Targeting Social Security, Retirement Age and Medicare

Paulie Brading

Well, that didn't take long.

The Commission on Fiscal Responsibility released their report today. Extreme economic inequality is about to become even more extreme if the Commission proposing reductions in medicare and social security have their way.

The middle class is shrinking and poverty is growing. The G.O.P. is calling for more Bush-era tax cuts and jacking up defense costs on the backs of senior citizens.

Do you have grandparents, parents or aunts and uncles dependent upon their social security check? Have you met a 65 year old who doesn't like their Medicare benefit? Just asking.

Comments

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    I'm truly curious to see how SS is going to be dealt with. It's not something that, as a young man, I include in my retirement planning. I'm just not convinced it can stay solvent, given the disparity between the population of soon-to-be retirees and the workforce needed to cover those costs.

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        the problem can also be fixed by recognizing that the US is no longer an agrarian or heavy manufacturing society and raising both early retirement and full retirement ages from 62-66-70 to 65-69-74. The average lifespan also has increased in the past 45 years, that is the real problem.

        Means testing for SS would also be something that could/should be on the table.

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          I agree with means testing but not the age limits. I'm seeing the toll that the current economy is taking on people who will be affected by these age changes, and I suspect that disability programs will be getting hit heavy instead.

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        Excellent comment and you are totally correct.

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      Jason, when I was your age I also assumed that social security was not worth much and probably wouldn't be there for me. Now I am 66 and will be eligible when I am 67. (Most people think 65 is the number and it is not. There are also incentives to wait until after 67.)

      When the market was crashing in 08 I was very pleased to know that I had a security cushion even though I have saved a lot over my life time and have a good retirement fund of my own. However, most of it is invested in equities or bonds that collapsed in 08. While they have since recovered I remain grateful for that cushion called social security.

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      Jason, while you're right to worry, one perspective to keep in mind is that I've been hearing worry about SS solvency since I was in college during the 70s (my parents were retired then; both of them were amongst the original taxpayers into SS). As the child of retirees, I was amongst the last to receive a Social Security benefit for college funding. I had originally objected but my parents told me that I shouldn't count on SS being around when I was their age, and since they'd been payers into the system since the beginning, they bloody damned well wanted to make sure I benefited (my siblings are significantly older than I am, and both have been able to draw SS benefits on their retirements. I still have over 10 years to go).

      So I have always gone into it with the view that I couldn't count on SS when I retired...and that was from the 70s.

      Nonetheless, what's happened in the 30-some years between then and now is that SS keeps on going, thanks to corrections like ending the student benefit program for children of beneficiaries. Yeah, I benefited, but really? It was a drain on the system, and it knocked me out of contention for other financial aid, plus I was under the same limitations as my parents with regard to outside work and its impact on my benefits. Once my benefits ended, I could take advantage of student loan programs I didn't qualify for originally, as well as work-study programs.

      What I see with these proposals is a necessary correction of the ilk that we've needed to face up to as a country. The only provision I really don't like is raising the benefit age to 69. While that's not going to be as significant for white-collar workers (though stress may take an unexpected toll as more people end up drawing disability instead), for working class and blue collar workers that's got a horrific potential.

      Realistically, I think most people my age (early 50s) do not anticipate a leisurely retirement. I expect to be working at something or other for the rest of my life. Part of my legacy at being born during the big tail-end of the Boom. Even my peers five years older have a better chance of a leisurely retirement than I do--and those peers are also worried about needing to do something that isn't the career they retired from for an income.

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    Soc. Sec. is fully solvent until 2037. After that, even if no adjustments are made it is 78% solvent. That said, there's an easy fix, which is popularly supported. Raise the FICA tax limit above $100 thousand.

    However, Soc. Sec. is not contributing to the deficit so it shouldn't even be considered by this commission. In fact the draft report specically states Soc. Sec. adjustments will do nothing to help the deficit.

    But no worries.. this thing is DOA. No one is going to sign on to this idiocy. The real roadblocks are not policy but political. The GOP will never support any revenue increase, or cuts to the military, and the Dems are going to defend Soc. Sec., Medicare, and Medicaid to the last person. I'm doubtful that the commission will find the votes to pass on a majority report. The Dems are already giving it a thumbs down.

    In the meantime if anyone in Washington were serious about the deficit, the Clinton tax rates would be reinstated without argument.

