The following is an excellent excerpt from the book “IT’S THE MIDDLE CLASS, STUPID!” by James Carville and Stan Greenberg from Chapter 15: “The Elite Consensus on Entitlements and Deficits” on page 226 and I quote: “”MEDICARE REFORM”: SHIFTING GOVERNMENT’S HEALTH CARE COSTS onto SENIORS – Stan We object to the broad bipartisan conclusion that “enrichment spending is unsustainable” and the most important goal is to get control of the government’s health care spending.
Simpson-Bowles offers the starting point: “Federal health care spending represents our single largest fiscal challenge over the long-run.” And note: the focus is on cutting back what the federal government spends on health care, not cutting back the cost of health care. There is a big difference. This starting point sets off a wave of proposed changes to Medicare and Medicaid–including Domenici-Rivlin’s proposal to “transition Medicare, starting 2018, to a ‘premium support’ program that limits growth in per-beneficiary federal support.” While preserving the choice of traditional Medicare, this will make Medicare a refuge for the poorest and shift costs to seniors.
That is kind compared to the conservative think tanks that use this debate to abolish the Affordable Care Act and gut federal health programs for seniors–getting rid of “its current defined-benefit philosophy to a defined-contribution system, mostly to serve the poor.” The first Paul Ryan budget became the centerpiece of the new House Republicans’ agenda for the whole Republican Party. His budget ended Medicare as we know it, turning it into a voucher program where seniors go back into the market to purchase health insurance–but, criminally, have to pay at least $6,400 more a year. This year’s Ryan budget shifts to premium support but freezes payments below inflation and thus shifts substantial costs to Medicare beneficiaries while leaving Medicare with the least healthy and poorest seniors. Saving America from its debts requires transferring the bills to seniors, many of whom are retiring after three decades of work.
And we haven’t even talked about the impact of their proposed Medicaid cuts, the great majority of which would hit seniors. Most nursing-home patients are there under Medicaid and their care or bills would shift to their families.
The public, to be sure, wants none of this. Democrats paid a price for seeming to take $500 billion from Medicare to finance the new health care reform law. Karl Rove wrote, “The administration would cut $622 billion from Medicare and Medicaid, with a big chunk coming from Medicare Advantage, to pay for overhauling health care.” His attack ads featured a beleagured woman saying, “Instead of fixing health care, my mom’s Medicare will be cut, and our health insurance premiums went up.”
Well, the Republicans have been on the defensive since the Paul Ryan budget was accurately characterized as a plan to turn Medicare into a voucher program. In our polls, two thirds of voters turned against a House member who voted to “end Medicare as we know it, forcing seniors to pay $6,400 more out of pocket every year and buy insurance directly from the insurance companies.”
And all hell breaks loose when they learned he pushes those costs onto seniors so they could continue “tax breaks for those earning over $200,000 and special interest subsidies for oil companies.” Rarely have we seen a potential campaign attack register so powerfully.
What all these plans share is a health care cost shift from the government to seniors. Could any idea be so mad? That is the responsible position in the elite debate, and again, we side with the middle class. These changes to Medicare would be a crushing blow to the middle class and we flat-out oppose them.
James Why does everyone talk about cutting Medicare and not cutting overall cost of health care? It’s in the middle class’s interests to get the cost of health care down, which is what affects them.
The health care lobby is interested in keeping the costs artificially high, which is the biggest driver of long-term structural deficits, and the government’s priority has been to talk about cutting Social Security so they can cut taxes. As usual, the middle class comes last. It seems like the consensus in Washington is that to show strength, you take on the middle class rather than taking on the health care lobby, which is a messed-up sense of priorities. Surely it’s smarter to go after the health care costs themselves, not the people bearing the brunt of the costs.
Personally, I have problems with raising the age for Medicare, because, for one, it doesn’t reduce health care costs by itself at all. Secondly, it might not even reduce health care costs to the government, because some people will just put off the procedures they need until they become Medicare-eligible. The lower half of the population from an economic standpoint also tends to be much sicker than the upper half, which clobbers them further.
And again I return to my point that reducing costs will have a dramatic effect on the amount the government spends on health care. To illustrate, the government of Canada spends a lower percentage of its GDP on health care than the government of the United States. Think about that for a second. The government of Canada provides 99 percent of the health care in the country where we have every kind of market. Obviously, they have found a way to reduce the overall cost and increase the total coverage.
The most important damn thing in the campaign ahead is to defeat these “Medicare reforms” as Social Security privatization was defeated at the outset of George Bush’s second term. The presidential election should center on it–and every Republican incumbent should face the wrath of the voter on the votes they cast. Only then can we get on with the real job of reducing the country’s health care costs.
