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Reich writes: "It has become accepted economic wisdom that the only way to get control over America's looming deficits is to 'reform entitlements.' But the accepted wisdom is wrong."

Portrait, Robert Reich, 08/16/09. (photo: Perian Flaherty)
Portrait, Robert Reich, 08/16/09. (photo: Perian Flaherty)


The Hoax of Entitlement Reform

By Robert Reich, Robert Reich's Blog

07 January 13

 

t has become accepted economic wisdom, uttered with deadpan certainty by policy pundits and budget scolds on both sides of the aisle, that the only way to get control over America's looming deficits is to "reform entitlements."

But the accepted wisdom is wrong.

Start with the statistics Republicans trot out at the slightest provocation - federal budget data showing a huge spike in direct payments to individuals since the start of 2009, shooting up by almost $600 billion, a 32 percent increase.

And Census data showing 49 percent of Americans living in homes where at least one person is collecting a federal benefit - food stamps, unemployment insurance, worker's compensation, or subsidized housing - up from 44 percent in 2008.

But these expenditures aren't driving the federal budget deficit in future years. They're temporary. The reason for the spike is Americans got clobbered in 2008 with the worst economic catastrophe since the Great Depression. They and their families have needed whatever helping hands they could get.

If anything, America's safety nets have been too small and shot through with holes. That's why the number and percentage of Americans in poverty has increased dramatically, including 22 percent of our children.

What about Social Security and Medicare (along with Medicare's poor step-child, Medicaid)?

Social Security won't contribute to future budget deficits. By law, it can only spend money from the Social Security trust fund.

That fund has been in surplus for the better part of two decades, as boomers contributed to it during their working lives. As boomers begin to retire, those current surpluses are disappearing.

But this only means the trust fund will be collecting from the rest of the federal government the IOUs on the surpluses it lent to the rest of the government.

This still leaves a problem for the trust fund about two decades from now.

Yet the way to deal with this isn't to raise the eligibility age for receiving Social Security benefits, as many entitlement reformers are urging. That would put an unfair burden on most laboring people, whose bodies begin wearing out about the same age they did decades ago even though they live longer.

And it's not to reduce cost-of-living adjustments for inflation, as even the White House seemed ready to propose in recent months. Benefits are already meager for most recipients. The median income of Americans over 65 is less than $20,000 a year. Nearly 70 percent of them depend on Social Security for more than half of this. The average Social Security benefit is less than $15,000 a year.

Besides, Social Security's current inflation adjustment actually understates the true impact of inflation on elderly recipients - who spend far more than anyone else on health care, the costs of which have been rising faster than overall inflation.

That leaves two possibilities that "entitlement reformers" rarely if ever suggest, but are the only fair alternatives: raising the ceiling on income subject to Social Security taxes (in 2013 that ceiling is $113,700), and means-testing benefits so wealthy retirees receive less. Both should be considered.

What's left to reform? Medicare and Medicaid costs are projected to soar. But here again, look closely and you'll see neither is really the problem.

The underlying problem is the soaring costs of health care - as evidenced by soaring premiums, co-payments, and deductibles that all of us are bearing - combined with the aging of the boomer generation.

The solution isn't to reduce Medicare benefits. It's for the nation to contain overall healthcare costs and get more for its healthcare dollars.

We're already spending nearly 18 percent of our entire economy on health care, compared to an average of 9.6 percent in all other rich countries.

Yet we're no healthier than their citizens are. In fact, our life expectancy at birth (78.2 years) is shorter than theirs (averaging 79.5 years), and our infant mortality (6.5 deaths per 1000 live births) is higher (theirs is 4.4).

Why? Doctors and hospitals in the U.S. have every incentive to spend on unnecessary tests, drugs, and procedures.

For example, almost 95 percent of cases of lower back pain are best relieved by physical therapy. But American doctors and hospitals routinely do expensive MRI's, and then refer patients to orthopedic surgeons who often do even more costly surgery. There's not much money in physical therapy.

Another example: American doctors typically hospitalize people whose diabetes, asthma, or heart conditions act up. Twenty percent of these people are hospitalized again within a month. In other rich nations nurses make home visits to ensure that people with such problems are taking their medications. Nurses don't make home visits to Americans with acute conditions because hospitals aren't paid for such visits.

An estimated 30 percent of all healthcare spending in the United States is pure waste, according to the Institute of Medicine.

We keep patient records on computers that can't share data, requiring that they be continuously rewritten on pieces of paper and then reentered on different computers, resulting in costly errors.

And our balkanized healthcare system spends huge sums collecting money from different pieces of itself: Doctors collect from hospitals and insurers, hospitals collect from insurers, insurers collect from companies or from policy holders.

A major occupational category at most hospitals is "billing clerk." A third of nursing hours are devoted to documenting what's happened so insurers have proof.

Cutting or limiting Medicare and Medicaid costs, as entitlement reformers want to do, won't reform any of this. It would just result in less care.

In fact, we'd do better to open Medicare to everyone. Medicare's administrative costs are in the range of 3 percent.

That's well below the 5 to 10 percent costs borne by large companies that self-insure. It's even further below the administrative costs of companies in the small-group market (amounting to 25 to 27 percent of premiums). And it's way, way lower than the administrative costs of individual insurance (40 percent). It's even far below the 11 percent costs of private plans under Medicare Advantage, the current private-insurance option under Medicare.

Healthcare costs would be further contained if Medicare and Medicaid could use their huge bargaining leverage over healthcare providers to shift away from a "fee-for-the-most-costly-service" system to a system focused on achieving healthy outcomes.

Medicare isn't the problem. It may be the solution.

"Entitlement reform" sounds like a noble endeavor. But it has little or nothing to do with reducing future budget deficits.

Taming future deficits requires three steps having nothing to do with entitlements: Limiting the growth of overall healthcare costs, cutting our bloated military, and ending corporate welfare (tax breaks and subsidies targeted to particular firms and industries).

