Unsilent Generation

Entries categorized as ‘pensions / retirement funds’

Debt Commission Chair Alan Simpson Thinks “This Country is Gonna Go to the Bow-wows”

March 8, 2010 · 3 Comments

For more than a year, I’ve been joining with a handful of other critics in warning that all our economic woes–the costs of the financial meltdown, and the bank bailout and stimulus spending that followed–would eventually be placed square on the backs of our so-called old-age entitlements: Social Security and Medicare. And lo, it is coming to pass, via President Obama’s euphemistically named National Commission on Fiscal Responsibility and Reform–commonly called the Deficit Commission or the Debt Panel.

Despite the names, no one is even trying very hard to pretend that the commission has any purpose other than cutting Social Security, Medicare, and probably Medicaid as well. That choice was clear from the get-go, based on Obama’s choice of Alan Simpson to co-chair the commission. The former Republican senator from Wyoming has already described his mission as “saving” the United States from “insolvency” by hacking away at entitlements. And if we want any more proof, we need only look at Simpson’s background, as detailed by Saul Friedman in his latest “Gray Matters” column:

This time President Obama, in his obsessive reaching across the political aisle, may have gone a stretch too far. For the Republican he picked to co-chair the so-called deficit reduction commission, former Sen. Alan Simpson, has been a harsh critic of Social Security and Medicare. And he sought to destroy their most powerful defenders, especially AARP.

That was 15 years ago, but as recently as 2005, Simpson, a conservative from Wyoming who left the Senate in 1997, supported attempts by President George Bush to privatize Social Security by turning part of the pension and insurance program into millions of individual investment accounts, which by now would have lost 20 percent of their value. Bush’s plan failed, largely because of the opposition of AARP and other advocates that Simpson sought to discredit.

Even now, Simpson, who should know better, conflates or deliberately confuses Social Security’s long term fiscal problems, which are minor, with its supposed contribution to the federal deficit, which is almost nil.

In an interview with the NewsHour after his appointment, Simpson said of Social Security, “You have two choices…you either raise the payroll tax or decrease the benefits or start affluence testing. The rest of it is B.S. And if the people are really ingesting B.S. all day long, their grandchildren will be picking grit with the chickens. This country is gonna go to the bow-wows unless we deal with entitlements, Social Security and Medicare.”

Simpson insists that he is keeping an open mind. He told the Wall Street Journal that he didn’t like politicians who “demonized” their opponents: “Instead of saying this guy’s ideas are as goofy as a peach orchard boar, they are saying this guy is as goofy as a peach orchard boar. I won’t demonize people.” But its eminently clear whose ideas Simpson agrees with. In an interview on CNBC, Simpson referred to cutting entitlements as “correcting Social Security.” 

Simpson also told old people and their advocates to stay out of the debate, since the cuts would only apply to younger people.

You remember the last time we corrected Social Security, and people calling me.  Let me tell you, everything that Bush and Clinton or Obama have suggested with regard to Social Security doesn’t affect anyone over 60, and who are the people howling and bitching the most? The people over 60.  This makes no sense.  You’ve got scrub out [of] the equation the AARP, the Committee for the Preservation of Social Security and Medicare, the Gray Panthers, the Pink Panther, the whatever. 

There’s an interesting twist to Simpsons argument. Usually, we geezers are accused of being greedy and selfish for opposing entitlement cuts that would affect us. We’re told we should be willing to give up some of our government handouts for the good of future generation. This time we’re being attacked because we might actually care about the next generation, who won’t even be able to count on the modest social programs we enjoy.

But Simpson himself says he’s doing all this for his grandchildren, according to US News and World Report. (Warning: This quote contains more animal metaphors.)

There are six little people running in and out of my house, called grandchildren, who are absolutely just little lambs led to slaughter. They are totally uncomprehending. They have no idea that when they reach 60—under the present system—they’ll be picking grit with the chickens.

This would be quite noble if not for the fact that Simpson wants to cut his grandkids’ Social Security (presumably because he thinks the debt threatens them even more?) And if not for the fact that there is no crisis looming for the future of Social Security. Any long-term shortfalls in the system could be fixed with a minor adjustment:  raising the ceiling on earnings subject to Social Security taxes, which currently stands at $106,000. Obama himself has suggested this in the past.

More importantly, as Friedman points out.

Social Security’s long term fiscal problem has nothing, absolutely nothing, to do with Social Security’s role in the deficit. For, as I have emphasized in my column for years, Social Security costs the budget not one cent-aside from the one percent it spends on its thousands of employees and field offices. Indeed, Social Security helps finance the deficit by loaning the treasury money, for which it earns interest (about $700 million a year.) If what’s owed to Social Security must be cut as part of deficit reduction, will that help Social Security?

As for Medicare, the only way to deal with its fiscal problems are through comprehensive health care reform to address the skyrocketing cost of privatized medicine.