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    I haven't heard Republicans say much about cuts to SS. Their biggest issue is de-funding, or repealing the healthcare bill, and starting over. That's been their theme since election night.

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      Only one problem, the vast majority of people like the individual elements of the reform[except the fine for not having insurance].

      Article Here

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        No, most people don't 'like' the individual elements of HCR. This is just another progressive pie-in-the-sky wish. Many thin if repeated often enough that it will become self actualizing.

        Many see the coverage on mommy and daddy to age 26 as an extension of the couch surfing mindset the current 20 somethings already have ingrained. It really is far too late for these 'kids' to be mooching off of their parents with government edict.

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          Many see the coverage on mommy and daddy to age 26 as an extension of the couch surfing mindset the current 20 somethings already have ingrained.

          Citation?

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    Paula, I don't want to be accused of arrogant academic elitism, but I have to ask if you read the report at all? (The HuffPost link does not work by the way, but it's just a short story wondering if tea party folks will object to cuts in SS and medicare.)

    Your glib description seems more designed as a set of talking points and not as a way to resolve the long term debt trap that this nation faces as the baby boomers retire.

    Contrary to Paula's description, the Commission report:

    It suggests dramatic cuts in defense spending (100 billion).

    It suggests changing the FICA formula to capture a greater proportion of income (currently none after 106k). This will reduce inequality.

    It proposes a wage indexed floor benefit and an income pegged formula, so wealthy retirees don't get the same benefit as poor retirees. This will reduce inequality.

    It proposes an earlier retirement age for those in labor intensive occupations, who cannot reasonably wait until 67 to retire. This is a benefit directly targeted at working class laborers. This will benefit the working class.

    It proposes an increase in the Federal gas tax which will wean us from our dependence on foreign oil.

    And the Medicare savings reflect changes to the program already included in the health care reform.

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      Paul -- Thanks for your comments. Reading the HuffingtonPost today I almost thought the HuffPo were covering a different Commission report. Far from being a strictly Republican document, the deficit commission recommends limiting mortgage interest tax-deductions (which favor more wealthy people) and cutting $100 billion from the Pentagon. These are not exactly G.O.P. talking points.

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      I also appreciate getting a more complete look at the proposals. The blogs on the left just totally dumped on the report, but provided very little detail. It will be interesting to see how it is analyzed by the main stream media. I am willing to take a wait and see approach.

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      Yeah I read it. The last thing we should do is take more money out of middle class pockets in the name of a conservative tax cut agenda that favors the wealthy. Real budget reform allows the Bush-era tax cuts for the wealthiest two percent of earners to expire as they were designed to do.

      The corporate tax rate is reduced in the proposal with research tax breaks extended for the corporations.

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      It also proposes scraping all deductions in income taxes such as mortgage interest, etc. It is a disaster of a "plan". The only things worth merit at all in this "plan":

      • Increase the Social Security contribution ceiling: while people only pay Social Security taxes on the first $106,800 of their wages today, that's only about 86% of the total potentially taxable wages. The co-chairs suggest raising the ceiling to capture 90% of wages.

      • Reduce farm subsidies by $3 billion per year.

      • Cut $900 million in fossil fuel research funds.

      • Reduce procurement by 15 percent, or $20 billion.

      • Eliminate the V-22 Osprey program.

      • Cancel the Marine Corps' Expeditionary Fighting Vehicle program.

      • Halve the number of F-35 Joint Strike Fighters in favor of F-16s and F/A-18Es.

      • Cancel the Marine Corps F-35 program.

      • Cancel the Navy's Future Maritime Prepositioning Force.

      • Cancel the new Joint Light Tactical Vehicle (JLTV), the Ground Combat Vehicle, and the Joint Tactical Radio.

      • Reduce military forces in Europe and Asia by one-third.

      • Send all military children based in the U.S. to local schools.

      The rest that have been made public are (or should be) DOA and more than a few, down-right insane.

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        The military doesn't even want the Osprey v-22 or the F-35. These are political pork barrel projects for legislators to brag about bringing home the bacon.

        End US occupation of Japan and Okinawa entirely, Recognize that the cold war really is over and reduce NATO forces and German occupation by 50%. Seriously consider withdrawal from Korea.

