How to kill Social Security with a Smile

[pat_k]

Replies to this thread indicate a surprising level of support for the notion of means testing. It's surprising because, as pointed out in the following, means testing is "Plan B" for the people who are out to kill Social Security.

Real Clear Politics
How to Kill Social Security, With a Smile
By Froma Harrop - November 27, 2012

Plan B starts with means-testing. It is a clever approach because it expropriates liberal rhetoric about the rich helping the poor. Means-testing would reduce the benefits of the well-to-do while keeping (or raising) them for others. This is an excellent way to destroy the loyalty to the program among our more powerful citizens. The deal could include making permanent the Social Security payroll tax holiday scheduled to expire on Jan. 1 -- in the interests of progressive taxation, of course.

Introducing means testing to a program designed to provide benefits to all who pay in is the absolutely WRONG approach. In fact, what we need to do is work to replace existing safety nets with a universal basic income.

Raising the Floor: How a Universal Basic Income Can Renew Our Economy and Rebuild the American Dream
Andy Stern, former Pres SEIU
http://raisingthefloorbook.com

[TDale313]

1. You are absolutely right on this.

Raise the cap, yes. But means testing makes it a program for the poor, and that makes it easier to demonize and kill. Social Security and Medicare are popular because everyone has a stake. Bad, bad idea to go the means test route.

[dawg]

2. You make a really good point.

Social Security is hard to kill because it's something that almost everyone benefits from. Any change that would make it appear to be more of a "welfare" type program would undermine its popular support and make it easier to kill down the line.

Perhaps our biggest mistake with Obamacare is that it is, perhaps wrongly, perceived as being something primarily for the poor.

[pat_k]

4. Very good point on ACA

Dems need to put forward an ACA fix plan that adds the Public Option -- and get out there NOW to make the case for it. The public option benefits EVERYONE! As more employers and individuals opt for "public option" coverage, rates come down as the greater numbers put the plan in a better position to negotiate lower fees and prices. That is an "Affordable Health Care Act" that would truly benefit everyone -- and it would be seen that way.

It is the answer to the "look, the requirements are so onerous there are places that no insurance companies offer a plan" drum beat. Problem solved with the stroke of a pen. We are in a BETTER position to get the Public Option through because people are seeing that ACA is NOT fulfilling its promise. The way to fulfill that promise is to add the public option.

Vote for Dems in 2018 so we can REALLY fix ACA with a public option should be a drum beat.

[dawg]

8. Public option would be good, but it wouldn't be a selling point to swing voters.

How about making the subsidies available for everyone? That would be appealing.

Get your insurance at work, but they take money out of your check to pay for it? You get a subsidy!

Live in a red state that didn't expand Medicaid? You get a subsidy!

Buy your own insurance, but not through the exchange? You get a subsidy!

Too rich to qualify under the current Obamacare rules? You get a subsidy! (Maybe up to $2,000 or so. We want to encourage healthy people to join the risk pool.)

Your employer pays for 100% of your health coverage? They get a subsidy!

Would this be colossally expensive? Yes!

Would we have to do some unpopular things in order to pay for it? Yes. (But we'll talk about those later!)

[pat_k]

11. That too!

I'm not sure if you are correct about swing voters rejecting the case for public option. We can't know because party leaders have NEVER made a concerted effort to make that case. I think it is a case worth making because doing so moves the whole question off "their turf" and on to ours.

Certainly adding "subsidies for all" into the mix would make it a stronger proposal. Then the public debate could center on whether we should just add PO, just add subsidies, or do both. That's how you move the game. One way or another, we MUST get away from the losing "ACA sucks" v. "No it doesn't" argument. (And make no mistake, even with the death of the repub bill, that "it sucks," "no it doesn't" debate will echo on and create fertile ground for some terrible reforms.)

[dawg]

14. I think we need to propose a public option only for ...

those counties that have fewer than two private insurance companies available on the exchange. This would be a "fix" to the problem of lack of choice.

But it would also get our foot into the door. And if we were able to run the public plan cheaper than the competition, expanding it nationwide would be the next logical step when it came time to wring more cost savings out of the system.

[pat_k]

15. hmmm...

That sounds like a decent fall back position -- not the thing we should be making the case for.

The power of the public option is in numbers. And universal availability boosts those numbers.

But, of course, if you can't get the door opened, go for "foot in the door." I just don't think you start trying for "foot in the door." That's a great way to have the door slammed in your face, particularly when the "foot in the door" option removes the most powerful aspect of a proposal.

[dawg]

17. We already tried for the pubic option. Powerful interests blocked it.

Unlike the Republicans, who just tried to "Leroy Jenkins" their plan through the House, Obama did all the back channel negotiations necessary to make sure we had a plan that could pass. That's where we lost the public option. The insurance companies simply wouldn't allow it, and the money and influence they were able to bring to bear were enough to kill the bill. We learned that from Hillarycare back in the nineties.