Obsessing about "entitlement reform" only serves to distract us from these more important endeavors.


 

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+107 # ThinkRodan 2013-01-07 10:45
Why does everyone forget CORPORATE WELFARE,the system which transfers VAST AMOUNTS of wealth to those so-called "small-business "companies like OIL COMPANIES?
 
 
+72 # Eldon J. Bloedorn 2013-01-07 11:55
Since we are talking corporate welfare, why are we not asking who got the "spoils" of war with Iraq? Did Bush/Cheney and their thugs "legally" take over Iraqi oil, oil contracts? Why are these questions not being asked? Former president Gerald Ford made a comment that struck me:" any and all wars are fought over natural resources."
 
 
+14 # Christopher Warren 2013-01-07 14:12
How about the entire tax credit loophole give aways in every nook and cranny of our economy! Federal! State! County! CITY! Everybody bribing their way to the Race for the BOTTOM!
If we all paid what we owe at the basic rate in our income bracket, without deductions of any type for 2 years I'd bet the Deficit would disappear.
Meanwhile back at the Congress those years could be devoted to finer tuning for present desired social outcomes and gains of the commons. (Like,Bridge Maintenance!?)
 
 
+10 # Rita Walpole Ague 2013-01-07 18:28
Yep, ThinkRodan, we's still naive as hell. The staph infection of greed and power over all addiction has to be recognized and treated with total determination and courage on the part of all we the sheeple, regardless of political persuasion or the lack thereof.

I wanted to vomit when a great administrator at the Mayo Clinic in AZ educated me on 'healthcare's most wanted' listing - the med/pharma rip offs so egregious these sick and then some days.

Thank Prof. Reich, for the umpteenth time, for assisting us in taking off the La La Land blinders.
 
 
0 # NOMINAE 2013-01-10 15:48
Quoting ThinkRodan:
Why does everyone forget CORPORATE WELFARE,the system which transfers VAST AMOUNTS of wealth to those so-called "small-business"companies like OIL COMPANIES?


The author writes "ending corporate welfare (tax breaks and subsidies targeted to particular firms and industries)." In the second to last paragraph.

Therefore it is obvious that not "everyone" is "forgetting CORPORATE WELFARE." as you opine, and seem to have convinced 99 (at present count) "readers".

This phenomenon once again underlines the vast chasm that exists between the art of reading, and that of reading comprehension. The problem might be alleviated with a plan as simple as actually reading the article TO the end before offering outraged comments on what you *think* it does NOT include !
 
 
+94 # jjj 2013-01-07 10:59
Let's drop the inaccurate term "entitlements" for Social Security and Medicare. Most of us have paid into these programs all our working lives- they are more like trust funds. Entitlement reform would be more along the lines of eliminating the lifetime retirement-with -full-salary and blue chip medical coverage that Senators and Congresspeople get. And they get it even if they serve only ONE TERM.
But yes the major point here is the cost and quality and practicality of US's healthcare system and once again Mr Reich is largely correct.
 
 
+42 # mdhome 2013-01-07 11:59
Having worked hard and saved what little I made which was destroyed in '08, I have the grand total of $8,000/yr to live on. Hips, knees and back have all had it. Sure go ahead and take away my SS, I will be left with one resort to keep from starving. Thank you!
 
 
+23 # jjj 2013-01-07 12:50
Quoting mdhome:
Having worked hard and saved what little I made which was destroyed in '08, I have the grand total of $8,000/yr to live on. Hips, knees and back have all had it. Sure go ahead and take away my SS, I will be left with one resort to keep from starving. Thank you!

md I think you misunderstood? I am not saying we mere mortals should lose any of our SS and retirement medical benefits. I am contrasting what we receive with what Senators and Congressmen receive in retirement. They should not receive more than we- yet they do.
 
 
+37 # bobhintz 2013-01-07 12:02
But it is entirely accurate - It is just being misquoted and misused. At it's inception Social Security was called an entitlement. It is a trust fund that, having paid into all of your working life, you are ENTITLED to withdraw from it an income at retirement.
 
 
+4 # Lowflyin Lolana 2013-01-09 23:30
"Entitled" has a weird connotation. In our current culture, the way the word is used, it's made to sound like the opposite of what it really is.

That's why this word should be dropped. It was never used before----I never heard this word in the 90's. They started calling it "entitlements" in the media, with a sort of sneer in the voice, sometime over the past decade.
 
 
+10 # Smokey 2013-01-07 12:58
[quote name="jjj"]Let' s drop the inaccurate term "entitlements" for Social Security and Medicare."

I prefer the term "human rights programs." Might work in Europe. However, the term may be a bit too radical for most Americans, including some "liberals." So we may be stuck with terms like "entitlements" for a few more seasons.
 
 
+18 # Sensible1 2013-01-07 16:33
Forget the terms we are allowed to use, such as rights or entitlements; it should always be referred to as "EARNED BENEFITS!" When congress starts talking about entitlements as earned benefits, suddenly it sounds wrong to be cutting or reforming them.
 
 
+77 # pb83 2013-01-07 11:02
One of the biggest unstated crimes of the past 40 years is the systematic dismantling of retirement benefits. Social Security has become the retirement for many seniors of Baby Boom age because private industry gutted the plans that were supposed to bring comfort in old age. And as wages fell those who had 401K plans have raided them to pay for houses (which lost value) or education (that did not result in increased income). Now the GOP wants to gut SS and Medicare just when they are needed more than ever because of the bad policies that destroyed the only alternatives to relying on them.
 
 
+71 # Regina 2013-01-07 11:03
"Entitlement" means having title to some service -- prepaid! The conniving politicians braying against "entitlements" are seeking to rip off those "entitlees" who have prepaid for services, notably Social Security. Our elders are NOT freeloading. People driven into poverty DESERVE assistance -- they did not cause their impoverishment when the economy tanked. That assistance is not (technically) an "entitlement" but it is human decency. As the article suggests, human decency can be offset financially with curtailment of inhuman indecency, notably our "bloated military" and our corporate slush.
 