Renegotiating Terms – James It seems at the writing of this book that the consensus among pundits is that President Obama will be reelected in November 2012. If the collective wisdom of the pundits is correct (relying on it is always a risky proposition), then we know what President Obama is going to do. He is going to strike a bargain that is something along the lines of the Simpson-Bowles commission. It was impossible to read Matt Bai’s New York Times Magazine piece in April 2012 and not walk away thinking that this is a man who really wants a big deal on the deficit and is willing to give up a lot along the way.
The terms of the surrender that the president was trying to negotiate with Speaker Boehner would have effectively given the Republican Party almost anything that they wanted, but because Boehner refused to accept the terms, we were left without a deal. I fervently hope that we reelect President Obama so he can negotiate a deal much stronger than the one he capitulated on in August 2011.”
SOCIAL SECURITY: WHY NOT a BIPARTISAN COMMISSION to SECURE IT AGAIN? – Stan Social Security and Medicare are essential elements of middle-class life and survival. After a lifetime of work, we have built up a system that allows most Americans to retire without falling into poverty and have the security of an assured monthly income and coverage for health care. If you get retirement right for middle America, it will reverberate all the way down through the generations. This is the one place where thanks are due to Franklin Roosevelt but also Dwight Eisenhower and Richard Nixon, who repeatedly increased Social Security payments and also indexed it to inflation, making sure Social Security today remains central to what it means to be middle-class in America.
We all know that Social Security can be put on a sustainable path without the drastic changes required for health care and Medicare. Social Security is not in crisis. But the gap between the elite debate and the public debate could not be larger. The former talk about “entitlement spending” (translation: “We can only achieve fiscal stability if we cut Social Security, Medicare and Medicaid”). Well, in my entire life watching focus groups, I have never heard a human being use the word “entitlements.” But when the debate mentions the real programs, they say “Hands off.” They know these are the final critical pieces that make a middle-class life in America possible.
Elites should get it into their head that two-thirds of the country rejects this statement: “The federal deficit is such a national problem that we have to cut spending broadly, including possible future cuts to Social Security and Medicare spending.” In other words, two-thirds just reject the legitimacy of this debate. We conducted a series of polls for the Campaign for America’s Future in the summer of 2010 as the Simpson-Bowles commission was moving to its bold recommendations. Near 70 percent said, literally, “Politicians should keep their hands off Social Security and Medicare,” adding, “The American people can’t afford cuts in these programs.”
As Simpson-Bowles and Domenici-Rivlin were recommending raising the retirement age and reducing benefits for some beneficiaries, our polls showed just a quarter of the public accepts that the deficit is such a national threat that we have to make major changes in entitlements. When we describe the recommendations of the bipartisan commission to reduce the deficit by $4 trillion, only a third support it. The problem we face is not gridlock; it is elites not getting how central this issue is to Americans. This is not about the power of the AARP.
Again, the public will not join the elites unless Social Security is addressed on its own terms.
James Why hasn’t there been a cry for a commission to secure Social Security? We’ve done this before in a bipartisan way, so why not again? The public is ready. We’re ready as long as everything is devoted to Social Security, not something else the elites want to get done.
We are going to do whatever we need to do with Social Security within the context of Social Security. We don’t advocate making changes to Social Security to address the deficit. If you want to make changes in the cost of living or move the retirement age up, do it if it’s a good idea on its own merits, not because you’re trying to pay for something else.
We actually have no problem touching the third rail in American politics as long as the train is going on the track of Social Security and the last stop is maintaining benefits. We don’t want to touch the third rail if people’s Social Security taxes are going to pay for rich people’s tax cuts or wars that don’t work.
I still don’t know why Al Gore’s lockbox wasn’t a great idea. The press pundits picked at it, but doubters said, “Sounds like a reasonable idea to me.” Lock up that money and make sure it’s only to protect Social Security.
Stan The president and Congress should appoint a bipartisan commission as they did under President Ronald Reagan to make recommendations to secure Social Security. It would be charged with securing the system and ensuring that benefit levels are consistent with the challenges facing most Americans today.
The report’s preface would conclude, “At no point since the beginning of Social Security has our country faced successive generations of Americans more on their own and dependent on the system.” Three decades of slumping incomes and fewer jobs with retirement plans–along with lowered home values and lost savings and wealth as a result of the recent crisis–have made Social Security the primary income for a growing majority in retirement. With growing integration with China and India and advances in information technology, wages will likely be under pressure for a long time. The need to get Social Security right will not diminish.
James Unless the country listened to Carville and Greenberg and acted to restore the middle class. If you can get middle-class incomes up and rewarded work again, this wouldn’t be so critical.