The real contributors to dangerously high deficits are health care costs and military spending, along with undertaxing of the rich. This means that what the “debt commission” really ought to be doing is raising taxes on the highest earners, getting us out of two wars, and instituting single-payer health care. But as Alan Simpson might say, that dog won’t hunt.

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Categories: Congress · Medicare · Obama Administration · Social Security · budget / tax policy · financial crisis / recession · generations / intergenerational issues · health care · media · pensions / retirement funds
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GOP to the Unemployed: Drop Dead (You Bums)

February 27, 2010 · 9 Comments

Tomorrow, unemployment benefits will officially end for hundreds of thousands of Americans, thanks to maneuverings by Senate Republicans to prevent a vote that would have extended those benefits. Unless the extension is passed soon, some 1.1 million of the nation’s unemployed will see their unemployment expire in the coming month, and 5 million will lose benefits by June. 

The House finally voted to extend benefits on Thursday, after several days of stalling and posturing. But in the Senate, the measure was blocked by Kentucky’s Jim Bunning. Politico reported that late into Thursday night, Bunning held out against repeated Democratic attempts to pass the extension by unanimous consent. In response to entreaties from colleagues across the aisle, other Republican senators rose to defend Bunning’s right to obstruct the vote, and Bunning himself was heard to utter, “Tough shit.”  

Bunning said he wanted to see the cost of the benefits offset by other savings, to keep from adding to the deficit. But earlier in the week, Nevada Republican Congressman Dean Heller offered another objection to extending unemployment benefits: He believes it might create a nation of bums.

Think Progress relayed Heller’s remarks, which were made at a Republican Party function in Elko, Nevada, and reported in the local paper:

Heller said the current economic downturn and policies may bring back the hobos of the Great Depression, people who wandered the country taking odd jobs. He said a study found that people who are out of work longer than two years have only a 50 percent chance of getting back into the workforce.

“I believe there should be a federal safety net,” Heller said, but he questioned the wisdom of extending unemployment benefits yet again to a total of 24 months, which Congress is doing. “Is the government now creating hobos?” he asked.

Heller doesn’t seem bothered by the fact that he hails from a state with one of the nation’s highest unemployment rates–now more than 13 percent–as well as its highest foreclosure rate. In his speech, he managed to blame everything on the Democrats. “Six percent of Americans believe the stimulus package created jobs. More Americans believe Elvis is still alive,” he said. Never mind that the extended unemployment benefits Heller derided are in fact among the most effective components the stimulus package, according to the Congressional Budget Office, producing  $1.90 in growth for every $1 spent. 

What makes Heller’s statement really stupid, of course, is that people could become hobos if Congress doesn’t extend unemployment benefits, rather than if they do. Modest as they are, these weekly benefits are what’s keeping thousands–and perhaps millions–of families out of  poverty. The benefits that expire first are for people who have been out of work the longest, and are most likely to be living close to the edge already. 

The same is true for the other social safety net programs that Republicans tend to despise. For example, without Social Security, according to the Alliance for Retired Americans, ”55% of severely disabled workers and their families would live in poverty; 47% of elderly households would live in poverty; another 1.3 million children would fall into poverty; and 2.4 million grandparent-headed households caring for 4.5 million grandchildren would be deprived of [their] most important source of income.” Yet Social Security, too, has long been under attack by conservatives–a position that’s lately gained bipartisan ground, as reflected in Obama’s bipartisan “debt commission,” which is aimed at reducing entitlements.

The heydey of hobos was during the Great Depression, before the New Deal began to weave the social safety net. If Nelson and his fellow Republicans want to see Americans riding the rails, living in tent cities, and lining up at soup kitchens (even more than they already are), all they have to do is keep tearing that safety net apart.

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Categories: Congressional Democrats · Congressional Republicans · Great Depression · Obama Administration · Social Security · budget / tax policy · economy · financial crisis / recession · jobs / employment / unemployment · poverty · right wing
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Obama’s Stealth Entitlement Commission

February 19, 2010 · 5 Comments

Less than a month after the Senate rejected a proposal for a bipartisan entitlement commission, President Obama has created his own version by executive order. It is not, of course, called an “entitlement commission”–that unsavory term has been banished from the political lexicon, since it clearly frightens the geezers. Instead, it is called the National Commission on Fiscal Responsibility and Reform. (Who wouldn’t support that?) The shorthand names are the “deficit commission” and the “debt panel.” This last term is remarkably similar to the much-maligned “death panels”–which seems appropriate, since its primary purpose is to pull the plug on old-age entitlements. Despite protestations to the contrary, the commission exists primarily to make cuts to Social Security and Medicare.