 
+53 # BradFromSalem 2013-01-07 11:04
The absurdity of the meme that the only solution to our economic problems lies in destroying anything that benefits poor people first, then middle class, and only as a last resort do the people that have money get asked to chip in a penny or two is the crowning achievement of the Radical Right. It has been so successful that when a total doofus like the Senate Minority Leader, as only one example among many others, states we have a spending problem; nobody challenges him. Granted, they all do avoid being interviewed by anyone that would ask that question.

The upcoming Debt Ceiling fantasy will again feature Republicans screaming that we must, must, MUST make cuts to the wasteful items that Robert Reich named. When challenged on what to cut, they are all too chicken to actually name a cut. Instead, they put the onus on the President to make thew cuts in the programs they want to cut.

This has to stop. If they know what needs to be cut, then propose it. They are terrified of the public backlash. While I disagreed with Obama's proposal to take a slice from SS benefits, at least he had the balls to put it out where we knew what it was.

Does anyone know specifically what the Republicans will cut?

The solution is to spend into full employment, recycle the paid back bailout money into the economy at large. Every day we delay, the costs of a full recovery get higher.
 
 
+24 # jky1291 2013-01-07 11:26
Equitable and Logical Program Reform

The majority of working taxpayers in this nation pay Social Security and Medicare taxes on 100% of their income their entire lives to earn the modest benefits of these programs that sustain them when they are no longer able to work. The 2% who vigorously resisted paying less than 7 cents per dollar above $250,000.00 pay these taxes on less than 45% of their income, while those receiving $1,000,000.00 pay on barely more than 11%, and those collecting 10,000,000.00 are taxed on only 1.1% of their income for Social Security and Medicare. To address entitlement reform, eliminating the 99%+ tax break received by the wealthiest 1%er's would essentially eliminate the unfunded liabilities in Social Security and reduce the federal deficit and national debt substantially by equitably funding Medicare. (Social Security and Medicare taxes applied to approximately 1/2 of 1% of Mitt Romney's income.)

The SignOn.org petition below might suggest the solution to many of these problems by providing the greatest detriment to the Republican obstructionists talking points: TRUTH!!!

http://signon.org/sign/equitable-and-logical?source=c.url&r_by=1279693

Add your support to the petition if you agree this is the appropriate means to frame the debate and redirect the discussion.
 
 
+16 # jky1291 2013-01-07 12:26
Equitable and Logical Program Reform

To President Barack Obama, House Representatives , and Senators,

Whereas there is great concern for the sustainability of Social Security and Medicare due to unfunded liabilities, and in consideration of demands for reform to strengthen those programs for future generations, and in consideration of the burden on our budget deficit and national debt due to persistent high unemployment:

Be it proposed that all exemptions of income subject to Social Security and Medicare taxation be immediately eliminated and the $110,100.00 cap on income subject to such taxes be permanently removed, thus equalizing the percentage of income upon which all income brackets are fairly paying to support these programs that benefit all the citizens of our nation.

Furthermore, be it proposed that the Social Security retirement age be returned to 65 years for 2 years in order to simultaneously reduce both the deficit and unemployment through eligibility of more than 2% of the workforce to voluntarily relinquish their jobs to be filled by the unemployed, while massively increasing the economic impact of their Social Security benefits spending from the increased funding resulting from taxing all income brackets equally.

http://signon.org/sign/equitable-and-logical?source=c.url&r_by=1279693
 
 
+7 # Mannstein 2013-01-07 21:39
In the meantime guys like Senator Lindsay Graham from SC is ready to launch of to war with Iran so as not to let down Netenyahoo. Say Lindsay, where the hell is the money going to come from for that next fiasco? Oh I forgot patriotic seniors are ready to step up to the plate. And these dolts continue voting for clowns like Lindsay.
 
 
+46 # engelbach 2013-01-07 11:05
Thanks, Bob.

Your detailed analysis has its only logical conclusion: We must not cut benefits.
 
 
+5 # jtatu 2013-01-07 11:19
Is there no interest in establishing and investing in programs that encourage young people to complete their educations before getting married and to get married before having children?
 
 
+33 # jjj 2013-01-07 11:23
Additional note- I am SO READY for Mr Reich to be back in government service. His clear eyed practicality is badly needed there.
 
 
+8 # oprichniki 2013-01-07 11:37
Most politicians and public officials were not physics majors.
 
 
+20 # bobhintz 2013-01-07 11:43
There is more to this than the IOUs on surpluses lent to the rest of the government. And it provides a third way to meet future deficits on Social Security.

THE SO CALLED “TAX ON SOCIAL SECURITY” IS REALLY A TAX ON OTHER INCOME, for those who can afford it. This tax makes up for the tax free social security received by these individuals, by increasing marginal tax rates, until they have “paid taxes on 85% of their social security benefit.” As such, these revenues should rightly go into the Social Security Trust Fund as recovered benefits. Instead they go into the General Fund as revenue.

Treating these monies as revenue is an unfair and unjustified ripoff of seniors. Treating them as recovered benefits and depositing them into the Social Security Trust Fund is the right and fair thing to do.

AND IT WOULD PROBABLY CURE ALL FUTURE INSOLVENCY PROBLEMS FOR SOCIAL SECURITY.

I could even argue for going back some years and redepositing misdirected “revenues” into the Social Security Trust Fund to recover past misappropriations.

There is little doubt in my mind that the value of the IOUs to the rest of the government would be significantly increased, probably doubled or more.
 