So I think the only way to get a public option going is as a stop-gap measure to fill the holes that the free market leaves open. And actually, that might be enough. I'm not wedded to an entirely public plan. But something needs to be in place to at least backdrop the private system.

And if that something turns out to be cheaper and more user-friendly ...

[pat_k]

19. The case for public option was never made to the Public.

The debate didn't go beyond "insiders" or "back channels" -- and Obama and Congress abandoned it before even 25% of people knew what the term meant.

You don't START talking to the public about what you think "they" (the repubs) will "let" us have. That is the error the Democrats have been making for decades. And it is the reason we have lost so much ground.

The point is to make the case for the Public Option to the PUBLIC. You can bet that if they did that, there would be all kinds of dollars flowing in to support the effort. Progressives are VERY activated.

[dawg]

22. Yeah, but I don't move in progressive circles and I don't think it has ...

all that much appeal to anyone other than us.

To swing voters with employer-based insurance, it doesn't sound like anything that helps them. And they are susceptible to Republican arguments about "wasteful" government programs.

But making an option available for people in rural areas that have been abandoned by the corporate plans sounds reasonable. I think that would sell.

Then, we actually have to make the public option outperform the private plans. Shouldn't be all that hard.

At that point, it becomes a no-brainer to expand it. In fact, voters might even clamor for it if they think someone three counties over is getting a cheaper and better plan than they are.

The next step after that (sssh! Don't tell anyone) is to phase out employer-based health insurance. I don't mean that we should ban it or anything. We just need to make the alternative much more affordable and convenient.

One of the worst things about our private health insurance system is the huge advantage it gives to large corporate employers and their employees. Small businesses and self-employed individuals are treated like the riff-raff, and forced to pay through the nose. It's one of many unfair advantages that create an unlevel playing field in the American economy.

[pat_k]

25. As of this year, states can open exchanges

.. to large group employers. Some states will undoubtedly do this. Public option plans offerred as competition to private plans through exchanges would then be available to large insurers. If (when) the cost of public option group plans goes lower than private, you can bet businesses would be lobbying their state to open their exchanges up too. So, people insured through large groups would have a stake. (In any case, they have a stake because they could be laid off and need individual coverage in the future.)

I can't see how making the case does anything but good. Adding a public option has no downside for the consumer. Advocating it moves the debate to a better place. I've already described what's wrong with advocating a very limited PO. (You lose the best argument for it -- the cost controlling power of size.)

When Dems are proposing something that economists agree would control costs more effectively than anything currently on the table, nobody can accuse them of having no "ideas." (And we are being accused of that -- that all we are is "opposition.&quot

Does advocating the addition of the public option mean they'll get legislation passed in short order? No. With enough public support, it could happen next session, but would likely take longer. But we'll never get there by keeping silent.

Giving people hope and direction is what it's all about. The message: "Hey, don't allow powerful industry interests dictate what you can have! People-power is what gets the big thing done!" inspires hope and confidence that's infectious. A lot of those swing voters you are worried about would be "infected." Of course, if we aren't advocating some big things, we aren't sending that message.

Ultimately, demonstrating leadership, strength, and confidence is appealing in and of itself. That the direction and proposals would make real, positive, changes in people's lives is wonderful. But, in truth, more people vote for someone because the seem "strong," or "are willing to take a stand." than because they support nuances of this or that proposal.

Talk about specifics like subsidies for all, and/or public option gives us a platform for helping Americans redefine who we are in ways that point us in the right direction. These are proposals that can be tied to some fundamental principles. We need to get clear about where we want go, and get buy-in on the goal. Objections to this or that specific proposal can then be met with "We think this is the best way to get to X. But if there are better ways to get there, we'll find them." Then when people are voting for you, they are voting for the goal, not a particular way to achieve it. That's how you set the stage for meaningful change. That's how to establish a bedrock from which you can tear down "competing" ideas from "them" that are antithetical to the fundamentals.

Related post:

http://www.democraticunderground.com/?com=view_post&forum=1002&pid=8773578

[AJT]

3. Means testing turns social security into a welfare

program instead of a retirement program. NO MEANS TESTING, raise the cap.

[CousinIT]

23. BINGO. n/t

[pnwmom]

5. Thank you. Excellent post. nt

[Warpy]

6. Absolutely no means testing, ever

It's insurance, like your car insurance. How would these people like it if Geico called them after a wreck and said "well, we see you have a decent portfolio so you don't need us to pay for repairs or a new car." Or life insurance, "We're sorry your daddy was worked to death on the job and died of exhaustion at his desk, but we think his salary was high enough that you don't need any more money."

Social Security is no different. It's old age insurance. Many people who pay in won't get there, thanks to accidents and illnesses. Everyone who does get there and has paid a lifetime of premiums should be able to collect when it's time.

No exceptions.

[pat_k]

9. Good way to frame.

I've always felt that "insurance" was a bit of a misnomer. I would have preferred if it had been called something like Social Security Income and Disability Insurance. But I like your take on it being insurance with "attaining the age 65" being the triggering "event." (Emphasizing the point that some of us won't get there.)