        Unfortunately having military kids go to town schools is aleady occring in many areas of the US. Dumping the remainder of military school children into local publice education could prove too much a strain to local public ed.

        End the corn ethanol subsidy immediately and cut the farm subsidy program.

        Suspend all foreign aid (with the exception of humanitarian emergency aid) for 2 years.

        Eliminate second home mortgage deduction. Curtail home mortgage amounts eligible to first $1MM in loan amount.

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    I fixed the link.

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    I am encouraged by the report. I think the US needs to get its long term deficit under control (after more short term, deficit increasing stimulus to get the economy booming again). We need to make a lot of hard decisions. This report has put them before us.

    I understand that it proposes $3 in spending cuts for every $1 in tax increases. I'd probably prefer slightly less cuts and slight more taxes.

    Although defense budget cuts are included (yes), funding for the Afghanistan and Iraq war was not. We should, of course, end those wars and gain those cost savings.

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    Social Security is not causing our deficit problems. It should not included in these cuts. An increase in the retirement age is a cut. Try getting a job when you are in your 60s! Also eliminating the COLA for Soc. Sec. is a cut.

    Dems won't support the Soc. Sec. Medicare cuts and the Rs won't support the military cuts. Cutting upper income tax rates is a non-starter. Initial reactions from both parties indicate this is not going anywhere.

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      What crap. Social Security is not a long-term problem debt wise. As I noted up-thread, removing the cap on FICA makes Social Security solvent in perpetuity, and is currently in surplus and has no impact on long-term structural debt. That the debt commission even brought Social Security into the scope of what this commission was tasked with is a diversionary move by the "kill the New Deal" crew (ala Simpson).

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    Paul, using means testing on Soc. Sec. is a great GOP talking point. Soc. Sec. is not a welfare program. It's an income insurance program for all Americans for retirement, for disability, and for orphaned children.

    As for the treasury notes that the Soc. Sec. fund holds, why should those be any less honored than what the Chinese holds or any investor holds. I frankly don't buy what you're selling. And I don't find it the least bit progressive.

    I repeat, Soc. Sec. is not responsible for the deficit, and its sustainability is not dependent on cuts. If the govt. exchanges treasury notes to borrow money from the Soc. Sec. trust fund to fight wars, then by God the govt. can pay it back, just like it does other debtors. Retirees, the disabled, and orphans don't have to go to the back of the line when it comes to honoring commitments.

    You might be buying this piece of crap from the co-chairs of this commission , but the Dem. leadership won't buy it, and neither will the GOP leadership. There won't be the 14 votes to even get it to the Congress. This draft proposal is DOA.

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    So much for President Obama's bipartisan blue-ribbon commission, the budget experts they listened to, the 75 groups, think tanks, policy experts and individuals they solicited testimony from and the enormous and extremely serious proposal they came up, noting:

    "The Problem Is Real –the Solution Is Painful –There’s No Easy Way Out –Everything Must Be On the Table –and Washington Must Lead."

    Most of what I see here is a quick toss in the trash.

    So goeth the country.

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      As long as the GOP is insistent on protecting their primary constituency at all costs, the wealthy, there will be no political resolution to long term deficits.

      The long term deficit problem started with Ronald Reagan and his tax cuts for the wealthy, and instituting a long term increase in the military budget. At the time George Bush the first rightly called it "voodoo economics" and he was right. Sen. Howard Baker of Ten. called it a "riverboat gamble". But it was based on "trickle down economics" which has never worked. Since then it's been the policy of the Republican Party and they've sold it to the American people.

      It's borrow and spend economics. Bill Clinton reversed it with his tax increase and the country benefited, until the travesty of the election of GWB. And his attitude was summed up by Dick Cheney in his comment to the Treasury Sec. "Ronald Reagan proved deficits don't matter." The root of our problem is a political one, not a policy one. Republicans don't really believe in eliminating the deficit. And any cuts in government services they want to fall on the middle class. And they want the middle class to increasingly shoulder the burden of taxation. Which they have done.

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    I would simply add that what Paul Gronke is so enthusiastic about, cuts in Social Security and increase in the retirement age is universally opposed by large majorities of polling, who also prefer increases in taxation to maintain current levels of benefits. Any party who cuts social security is going to feel the full wrath of the American people. And they should.