 
+4 # bbhaywood 2013-01-07 11:48
Reich avers that a single-payer-fi nanced national health service is lynchpin of serious entitlement reform. But Reich yet shrinks from upfront advocacy of a social-democrat ic agitation, movement and party to ram it down the craw of finance capital.

bbhaywood
 
 
-14 # coberly 2013-01-07 11:59
I agree with Reich except when he says,

"That leaves two possibilities that "entitlement reformers" rarely if ever suggest, but are the only fair alternatives: raising the ceiling on income subject to Social Security taxes (in 2013 that ceiling is $113,700), and means-testing benefits so wealthy retirees receive less. Both should be considered."

Both of these "possibilities" would destroy Social Security by turning it into welfare. In fact the workers can continue to pay for their own Social Security... as they always have, as the system was designed... by raising their own payroll tax about one TENTH of a percent per year. In today's terms that is about eighty cents per week while wages are going up eight dollars per week.

This is the cheapest, sanest, fairest solution to the so called crisis in Social Security. Yet we never hear about it. The Big Liars want to destroy Social Security for what amounts to personal psychological reasons. And the left wants to destroy Social Security by turning it into welfare for what amounts to... personal psychological reasons.
 
 
+16 # dkonstruction 2013-01-07 12:52
"Welfare" as you call it is in fact the nature of the current SS system in which 100% of my (and the vast majority of all other Americans) income is taxed whereas those earning above the cap get a 100% tax break on all income earned above the cap. Only by going to a system in which all income is taxed will SS no longer be a system of welfare for the 1% (or in this case more like 2 or 3%).
 
 
-5 # coberly 2013-01-07 16:15
dkon

i think you have it backwards. welfare is when the rich pay for the poor. in fact "the rich" do not get more Social Security benefits than they pay for. In fact, as a percentage of what they do pay, they get considerably less than the poor.

It's all very much fun to grunt and shout about the evil rich, but you really need to learn what you are talking about.

Social Security was designed to be insurance paid for by workers exactly to protect it from "the rich" who, if they were paying for it would surely destroy it... by, say, means testing.

Even the AFL-CIO understands that means testing will destroy Social Security and Medicare.
 
 
+3 # BradFromSalem 2013-01-07 16:41
Coberly,

If what you call means testing is that you get SS income if your income is under some arbitrary number, then it would be a welfare payment system. However, there is no reason that the base value for SS can the cost of living as long as you worked a total of x hours and/or y years (not much different than now). The amount you receive each month is calculated on a formula where you get nothing above Cost of Living once all your income reaches the top bracket. If every tax dollar paid was subjected to an ss tax surcharge, then you could make any amount received over the cost of living taxable while doing the same for those not collecting ss. The idea is that while you may be paying out more, you are also collecting a lot more. My plan also covers being able to retire when you want with coinciding adjustments based on your age. To make it really effective add in a rule that changes the base age down each each year unemployment is too high. Tax codes must be made flexible to individual lifestyles not conforming everyone into the same straight jacket.
 
 
+5 # dkonstruction 2013-01-08 08:08
Quoting coberly:
dkon

i think you have it backwards. welfare is when the rich pay for the poor. in fact "the rich" do not get more Social Security benefits than they pay for. In fact, as a percentage of what they do pay, they get considerably less than the poor.

It's all very much fun to grunt and shout about the evil rich, but you really need to learn what you are talking about.

Social Security was designed to be insurance paid for by workers exactly to protect it from "the rich" who, if they were paying for it would surely destroy it... by, say, means testing.

Even the AFL-CIO understands that means testing will destroy Social Security and Medicare.


So, when "the rich pay for the poor" you call it welfare but when the rest of us pay for the rich (via tax breaks) this isn't welfare? when someone gets a tax break (in this case not having to pay taxes on income above roughly $113,000) it is essentially a subsidy, an "entitlement" paid for by the rest of us. You may want to believe that "corporate welfare" or tax breaks for the wealthy (or even for the middle class such as many receive via the mortgage interest tax deduction) isn't "welfare" but that's only because it is on the tax side of the ledger rather than on the spending side. But, it amounts to the same thing. The poor in this country are subsidized (to the meager extent that they are) via spending but the rest are subsidized via the tax code. Different name; same result.
 
 
-2 # coberly 2013-01-08 16:19
dkon

not quite. the rich no doubt don't pay enough taxes. but that has nothing to do with Social Security. Turn SS into welfare by making the rich pay for it and they will destroy it. right now only the crazy rich want to destroy it. make the not-crazy rich pay for it, and they will join the crazy rich.

just because you have a hammer doesn't make every problem a nail.

it is very important to understand that the "payroll tax" is not a "tax." it is an insurance premium. it is what you pay to insure yourself against poverty in old age. the rich also pay the premium. more than you do. they just don't pay the premium on every dollar they make, any more than they pay a million dollars for a loaf of bread just because they have a million dollars more than you do.
 
 
+1 # dkonstruction 2013-01-09 09:20
coberly,

i certainly agree that the issue of the rich not paying enough in taxes is completely separate from the issue of SS. And, i was not necessarily arguing that we should call for everyone paying into SS on 100% of all income (for as you point out, politically, this would lead the 1% to work to completely destroying it). I do think we could push for a modest increase in the cap that would solve the long-term (which is really only a temporary problem anyway...until us babyboomers die off...ugh) without risking the program as a whole.

My point though was simply that any tax break is no different than any "welfare" program other than how they are run i.e., "welfare" for the poor comes through gov't spending whereas "welfare" for the rich (or even the middle class) comes primarily through the tax code. Both are subsidies though and one of the problems i think is that welfare for the poor has been stigmatized whereas welfare for the rich and middle class has not in the same way.
 
 
+2 # Doctor J 2013-01-07 14:05
Quoting coberly:
I agree with Reich except when he says,

"That leaves two possibilities that "entitlement reformers" rarely if ever suggest, but are the only fair alternatives: raising the ceiling on income subject to Social Security taxes (in 2013 that ceiling is $113,700), and means-testing benefits so wealthy retirees receive less. Both should be considered."

