Debt Ceiling Talks Focus on Social Security, Medicare and Medicaid Cuts

July 08, 2011

President Obama is pressing congressional leaders “to consider a far-reaching debt-reduction plan that would force Democrats to accept major changes to Social Security and Medicare in exchange for Republican support for fresh tax revenue,” The Washington Post reported on Thursday. Unless Congress acts before August 2 to raise the $14.3 trillion ceiling on the amount the government can borrow, Treasury Secretary Timothy Geithner has said the U.S. will begin to default on its obligations for the first time in history.

 

According to ABC News (http://abcn.ws/rigJK7), President Obama and House Speaker John Boehner (R-OH) have been discussing a grand bargain to cut some $4 trillion in projected budget deficits over the next 10 to 12 years. There is no deal yet, but the ideas under consideration include reductions in spending on Social Security and Medicare, as well as Medicaid.  Among the spending reductions the president and the speaker have discussed is reducing the annual Cost-of-Living Adjustment (COLA) for Social Security, as well as increasing the level of income subject to the Social Security FICA tax (the tax currently applies to an individual’s first $106,800 of income). Senate Democrats reacted angrily after reading about Obama’s offer in the press. House Democratic Leader Nancy Pelosi (CA) emphasized that House members from her party do not support cutting Social Security and Medicare benefits.

 

“It would be terribly hurtful – as well as contradictory to prior White House statements – to try to balance the budget on the backs of current and future retirees.  Lowering the COLA would be devastating for millions of retirees,” said Edward F. Coyle, Executive Director of the Alliance. “According to Social Security’s Chief Actuary, a 75-year-old retiree’s benefits would be cut by $560 per year, while an 85-year-old would have an annual cut of $984,” he continued.  To see Mr. Coyle’s full statement, go to http://bit.ly/pycyZO. Richard Fiesta, Director of the Department of Government and Political Affairs for the Alliance, made similar points on a Friday tele-conference call with reporters, Sens. Sheldon Whitehouse (D-RI) and Bernie Sanders (I-VT) and the Strengthen Social Security coalition, which includes other senior advocacy groups.

 

What You Can Do: Contact the White House

The Social Security COLA helps your benefits keep pace with inflation. The current COLA is already too low because it does not account for rising health care costs, which hurt seniors and people with disabilities the most.  Now they want to make it even lower. Under the proposal, after 10 years the average benefit will be cut by about $600 a year. After 20 years the cut will be about $1,000 a year. The typical Social Security benefit is only $13,000 a year. Tell the President all of this by sending an e-mail directly to the White House: http://bit.ly/r30M0I. “The time to act is now,” said Barbara J. Easterling, President of the Alliance. “We need all seniors and their friends to contact the White House right away.”

 

‘Chained’ CPI Targets Middle and Lower-Income Workers

A senior White House official said on Thursday that while Social Security is not a driver of the deficit, “it does need to be strengthened.” A Huffington Post article (http://huff.to/pVo5xm) noted that the idea of “strengthening” is vague. Last week, numerous consumer advocacy groups expressed concern over news that lawmakers were considering changes to the way the government calculates the rate of growth for benefits people receive. Four senior congressional aides said lawmakers are discussing using an alternative yardstick, known as the “chained consumer price index,” to gauge inflation, determining COLAs for millions of Americans. The “chained” CPI is an alternative Bureau of Labor Statistics index that shows a lower inflation rate than the standard calculation. According to a Joint Committee on Taxation report (http://bit.ly/oIt81w), a “Chained” CPI would disproportionately affect middle and lower-income Americans. The Chief Actuary estimates that the reduced COLA would result in a decrease of about $130 a year (0.9 percent) in annual benefits for a typical 65-year-old.  Because the cut grows every year relative to scheduled benefits, by the time that senior is 95, the annual benefit cut will be almost $1,400 (9.2 percent). Social Security’s oldest beneficiaries, mostly women who have outlived their non-Social Security sources of income, are significantly poorer than younger beneficiaries and rely on Social Security more. To see the Alliance’s one-pager on the Chained CPI, go to http://bit.ly/nuxKjG.

 

New York Times Elaborates on Proposed Medicare, Medicaid Cuts

In addition to Social Security cuts, the Obama administration has offered to cut tens of billions of dollars from Medicare and Medicaid. The extent of the cuts will depend on the Republicans’ willingness to create more revenue via tax increases. Some proposals being seriously considered would reduce Medicare payments to training hospitals and reduce the federal share of payments to Medicaid, according to The New York Times. Nothing is official, as negotiations are still underway.

 

Ohio Alliance Hosts Roundtable Discussion on Health Care

Last Thursday, the Ohio Alliance hosted a roundtable discussion on Medicare benefits in the Affordable Care Act with Kathleen Sebelius, Secretary of the U.S. Department of Health and Human Services, in Cincinnati. The event was well-received, gathering approximately 65 attendees of all ages. Much of the discussion focused on the increased coverage of preventive services that attendees felt would drastically improve their health and the program’s fiscal situation. “These educational programs go a long way towards enlightening and empowering consumers of their rights and responsibilities,” said Ruben Burks, Secretary-Treasurer of the Alliance. Former Cincinnati mayor Dwight Tillery was also in attendance to offer his support for, and insights into, the Affordable Care Act.

 

Sen. Bernie Sanders, Randi Weingarten to Speak at Alliance Convention

Help us mark our 10-year Anniversary at our upcoming Legislative Conference, Celebrating Our Past, Fighting for Your Future, on September 6 - 9, 2011 in Washington, D.C.! Information and registration forms were mailed in May. You may also register online at http://bit.ly/hQro1V. Sen. Sanders and Randi Weingarten, President of the American Federation of Teachers, are scheduled to speak. Any questions, please contact Event Coordinator Joni Jones at 202-637-5377 or jjones@retiredamericans.org, or else visit http://bit.ly/pjVbXy.


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