    I would repeat what I said in a previous comment. Social Security is not a welfare program. It is an income insurance program for everyone, regardless of income. That's what makes it popular. And it was instituted and enhanced over the years to make sure that in old age you would have an income, or if you became disabled you would have an income, or if you died, your children would have an income. Woe unto anyone who wants to tamper with it! It is the most popular and most sustainable safety net we have in this country.

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      I agree that Social Security is all but politically untouchable, but I don't agree that it is an insurance program. Insurance by definition is a strategy of spreading risk to all those who might suffer a loss to indemnify the minority who do suffer loss.

      Social Security does not function like that, regardless of its misnomer. It is designed as an income transfer program from those who are working to those who were but are no longer working.

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        "Income Transfer", another right wing talking point. Your reasoning may play well with the GOP, who has always opposed Soc. Sec. but it doesn't play well with the vast majority of the American people. For those who pay into Social Security you buy the insurance that you will have an income at the rate you paid into it, that you will have an income if you are disabled, and that your children will have an income if you die. It's that simple and the obfuscation of the rabid right doesn't make it otherwise. So I suggest you sell your talking points to the Rush Limbaugh crowd, or maybe to Paul Gronke, who seems to be an anomaly on this forum.

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          I worked in insurance for several years. I know how insurance works. I've said this about Social Security years. It's nobody's talking point but mine, in my book.

          If Paul Gronke is an anomaly on this forum, you appear to win the award as most rigid.

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            Funny how your "talking point" is the same one the anti-New Dealers have been screaming for decades, and are both equally fraudulent.

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              Funny how I agree with you about removing the cap on earnings subject to FICA tax. I don't agree that it is "insurance." It is an entitlement/income-transfer program, of inestimable value that cannot be politically and should not be socially abolished, but fiscal changes including retirement age will have to occur.

              I personally find it rather abhorrent how onerous this tax has become on the working class.

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          Social Security is not an insurance program, it is an income transfer program.

          If you refuse to admit this, is is useless discussing the point with you. You are either misguided or purposely ignoring the facts.

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    This piece of garbage will be a non-starter according to this Commission member: http://www.enewspf.com/latest-news/latest-local/19826-rep-schakowskys-statement-on-fiscal-commission-co-chairs-proposal-to-address-deficit-reduction-.html

    Cut Medicare and Soc. Sec. - Not so fast! The senior population will really support larger co-pays when they already pay 30% of their income for health care?? That's progressive, Gronke???

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      Medical costs may well be crushing our country more than any other single factor, and, sadly, the "health care reform" made that only worse.

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        You're working overtime today as a rabid right troll.

        Wrong again. According to the CBO the Affordable Healthcare Act cuts the deficit. http://www.bullfax.com/?q=node-omb-aca-cbo-and-deficit

        "The OMB has dug into the CBO's projections for the Affordable Care Act, and they're pretty pleased with what they see. I'm going to quote the analysis, but if you just want to read one line, the ACA wipes out about a quarter to a third of our long-term deficit -- and that's in the nasty scenario, where we continue things like the Bush tax cuts and the Medicare doc fixes.

        • CBO projects that the Affordable Care Act will, unless Congress reverses some of its provisions in the future, reduce the long-term fiscal gap — the amount by which revenues must be raised or spending cut to produce a stable debt trajectory — by 2 percent of GDP over the next 75-years. (Between CBO’s long-term report from last year and its report from this year, the 75-year fiscal gap under the "baseline scenario" has been cut by 2.5 percentage points of GDP. There has been only one major change to fiscal outlook in that period — the enactment of the Affordable Care Act. And, based on both the CBO report’s narrative and backup data, the Affordable Care Act is responsible for about 2 percentage points of GDP of this deficit reduction.)"

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          You needn't question my motivations. My recollection is that the original CBO estimates were predicated in part on letting the Bush tax cuts expire, and it doesn't look like that will happen.

          Medical spending per capital in the US has been much higher than in most countries for a long long time, and the percentage it consumes of our GDP rising frighteningly. I don't see any of that changing.

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            You're a wealth of disinformation. The CBO report did not refer to the Bush tax cuts as a contingent factor in the deficit reducing aspects of the Affordable Healthcare Act. Your recollection is quite flawed.