Both of these "possibilities" would destroy Social Security by turning it into welfare. In fact the workers can continue to pay for their own Social Security... as they always have, as the system was designed... by raising their own payroll tax about one TENTH of a percent per year. In today's terms that is about eighty cents per week while wages are going up eight dollars per week.

This is the cheapest, sanest, fairest solution to the so called crisis in Social Security. Yet we never hear about it. The Big Liars want to destroy Social Security for what amounts to personal psychological reasons. And the left wants to destroy Social Security by turning it into welfare for what amounts to... personal psychological reasons.

Please tell us where wages are "going up eight dollars per week." With meager wages and lack of benefits, there are people who struggle to obtain food, shelter, and other necessities. There is nothing left over for anything else.
 
 
-1 # coberly 2013-01-07 16:11
Doctor J

the same Trustees Report that predicts the shortfall in Social Security also predicts wages rising 1.1% per year over the same time. 1.1% of 800 dollars per week is 8 dollars per week.

This is quite low by historical standards, and is part of the reason for the projected shortfall.

I have been dirt poor in my life, but never so poor i couldn't have found a tenth of one percent of my wages to guarantee my retirement.
 
 
+1 # SusanT136 2013-01-10 22:31
Is $800 a week your idea of dirt poor? People working full time but making minimum wage - $7.25 (nationally) to $10 an hour earn between $310 - $400 BEFORE taxes. After? $270 - $335.

If wages are predicted to rise 1.1% per year, that rise won't even keep up with inflation, which has averaged over twice that for the last 10 - 12 years. So that worker taking home $275 a week should look forward to their buying power eroding every year, plus losing another 1.1% to additional payroll taxes every year?
 
 
+2 # SusanT136 2013-01-08 10:17
Quoting coberly:
I agree with Reich except when he says,

"That leaves two possibilities that "entitlement reformers" rarely if ever suggest, but are the only fair alternatives: raising the ceiling on income subject to Social Security taxes (in 2013 that ceiling is $113,700), and means-testing benefits so wealthy retirees receive less. Both should be considered."

Both of these "possibilities" would destroy Social Security by turning it into welfare.


I agree with you - means testing is a bad idea. Medicare and Social Security are programs every citizen needs to be invested in & eligible to receive.

But I fail to see how raising the ceiling on income in any way threatens to turn SS into "welfare" since every citizen who pays in is eligible to receive benefits. In the last 20 years there has been a stagnation of (mid/lower level) wages & vast income gains made by the top earners. Historically there is now a significantly greater percentage of EARNINGS above the cap, although the percentage of the workforce paying in has remained relatively constant. Since many people are making a lot less, there is a lot less money paid in to Social Security.
http://www.forbes.com/sites/rickungar/2012/04/24/the-great-american-social-security-lie/3/

Why should workers at the bottom pay more when they have already essentially funded the astronomical salaries of upper level management?
 
 
+1 # coberly 2013-01-08 16:27
Susan T

You have to be careful of that "essentially funded" stuff. Sure, the rich live off the labor of the poor. But unless they actually steal it they have legal title to what they get. If you want to change the laws so it is harder for them to steal your money through low wages or deceptive prices, work for that.

But don't destroy Social Security in a blind rage at the rich. They would be glad to have you do that.

The workers pay for their own Social Security. They do not pay for "the rich." And it is desperately important it remain that way.

Raising the cap a little bit might be something you could sell those who make a little over the cap, IF you raised their benefits at the same time. It would amount to them deciding that the extra "tax" was worth the extra guaranteed benefit.

But just running around saying "scrap the cap" will make them angry and afraid that YOU are trying to steal THEIR money. Yep, that's the way they see it. And that will make them work for, or at least agree with, the crazy people... including Our President... who are trying to cut Social Security... maybe cut it to death.
 
 
+1 # SusanT136 2013-01-10 11:21
No one is in a "blind rage" or saying "scrap the cap". We're discussing raising the cap. SS benefits are calculated on earnings - raising the cap will raise the maximum benefit.

It's absurd to worry that "the rich" will be "angry and afraid" that people are trying to "steal their money". That tired sawhorse is already being used by the Repubs. You can't placate that beast - taxes are still low historically for inheritance and the highest income bracket and they're still crying.

Workers pay for their own SS. But as wages have been cut or stagnant while upper management has seen enormous gains in the last few decades, AND as massive numbers of boomers retire, something has to change. Otherwise SS benefits will fall until the program becomes meaningless. Eliminating SS is the ultimate goal for some, while for others it's privatizing SS so Wall St can make big money on fees.

If you read the link I posted, it was on Forbes magazine. Hardly a bastion of lefty thinking - THAT'S where someone intelligently observed that the income gains have all been at the top for at least the past decade, and THAT is what is defunding SS.

Exactly what is it YOU are advocating - taking more out of most people's already diminished paychecks?
 
 
+17 # JSRaleigh 2013-01-07 11:59
If they do go to "means testing", I hope they won't do it like the VA where you're penalized for having saved anything for retirement and having made all your mortgage payments on time.
 
 
0 # BradFromSalem 2013-01-07 14:12
Any means testing should be simple and not require the hiring of a single additional person to administer it.

Change the % paid to FISA as a flat percentage of taxes paid. All income being treated equally. Then pay out at whatever the cost of living is in the county you live in. You canm begin collecting at any age, except there is a 2% cumulative discount for each year before your 65th birthday you start to collect. If you collect after you are 65, then you get a .5% increase for each year; but it is counted as taxable income just like any other income. All this is calculated on your taxes.
 