[Warpy]

10. If you find yourself talking to a moron

do use the car insurance comparison. It does seem to wake them up, if temporarily.

[SMC22307]

7. Thanks for setting the pro-means testing folks straight! (n/t)

[pat_k]

16. Sigh..

Sixty votes (and counting) for a post advocating means testing. Five for one opposing.

DU has become a bit of a foreign land to me.

[SMC22307]

18. LOL, agree. Many are on the pro-Lindsey bandwagon...

because of Russia or some such bullshit. Big deal -- Trump out and Pence in. Lindsey's still not any Democrat's friend.

[pat_k]

20. Well, he can be pretty funny when he's looped,..

whch he used to be about 100% of the time. (Seems to have sobered up a bit.)

[SMC22307]

21. Heh. And Jon Stewart does a wicked impression...

ol' Lindsey's good for that!

[Gabi Hayes]

12. raise

the

cap

[pat_k]

13. Yep.

There is so much support for it. It is one of those things the Dems need to be out there advocating -- loud and proud. They need to be calling on voters to elect more Dems to get it done; and excoriating republicans for efforts to f-up SS.


http://www.cbpp.org/research/social-security/increasing-payroll-taxes-would-strengthen-social-security#_ftn6

More than seven in ten registered voters say Social Security benefits should not be reduced in any way, including 68 percent of Republicans and 72 percent of Democrats. (Pew Research Center, “Campaign Exposes Fissures Over Issues, Values and How Life Has Changed in the U.S.,” March 31, 2016, http://www.people-press.org/2016/03/31/3-views-on-economy-government-services-trade/.) More than eight in ten — including 74 percent of Republicans and 88 percent of Democrats — agree that “it is critical to preserve Social Security even if it means increasing Social Security taxes paid by working Americans.” (Jasmine V. Tucker, Virginia P. Reno, and Thomas N. Bethell, “Strengthening Social Security: What Do Americans Want?” National Academy of Social Insurance, January 2013, https://www.nasi.org/sites/default/files/research/What_Do_Americans_Want.pdf.)

[WinkyDink]

24. Wait until many of us placed in the "Well-to-Do" category.

[JHan]

26. massive K & R

[Hoyt]

27. So that means if the cap is removed, people who pay more will get more?

I basically agree, but Trustee projections show that will only solve 70% of Social Security deficits in future.

[USALiberal]

28. They should get more. SS is earned. Bill Gates deserves it as much as I do. IMO. n/t

[Hoyt]

29. Fine, then we will need other ways to prevent shortfall than just increasing cap.

Yet no one wants to talk about that.

[USALiberal]

30. How about stop raiding it for other government programs? nt

[Hoyt]

31. Sorry, but that is not the reason for the shortfall. Being repaid for that is considered

a program asset. Shortfall is on top of that.

[USALiberal]

32. OK, thanks for the info. n/t

[pat_k]

33. Some of the options.

Some of the options discussed here:
http://www.cbpp.org/research/social-security/increasing-payroll-taxes-would-strengthen-social-security

The main ones discussed:

Raise contribution/benefits cap
For example, raise the tax cap to cover 90 percent of aggregate earnings (would be 270,000 currently), and replace earnings at same 15% rate that is applied to earnings over second "bend point" in formula. If gradual increase to 90% level, it would close about a quarter of Social Security’s long-term shortfall. Faster increase to that level would close more of gap.

Raise contribution/benefits cap + lower replacement rate for earnings over current cap.
To close more of the gap, add a "bend point" at current cap level and replace earnings from old cap to new cap at 7.5%. There is no specific estimate for how much more of the gap this would cover.

Sanders' proposal was to gradually eliminate contribution cap, but keep same benefits cap. IMO, decoupling contribution from benefits in that way could endanger the program.

Raise rates.
Yeah, sucks, but raising the cap doesn't get us there. For example, raising rates 0.1 percentage points per year until the combined payroll tax rate reaches 13.0 percent would close one-fifth of the solvency gap. Continuing to raise the rate at that pace until it reached 14.8 percent would close two-thirds of the gap

One thing I think needs to be noted is that Social Security is actually in pretty good shape financially Right Now. It is the 75 year projections that are worrisome.

A SUMMARY OF THE 2016 ANNUAL REPORTS
Social Security and Medicare Boards of Trustees

https://www.ssa.gov/oact/trsum/

Highlights:

In 2015 $23 billion more flowed into the system than was paid out as benefits.

OASDI finished 2015 with more than $2.8 trillion in excess cash reserves.

OASDI will be cash flow positive through 2019

75-year OASDI actuarial deficit of 2.66% (That means in absence of any other change, rates would need to be raised 2.66% to preserve cash reserves and stay solvent for 75 years). If nothing done, actuarial deficit is projected to deplete cash reserves by 2034. (Once again, that's if no changes at all are made between now and then.)