Stan In that context, the commission’s focus should be on maintaining benefit levels in this new world. This is the one place where America has the legal structures, precedents, ability, and the public support to make a long-term difference for the middle class. We should not fail to act.
Most of the elites’ work to “save” Social Security begins with reducing benefits. That is not where the rest of the country begins.
A large majority of the public–often approaching two-thirds–opposes any proposal for reform that reduces the benefits people receive in retirement. For the public, the purpose of “reform” is to maintain if not increase benefits.
When you propose to reduce future benefits for those entering the labor force now–by 17 percent for those whose salaries average $43,000 and by about one-third for those who average over $100,,000, as in Simpson-Bowles–60 percent of those under 50 years of age, including those under 30, oppose it. After all, these are policies that would diminish their own retirement prospects. They will casually comment to reporters and our focus group moderators that “Social Security won’t be there when I retire,” but as we see in practice, they are damn certain to make sure Social Security maintains its benefit levels when they get there.
Critics say that young people don’t expect it. They are wrong, but it does not matter. We are opposed to reducing the benefit level–especially given what is happening to wages and retirement plans for the younger generations.
Nearly as large a majority opposes proposals to gradually raise the retirement age from 67 to 69 years, though opposition may have dipped down in public polls.
Stan I could be convinced to support that shift, as it reflects real-life changes in work and life expectancy, and people have accepted the current slow rise in the retirement age.
James Why do we have to raise the retirement age by a full year? Can’t we raise it three months? If you’re a hotel maid, three months is a lot less than a year.
Stan One thing the bipartisan commissions and the public agree on is the need to raise the amount of wages subject to the payroll tax, currently capped at $106,800. When the cap was first introduced, 90 percent of all wages were taxed and then indexed to inflation, helping make this all more sustainable. That should be done again, and three in five votes favor this proposal.
If it were up to me, I would advocate an increase in Social Security benefits, given what has happened to incomes and retirement. Senator Tom Harkin’s Rebuild America Act would increase retirement plans on average by 15 percent, about $65 a month and $800 a year. I’m pretty confident the public would support it, but amazingly, the elite debate is so dominant that no pollster, including myself, has even asked about support for increased benefits.
James You and I do have slight differences. You’d be willing to somewhat raise benefits and I’d be less enthusiastic about that because we wouldn’t be credible. But I’m very enthusiastic about protecting the benefits we already have. Again, as long as we are talking about it, we’re moving forward.
So I’m in favor of whatever cost-of-living formula best reflects the rising prices facing seniors. to be honest, you are for whichever formula gives seniors more money.
But what we both care about most is changing the elite presumption on entitlements and Social Security. America should be protecting benefits to reflect what has happened in the labor market and economy over the last three decades. We hope this chapter is a shot across the bow that gets the country thinking about what we really have to do.”
(THIS IS REALLY A GOOD TWO-PART CHAPTER TELLING JUST EXACTLY WHY WE MUST KEEP SOCIAL SECURITY STRONG AND BUILD ON IT AND NOT WEAKEN IT LIKE SOME OF THE REPUBLICANS IN CONGRESS WANT TO DO, STARTING WITH GEORGE W BUSH, WHO WANTED TO PRIVATIZE SOCIAL SECURITY, WHICH WOULD VIRTUALLY MAKE IT WORTHLESS BUT HIS WORTHLESS IDEA WAS DEFEATED IN CONGRESS, WITH HELP FROM BOTH PARTIES BUT NOW THAT REPUBLICAN DONALD TRUMP HAS BECOME PRESIDENT, LOOK FOR THE PROBLEM TO GET CONSIDERABLY WORSE SINCE HE WANTS TO LOWER THE FEDERAL INCOME TAXES FOR THE WEALTHY INDIVIDUALS AND BIG CORPORATIONS. AND PAY FOR IT BY SLOWLY WEAKENING SOCIAL SECURITY AND MEDICARE TO THE POINT THAT, DOWN THE ROAD, IT WILL BE VIRTUALLY WORTHLESS. THAT’S SOMETHING THAT MUST NEVER HAPPEN BECAUSE WHEN DEMOCRAT PRESIDENT FRANKLIN ROOSEVELT STARTED IT, HE SAID IT WOULD BE AROUND FOREVER BECAUSE GETTING OLD SHOULD NOT BE CONSIDERED A SIN. IT’S JUST A PART OF LIFE AND OLDER PEOPLE MUST BE TAKEN CARE OF.
LaVern Isely, Progressive, Overtaxed, Independent Middle Class Taxpayer and Public Citizen Member and USAF Veterans