 
+17 # bobby t. 2013-01-07 12:07
cut the bloated military budget? when pigs fly. Obama just signed a 600 billion plus budget bill last week. no discussion, no hand wringing, just sign here buddy. Is he part of the military industrial complex that Ike told us to beware of? of course he is...We have over 1000 military bases protecting our corporate interests all over the world. Time to stop this empire stuff and get real. We are in bad shape compared to the people out there who realize to get stuff they have to give money. We need higher taxes, not lower. That is what people here are never told. The idiots in New York City that pay city state and federal taxes which comes out to fifty percent, and then have to pay health insurance on top of that (15% more)are paying 65% of their salary before they see any money. Do they get free higher education? no.
do they get "free health care" no....I guess they missed fourth grade math.
Here we pay less taxes and are forced to pay extra for health insurance and higher ed which is crazy. Want a fancy school like Harvard, than pay for it. But all normal colleges and universities should be free. The governments should be paying them out of tax money like they do in Europe. Doctors don't need to be millionaires. A salary of 250k a year is fine when paid by the central government especially when they don't have to worry about paperwork and billing or insurance. Ask the doctors in France.Or Denmark, or England. We have special floors for very rich patients down here in Miami.
 
 
+28 # hondacivic21218 2013-01-07 12:11
I think what Dr. Reich is advocating is a "single payer" health system, which would solve the country's health insurance debacle in one, fell swoop. I guess what's blocking it is congress' subservience to the all mighty god of private enterprise. I'm wondering when
(not "if")the need for single payer becomes absolutely clear, will congress accept that fact or will it let the country's health care system go completely to hell. Personally, I'm afraid it will be the latter.
 
 
+20 # Old Uncle Dave 2013-01-07 12:11
The way to get control over America's looming deficits is to stop the imperialist wars and invasions. The defense budget could be cut by half or more and the US would be no less safe. The only threat would be to the profits of the military industrial complex.
 
 
+23 # jon 2013-01-07 12:12
Social Security is an Insurance Plan, not an entitlement.

I paid into it all of my working life, and it is my right, not an entitlement, to collect.
 
 
+19 # Susan1989 2013-01-07 12:16
Corporate welfare, money spent on other countries, and the military and CIA budget should come first! I am tired of hearing the word "etitlements" which implies that citizens have their hands out like beggars. These are benefits that have been earned. Does anyone realize that seniors making over $85,000 are charged more fr Medicare Part B....not including the supplemental plan, I currently pay $250 per month...with the supplemental... $650 per month...and I must use only Medicare doctors. This is far from "free stuff".
 
 
+5 # MidwestDick 2013-01-07 12:33
If you lose your privately provided supplemental policy, you will improve your overall economic picture. The supplemental also probably puts a second constraint upon the pool of providers you may use. Supplementals are only individually advantageous when they are provided by a corporation to its retirees.
 
 
+12 # wleming 2013-01-07 12:28
why then would obama appoint bowles and simpson to look into "entitlements." the word itself, which reeks of right wing condescension, is an insult the tens of millions who have paid for their social security. simpson is a brahmin cowboy right winger- who has lived on the federal tit all his life, and now wants to deny his fellow americans, what is rightfully theirs. obama is playing fast and loose with these losers....
 
 
+3 # charsjcca 2013-01-07 12:29
HELLO! Our Congress can resolve the conundrum if they take the Hippocratic Oath seriously-NO NO HARM.
 
 
+9 # Smokey 2013-01-07 12:51
MEMO TO OCCUPY: If we want to grow the Occupy movement, we can start by defending entitlements and the people who depend on entitlements.

Yes, the entitlements have been earned.
Workers and their families pay for years, sometimes decades, before collecting entitlements. They're the basic form of social insurance in the United States. They're not "charity," despite what the libertarians and the big corporations argue. (Did you know that the big corporations have too much political influence and that they exploit the vulnerable? Points worth mentioning.)

Concern for the people should come first. If the Occupy movement can start with human needs - and if it can win the trust and active support of voters - the Occupy movement will be able to influence a long list of issues that need to be addressed. Including problems with the CIA budget, climate change, etc.
 
 
+7 # wrknight 2013-01-07 12:54
Right on! I would add only that we need to reform our insane foreign policy that only serves to protect the wealth of the 1%. We must end our incessant "war on terror" that is used to justify the bloated military budget and the invasion of foreign countries. We must stop spending our tax dollars killing and maiming people and destroying property in foreign countries and use that money to benefit our own people.
 
 
+4 # Archie1954 2013-01-07 13:28
Consider the Republicans' ideas about the deficit. They believe it is caused by too big a safety net and that it must be downsized. Do you ever hear them complain about the so called "defense" budget? No, you don't because that budget is sacrosanct and untouchable even though it is way out of line with reality. Republicans do not place any value on the minimal social protection of the American people from disease or hunger. Think about the protection the Republicans place on the bottom lines of the wealthy. Theses are also sacrosanct even though the elite have been keeping their wealth out of the economy as a whole thus exacerbating the recession. I remember Barbara Streisand's words in the musical Hello Dolly, where she states, "Money, pardon the expression is like manure. It's not worth a thing unless it's spread around encouraging young things to grow". How true is that?
 
 
+5 # MsAnnaNOLA 2013-01-07 13:30
Ahem....

By the tone of this article you are accepting the framing of the powers that be. Entitlements is the wrong word yes, but if we are to face budget deficits we must look outside the benefits that people have paid into their whole lives and that our seniors and disabled folks depend on.

We must look to both corporate welfare and the enormous defense budget. We spend more than the next ten countries combined on our "defense" we have started numerous wars of choice that we are still paying for. Tax breaks for oil companies and defense projects should be on the table before cutting pensioners old age benefits that they are entitled to because they paid into the system.

The Hoax that is being perpetrated by both dominant political parties in this country is that so called entitlements are the only thing on the table. The only reason for that is because the two parties collude to preserve the wealth of corporations at the expense of everyday Americans. The two parties also collude with each other and Big Media to keep any third party or any candidate with an alternate view of what is feasible off the airwaves and therefore not up for discussion. See Buddy Roemer former candidate for president and former Governeror of Louisiana.
 
