, along with profit-driven laboratories, imaging centers, and other types of health providers.
In addition, our system of reimbursing physicians provides an incentive for them to treat more and charge more for their services. That's costly -- and it subjects patients to a lot of unnecessary tests. On top of that, the lion's share of our health economy is "managed" by for-profit insurance companies who have little motivation or skill when it comes to prudent fiscal management.
If we expand Medicare to our entire population we'd have a health system like that of all other industrialized countries -- whose health costs are roughly 60 percent of our own and grow more slowly than our own. Medicare's cost problem would be solved.
By contrast, the solutions being floated in Washington wouldn't fix the problem -- they'd just dump it onto the backs of seniors and the disabled.
4. Myth: We can't get our federal deficits under control without cutting Social Security benefits -- either by raising the eligibility age, placing gimmicky limits on cost-of-living adjustments, or all of the above.
Fact: Social Security is forbidden by law from contributing to the federal deficit. It's an entirely self-sustaining program. If the day comes when it can't pay its full scheduled benefits, those benefits must and will be cut. This is a phony argument.
5. Myth: Too many millionaires are collecting Social Security and Medicare, so we should means-test and deny them these benefits.
Fact: The number of actual "millionaires" on Social Security and Medicare is tiny, by any objective measure. It wouldn't have any significant impact on their budgets to exclude them -- although it would help a lot to tax them.
(Oh, we can't do that! say the "centrists.")
What's more, Medicare and Social Security are social insurance programs. By definition, insurance shouldn't be means-testing like welfare and other aid programs, because you've already paid your premiums. The "means-testing" argument is often used to mischacterize these programs as "welfare," instead of what they really are: Something people have paid into through the payroll tax throughout their working lives, and (in Medicare's case) which they've also supported through their taxes.
6. Myth: Social Security benefits are too generous. They need to be cut because we can't afford them.
Fact: Our Social Security benefits are lower than those of nations that are economically similar to the US. As we said, the current reductions in revenue were caused by 1) an upward distribution of wealth to the "1 percent" and 2) a financial crisis brought about by Wall Street greed and speculation.
That suggests two possible solutions to Social Security's 20-year-from-now problem: 1) Lift the payroll tax cap, and/or 2) impose a small financial transactions tax on Wall Street and use it to make up the Social Security shortfall. Either of these approaches would solve the problem.
Richard (RJ) Eskow, a consultant and writer (and former insurance/finance executive), is a Senior Fellow with the Campaign for America's Future and the host of The Breakdown, broadcast Saturdays nights from 7-9 pm on WeAct Radio, AM 1480 in Washington, D.C.
http://www.huffingtonpost.com/rj-eskow/social-security-and-medic_b_1450729.html?utm_source=Alert-blogger&utm_medium=email&utm_campaign=Email%2BNotifications
Social Security In US Less Generous Than Similar Countries
When compared to other similar countries, retirement benefits in the United States are relatively modest. A report from CNBC took a closer look at retirement systems in numerous countries and found the U.S. to be performing lower than the average. Retirees in the U.S. generally receive about 47 percent of their pre-retirement income on Social Security. Similar programs in Europe and elsewhere generally pay about 68 percent of pre-retirement income.
In the 2011 Melbourne Mercer Global Pensions Index, the U.S. was given a middling grade of "C," along with France, Singapore, Brazil, Poland and Germany.
A country given a C has “a system that has some good features, but also has major risks and/or shortcomings that should be addressed,” the report states. “Without these improvements, its efficacy and/or long-term sustainability can be questioned.”The Service Employees International Union, among other organizations, is calling upon Washington to improve the U.S. retirement system:
The United States ranked close to average among 16 countries in adequacy of benefits provided and above average in sustainability, the likelihood that the system can maintain the benefits in the future. It fell short, however, on a sub-index focused on the private sector pension system.
The U.S. could take steps for a better score, the report said, including raising the minimum benefit for low-income retirees, improving benefits vesting, and further limiting access to funds before retirement.
The fastest, most efficient and fairest way to improve retirement security in the United States is to strengthen Social Security. Social Security is often the sole source of retirement income for low wage workers who are less likely to have access to an employer-sponsored retirement plan. The problem with Social Security is that its retirement benefits are less than $1,200 per month for millions of low wage workers.SEIU reports that the upper one percent of Americans have already stopped paying Social Security taxes for 2012 because of a cap on what earnings pay into the system. Currently, once someone reaches $110,100 of income they have paid Social Security taxes on, they pay no more into the system for the year. Eliminating this cap is widely seen as the easiest and fairest solution to shoring up the future of Social Security. SEIU has an action opportunity for citizens to contact Congress and demand they scrap the cap.
http://crooksandliars.com/kenneth-quinnell/social-security-us-less-generous-
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