            As long as we have a corporate insurance model of health delivery costs will never be contained. And we now have 60 million Americans with absolutely NO coverage, and at least 45 thousand who are dying annually from lack of coverage. (Bear in mind that those of us blessed to have coverage are paying for the growing number who don't.) The clamor will be to offer Medicare for all who need it, since Medicare is the only insurance system that does keep costs in check.

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              The original CBO appraisal certainly did specify that revenues would have to significantly increase for the model to be deficit neutral.

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                To wit:

                From the CBO Long Term Budget Outlook of June, 2010:

                This Congressional Budget Office (CBO) report examines the pressures on the federal budget by presenting the agency's projections of federal spending and revenues over the coming decades. Under current laws and policies, an aging population and rapidly rising health care costs will sharply increase federal spending for health care programs and Social Security. Unless revenues increase at a similar pace, such spending will cause federal debt to grow to unsustainable levels. If policymakers are to put the nation on a sustainable budgetary path, they will need to let revenues increase substantially as a percentage of gross domestic product, decrease spending significantly from projected levels, or adopt some combination of those two approaches.

                http://www.cbo.gov/doc.cfm?index=11579

                • (Show?)

                  More reason to not extend, let alone make permanent Bush's tax cuts for the wealthy:

                  More important, CBO assumed for this scenario that most of the provisions of the 2001 and 2003 tax cuts would be extended...

                  As you and I both talked about before, removing the FICA cap would take Social Security out of the equation (which as we both agree is not a part of the actual debt problem, even though CBO is mentioning it erroneously, the real driver is spiraling healthcare costs).

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                    How about this - either keep them all or cut them all. The tax cuts.

                    Of course that would be the wisest move from a deficit reduction standpoint. As it is making it a class warfare issue only saves the budget 70 Billion out of over 280 Billion.

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                The CBO also relied on the oft delayed 26% cut in medicare reimbursements to doctors. Yeah, like THAT is gonna happen!

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      Bill, can you provide a source for the 30% figure?

      Look, we just can't sustain Medicare at its current benefit level. If individuals are already paying 30% of their income and costs of Medicare are through the roof, then we need to contain costs.

      The current model is unsustainable. The current elderly won't support it--of course they won't.

      The current elderly are simply living off the incomes of the current working population. And by the time the fiscal time bomb blows, they'll all be gone.

      That's progressive? Mortgaging the future?

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        Our medical costs are on unsustainable overdrive. Try this for a dangerous political conversation: reining in the money spent basically torturing people in the last year of their life. It's exorbitantly expensive and it isn't good medicine.

        I wonder if Democrats would sound like Sarah Palin screaming death panels if the subject comes up.

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    This is what the American people think of cutting Social Security, recent poll by PPP:

    (Short version- tax the wealthy and cut the military before you cut Social Security. The Soc. Sec. cutting enthusiasts here, take note!)

    http://tpmdc.talkingpointsmemo.com/2010/11/poll-voters-would-rather-tax-the-wealthy-than-cut-social-security.php?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+tpmelectioncentral+%28TPM+Election+Central%29

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      Bill, are you saying we should make long term fiscal decisions on the basis of public opinion polls?

      Most citizens want to cut the budget but don't want to cut any programs. That is just not coherent.

      Most Americans also think Social Security is a pension program, not an income transfer program.

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        The long-term fiscal problems have nothing to do with Social Security. Social Security has not added a single dime to long-term debt. It has run at a surplus for decades and can be made solvent in perpetuity simply by removing the cap on FICA to the the first $106k.

        That the cat-food commission even brought Social Security into the discussion is a fraudulent bit of crap by longtime Social Security foe Alan Simpson.

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    So, extending the Bush tax cuts cost $7 Trillion over 10 yesrs. Why aren't the R's screaming about that? I agree with Mitchell. The cap on SS needs to be raised or eliminated. And Kurt's comments about the retirement age and means testing have merit. IMO, we must rein in military spending. I am reminded of Eisenhower's warning in his last speech as president about the military-industrial complex. I respectfully disagree with Bill. It is my understanding that most folks withdraw everything they paid in to SS within 4 or 5 years. So after that, it is an "entitlement" program. However, I do agree with Bill that SS is not part of the deficit problem. My understanding is it has been borrowed against. And I believe the R's want to access whatever is left and privatize it to benefit special interest groups (i.e. Wall Street). Just like some businesses have taken private pensions from their employees. I agree we need to get the deficit under control (Thanks for the legacy, GWB!) but with the likely hood of more gridlock the next 2 years and enough poison pills in the commissions report, so far, it is not likely this will create any real reform or common ground.