 
+4 # giraffee2012 2013-01-07 13:36
HOWEVER, congress can cut "entitlements" to oil companies, banks, G.E. (etc.) and to unnecessary purchases by the military (who seem to be bought and paid for by military machine making and airplane industries (and similar).

And we can stop giving $$ to foreign dictators - especially those whose countries don't have oil (intentional sarcasm)

And Congress can pass a few laws that make the Supremes' follow the code "no decision based on politics or $$" -- i.e. impeach the RATS -- especially Scalia and his side-hick (spelling intentional)

Finally, when a Congress person requests cutting spending as argument for the debt we have - send him/her a message that the debt was largely incurred under their 2000-2009 leader and the rest of the entitlements that were added since WERE to help those who were most injured by the BUSH/CHENEY company folly.

One more way to cut the debt is to stop giving tax breaks to companies who create jobs in other countries and reward those who create jobs in USA.

Ok -- I'll stop now but you can add to the list of cuts that would help build our nation up instead of just making a few (1%) richer.
 
 
+3 # slimslider 2013-01-07 14:01
Isn't it amazing that we elect senators and representatives that have no expertise in the areas over which they make laws? How can a lay body map out a formula for getting the nation out of the fiscal crises when it was the undisciplined lay body who got us into this quagmire! Remember th4e Congressional Credit Union fiasco several years ago where scores of politicians were way overdrawn on their accounts? If they can't handle their own finances how can they be expected to handle billions of dollars that aren't theirs?
 
 
+2 # Marvin Mandell 2013-01-07 14:15
It is very dangerous to means-test Social Security. Having the rich as well as the poor receive it protects it politically. President Franklin D. Roosevelt resisted means-testing for that reason. He knew it would be politically vulnerable if it were means-tested. The program for poor families, Aid to Dependent Children, was means-tested, and that was the beginning of the end for the program.
 
 
+3 # Rich Austin 2013-01-07 14:22
Regina and Smokey are both correct!

Who cares if we call them “entitlements” or “doles” or “privileges”? They are humane. That should our motivation for defending them!

Much has been said about single-payer health care. More needs to be said. It is the solution to this nation’s horribly fragmented medical profits system. The medical profits industry’s grip on the windpipe of America is literally killing people and/or causing economic distress. 18% of the GDP winds its way into their bank vaults. Let’s rephrase that: It doesn’t just “wind” its way, it is coaxed and pushed by members of Congress and others in our nation’s capital who have received over $5 billion in the past decade thanks to the largesse of for-profit hospitals, insurance companies, and the pharmaceutical industry.

The first link describes the benefits of single payer.

The second exposes on-the-take politicians, and prompts this question: Are they “entitled” to the payoffs they receive?

There is only one thing that scares politicians. It is called ballot box revenge. Until we the people deluge their offices with irate phone calls, humane programs like Social Security, Medicare and Medicaid will remain a target. The economic health of our nation and its people are at stake!

http://nurses.3cdn.net/c6fb9a313be501086e_1vm6y1duy.pdf

http://nurses.3cdn.net/8bdb91de705da903ee_j5m6vlg0k.pdf
 
 
0 # John Briggs 2013-01-07 15:34
Means testing for Social Security has a nice ring (the rich don't need all of the few dollars they get each month as pensioners), but it's the wrong way to go. Such an approach would move Social Security toward a "welfare" program that benefits only the undeserving 47 percent.
It makes more sense to continue to give the rich the same benefit we all have, to remind them they,too, have an obligation toward Social Security during their working life and a benefit after retirement, just like everyone else.
 
 
+1 # coberly 2013-01-07 20:03
JAB

it's more than a reminder. in principle the people paying the payroll tax don't know if they are going to end up rich or not. up to a point the premium protects even those who are doing well against the possibility that it could all go bad at the worst possible time... it happens more than you think.

at the end of the day it is the premiums paid by those who end up rich that pay for the enhanced benefits of those who end up poor.

but if you raise the premium too high it will no longer be a fair price for insurance.

right now only the really bad and the really stupid hate social security. raise the cap too high, or means test it, and everyone with any money at all will hate it. Roosevelt understood that.

it turns out we can pay for our own Social Security as we always have by raising our own tax one tenth of one percent per year to pay for our longer life expectancy, and, yes, to make up for the fact that our wages look like they will not be growing as fast as they did in the past.

there is a lot that needs fixing with the economy, but Social Security can't do it all. and it is simply suicide to try to make the rich pay for what is really our own groceries after we can no longer work.

i think you know this, but there are others here who can stand to hear it again.
 
 
+5 # ConcernedVoter 2013-01-07 15:57
In the '80s Social Security trust fund monies were placed in the US's general fund to pay for government operations that were paid for by tax revenues before taxes were cut. As tax revenue decreases, special interests want to reduce money spent on earned benefits and the social safety net to continue funding current and future tax cuts.
 
 
+6 # politicfix 2013-01-07 17:01
I wish the media and the Congress would stop calling social security and medicare
"entitlements". Perhaps we should start referring to the benefits that Congress receives as entitlements and begin cutting their benefits. The people have "paid into social security and medicare" and the GOP want to take cut the benefits we've already paid for. Never mind that there are people who pay in all of their lives then never live to collect anything. Let them cut the benefits paid to corporations who have paid nothing to the government and received all kinds of loopholes and benefits. It's time we start squelching the catch words that Republicans throw out there. This is a ploy the Republicans continue to expound upon. They take a word, attach it to a program, and say it over and over again and again until it catches on and everybody is using their word. They did the same thing with calling healthcare "Obamacare". I say we get a petition together to ask that Congress be stripped of their benefits, "entitlements", term limits, campaign finance, and force them to live by the same rules and regulations as the rest of the country.
 
 
-2 # egbegb 2013-01-07 18:08
Wrong answer.
Raising the cap is raising taxes.
Means testing fundamentally changes social security from an insurance program to welfare. Can the federal government simply take from the rich under the ruse of a "tax" and then give to the poor on and ignore apportionment?

"direct Taxes shall be apportioned among the
several States which may be included within this Union, according to their respective Number"?
 
 
+4 # dkonstruction 2013-01-08 08:25
Quoting egbegb:
Wrong answer.
Raising the cap is raising taxes.
Means testing fundamentally changes social security from an insurance program to welfare. Can the federal government simply take from the rich under the ruse of a "tax" and then give to the poor on and ignore apportionment?

"direct Taxes shall be apportioned among the
several States which may be included within this Union, according to their respective Number"?


So, in other words states like New York and California should get back (be apportioned) what they put in (according to their number)? Well, if that's your position then the "red" states owe the "blue" states alot of apportioned funds since we contribute more and don't get it back from the Federal gov't. This is not my position mind you but it does seem to be yours at least when it comes to SS but how about other taxes?
 
 
+3 # tarantilla 2013-01-07 19:05
All true. I'm not sure why regular people must worry about such things, or suffer. The government has no problem providing $billions for pork, and other programs, as well as $billions for banks and other companies. Why not let some billionaires tighten their belts, instead of middle class people whose belts are already tight?
 
 
+5 # coberly 2013-01-07 20:07
tarantilla

the fact is that cutting social security will do NOTHING for the deficit. SS is paid for by the workers who get the benefits. it does not borrow, never has, never can.

they are mixing SS in with the deficit because they think they can scare people.. who don't know any better.. into cutting SS to cut the deficit... but it won't have any effect.

to cut the deficit they need to raise INCOME taxes on the rich. to "save" social security from the 75 year "actuarial shortfall" they need to raise the payroll tax eighty cents per week per year for a few years.
 
 
+4 # BostonPundit 2013-01-07 21:22
He is absolutely correct about the soaring cost of health care. It is totally out of control.

This may be the most sensible point Mr. Reich has made in all that he has written.
 
 
+2 # Organizer 2013-01-07 22:02
Entitlement has at least two meanings: 1)A benefit you are entitled to as a result of having paid into a pool for a long period of time with money you earned by hard work, and 2)Getting something for nothing because of your ability to deceive and manipulate others, your laziness, or your personal connections. Let's throw that word out! I will never call it anything other than what I believe it to be: social insurance - a term unburdened by dual meanings, a respectable term indicating to me what social security and medicare really are: the many young, strong, and productive helping the fewer older and disabled who need the help. Of course we can save money - I work in health care and I see waste every day. By all means, let's clean it up. But let's stand up tall and proud to be contributors to and, when need be, recipients of, this just and honorable system.
 
 
+2 # Rich Austin 2013-01-07 22:33
Want to make Social Security immortal?

Here's how: Just Scrap The Cap.

Go to http://justscrapthecap.com/

Enjoy a lighthearted approach to the truth.
 
 
-2 # coberly 2013-01-08 16:32
Rich Austin

Scrap the Cap turns SS into welfare, and the rich know how to destroy welfare. Infact they have been trying to turn it into welfare for seventy years so they could kill it at leisure.

"Scrap the Cap" plays into their hands. You can "fix" Social Security... keep the same retirement age and the same benefit level (really a large increase in benefits) simply by paying an extra eighty cents per week every year for a few years. It's a pretty cheap price to pay to keep "the rich" from owning your retirement.
 
 
+5 # L mac 2013-01-08 00:00
...great article. Scrap the cap on wages. That alone would make S.S. viable for many more years. Do not change the COLA, many of us really do rely on S.S. As was mentioned in the article SS is fully funded for at least the next 2 decades.
 
 
+2 # randrjwr 2013-01-08 11:13
This article should be required reading (and then acting positively upon) for all of Congress as well as President Obama. Just one comment concerning raising the Social Security eligibility age: how can that make any sense in the current and, no doubt near future, high unemployment environment? The people forced to delay would have to work to support themselves! Where would they find the jobs, especially with our rampant age discrimination in the workplace? This idea is right up there with Romney's suggestion that young people who can't afford college should borrow from their parents.
 
 
-2 # coberly 2013-01-08 16:34
randrjwr

it's worse than that. most people are ready to retire at age 65 or sooner, no matter how long they "expect" to live. and since they have paid for their retirement themselves who is there to say they can't retire? this is one reason why it is so important not to get the rich to pay for Social Security. The cost of keeping the retirement age the same amounts to an extra eighty cents per week each year.

And it turns out that the only people living longer are the rich.
 
 
+3 # Beverly 2013-01-09 18:02
Dear Mr. Robert Reich,

I have an incident which clearly shows the illegality of AIG's rape of a wonderful old insurance company, Franklin Life. Would you be interested in adding it to the enormous offenses performed by AIG, or might you suggest a proper source, please?

Beverly Smith
Cottonwood AZ
 
 
+3 # Lowflyin Lolana 2013-01-09 22:24
"Entitlements" is a ridiculous, loaded, poisonous word.

Anyone who uses it in public discourse is a creep.

Someone should start a movement to do away with that word. It's very clever, deceptive and excludes the most outrageous theft of taxpayer money that goes on--the corporate welfare we all pay for so execs can get their nice bonuses and then stash the cash in overseas havens.

Entitlements. My @$$.
 
 
0 # flippancy 2013-01-10 13:03
Isn't it funny that stupid people (by Eisenhower's statement) feel thatr paying a flat tax on Social Security is a bad thing even though it does them absolutely no harm in any way, but a flat tax on income which destroys the lives of the poor and middle class who must spend all or most of their income on basic life needs, but represents a very small % of the needs of the rich is a good thing?
 

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