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      There is concern today that the administration may capitulate on the high end of the Bush tax cuts. I hope that is not true, but I'm betting that a capitulation on this in the form of making the upper end tax cuts permanent will result in Obama losing the nomination of the Dem. Party for a second term.

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    More on Social Security.

    http://www.thefiscaltimes.com/Issues/Budget-Impact/2010/11/09/Even-Liberals-Cant-Agree-On-Saving-Social-Security.aspx

    This report shows that the political divisions on Social Security are as much a product of Democratic unwillingness to consider any changes to the benefits as they are to Republicans inability to consider tax increases.

    It's also important to note, I think, that the last time we studied Social Security in 1983, the same set of suggestions were made as are going to be made by the bipartisan commission.

    And they were rejected then as well. The can was just kicked down the road for 27 years.

    Here we are again, lining up the kick....

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      The 1983 studies where about what to do to address the baby-boomers working their way through the system. That resulted in building up the trust fund through higher FICA withholding rates and gradually increasing the retirement age form 65 to 67 (which is already occurring) in order to be able to draw from (and draw down) which it can and will do. The trust fund is designed to go into deficit of revenue vs. outlays by design beginning in 2018.

      So you are comparing apples to kumquats.

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    More evidence that no one, except for Paul Gronke, is for cuts to Social Security, and a small minority of Republicans.

    From Survey USA: http://www.democracyforamerica.com/poll

    Even Republicans 2-1 favor raising the taxation limit to making cuts or raising the retirement age.

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      Bill you like to cite public opinion when it's in support of your position and ignore it when its in opposition.

      Most Americans want to cut the deficit ... yet no one wants to cut individual programs.

      There is actually a role for political leadership in educating and leading public opinion.

      Job number one here is to help most Americans, you included, understand that Social Security is an income transfer program, not a social insurance program.

      There is just no economic or social welfare argument for taking money from lower income young people and giving it to wealthy old people. And I really don't give a damn if the public supports such a policy.

      When you concoct such an argument, let me know.

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    Is poverty rising? Is it rising at a rate higher than other developed nations? I'd like to see some hard statistics.

    What is the official definition of poverty? I've seen poverty in third-world countries and they seem to be significantly more impoverished than people here who at least have access to clean water.

    If poverty is increasing, could it be due to unemployment? Is it due wealthy people not caring? Is it due to Americans asking what their country can do for them rather than asking what they can do for their country?

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    Bottom line, this draft proposal was not serious. It didn't address the revenue side of deficits, and it doesn't address the real problem, that the American people want an oversized military, and the services and safety net of government, but they've been convinced by the GOP that they don't have to pay for it.

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    It most definitely did address the revenue side as long as one took off their punish the rich lenses. There is a reduction in several tax deductions that high income earners derive greater benefit from along with a means to get greater over all revenue reported as US revenue through international operations. Then there is the $0.15/gal fuel tax.

    I would call a $100BB cut in military defense spending significant along with a 1/3 reduction in overseas military bases. An additional savings is found in the massive cuts called for in defense contractors as well as the 3 year freeze in pay for defense employees (along with the rest of the federal government).

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    As I understand our long-term budget dilemma, it is largely caused by the ever increasing costs of Medicare and Medicaid and by two wars we have never funded. Our primary choices, other than when to end the two war, are to make cuts or savings in those medical programs beyond what health care reform will accomplish, to raise taxes, or to cut other programs (like Social Security). The soundness of Social Security can be fixed by tinkering, but, as a large program, small additional changes in it can save large amounts of money (which could be shifted to pay for health care or our current wars).

    I think the co-chairs reports puts a lot of specific choices out, plus proposals on tax reform. I like much of it and don't think we Democrats can just walk away from the issues. We can only hold Social Security harmless if we are willing to find money in additional taxes or cuts in other programs.

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    David, you and I agree but the political lines on this one are pretty clear.

    Our children will thank us.

    Not.

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    Just to show that Paul is not the only one saying we should give these deficit reduction ideas a fair shake, here is Oregon's very own Congressman Earl Blumenauer saying the same thing on the House floor yesterday: "Democratic Congressman Defends Debt Commission (NY TIMES)".

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