The commission’s slant is evident from the choice of its two co-chairs: former Wyoming Republican senator Alan Simpson, a long-time foe of entitlements, and Erskine Bowles, the middle- right former Clinton chief of staff. The rest of the 18-member commission will include 6 Republican and 6 Democratic members of Congress, and four more members named by Obama. They are supposed to make a report and recommendations to the president in December, after the fall elections, and Obama is expected to forward the recommendations to Congress.

In the best-case scenario, Congress will do the same thing it has done with all of Obama’s other proposed reforms–i.e. nothing. Because if it acts at all, it will almost certainly decide to pay down the deficit at the expense of the social safety net. While Social Security may be the proverbial “third rail” of politics, the other debt-reducing options–raising taxes on the rich, or making corporations pay their fair share–will be seen as even more deadly in the current political climate.

An aggressive move to cut entitlements is, of course, a long-cherished conservative goal. The Heritage Foundation has been promoting the idea for decades, and was a major cheerleader for creation of a Congressional entitlement commission. Billionaire anti-entitlement activist Pete Peterson has bankrolled a huge lobbying effort for a commission that could ready the cuts, then ram them through Congress on a fast track yes or no vote. When that idea ran into heavy opposition in the Senate, Obama came up with his comparatively toothless version.

The driving force behind the commission—in addition to Peterson’s determined lobbying– is a group of conservative Blue Dog Democrats, some of whom would most likely be just as happy to see Social Security privatized. They will likely join with Republicans to support cuts in Medicaid, Medicare, and Social Security.

This same alliance will also be key to a scaled-back health care reform, which looks to bypass altogether the so-called liberals in Congress. Instead, it depends upon senior conservatives in the Republican party, led by retiring New Hampshire Senator Judd Gregg. Gregg has said he thinks the health care system needs changing, and he wants to engage in “constructive dialogue” with the president on reform. But any plan Gregg champions will have to be relatively meager and inexpensive. The fiscally conservative Gregg  joined with Democrat Kent Conrad to support the Congressional version of a debt commission, and he now seems to making common cause with the perennial Democratic health care compromiser, Max Baucus.

The long and the short of this situation is that  the Democratic administration, along with a small group of conservative Democrats in Congress, may make considerable headway toward doing what neither Ronald Reagan nor George W. Bush was able to pull off. They will likely make cuts to Social Security, while at the same time advancing Obama’s government-subsidized “automatic IRA” scheme, which would divert people’s earnings into 401K-style retirement accounts. These, of course, would be invested by Wall Street, helping to rebuild the finance industry. So in the end, we could see a de facto privatization of a portion of Social Security–the ultimate conservative dream, brought to us by the Democrats.

By the same token, the Democratic-led health care reform is likely to bring about some cuts to Medicare and Medicaid–the only single-payer health care this nation has ever known. It will do so while preserving the power and wealth of the health care profiteers who are largely responsible for skyrocketing costs.  The corporations, once again, are set to emerge victorious.

Meanwhile, the old, sick, disabled, and poor, who rely on entitlement programs, will bear the weight of the national debt. The low- and middle-income people still reeling from the recession–who need more, not less, government spending–will be left out in the cold, victims of what the Center for Economic and Policy Research calls “the deficit hawks who distract the public and policy makers from the policies necessary to bring the economy back to full employment.” 

The people and policies responsible for running up the deficit look like the only ones who won’t be taking a hit. In a report released on Wednesday called “Where Today’s Large Deficits Come From,” the Center on Budget and Policy Priorities added up the numbers and found: “In fact, the tax cuts enacted under President George W. Bush, the wars in Afghanistan and Iraq, and the economic downturn together explain virtually the entire deficit over the next ten years.”

Categories: 2010 elections · Bush Administration · Congress · Congressional Democrats · Congressional Republicans · Obama Administration · Social Security · Wall Street / financial industry · budget / tax policy · corporations · economy · financial crisis / recession · health care · health insurance industry · jobs / employment / unemployment · lobbying · pensions / retirement funds · poverty
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Time for Hell’s Grannies to Ride Again

February 10, 2010 · Leave a Comment

This is not a good time to be old in America. In addition to dealing with the usual burdens of aging–our aches and pains, and our worries about senility and death–we now have to contend with a backlash against the supposedly greedy geezers who insist upon clinging to life in definance of the public good.

On one side, we have pundits like David Brooks babbling on about old people stealing the nation’s wealth, and billionaire geezer-basher Pete Peterson bankrolling a campaign for an “entitlement commission” to cut Medicare and Social Security. Why should we expect a government handout just because we’ve worked and paid taxes all our lives? (Never mind that Wall Street has already decimated our retirement savings and home values.)

On the other side we have the champions of age-based health care rationing, led by “ethicists” like Daniel Callaghan, trying to convince us to go gently into that good night, while our corrupt system of medicine for profit goes on unrestrained. How would you like to be denied a kidney transplant or even a new hip, on the grounds of enlightened “cost-benefit analysis,” while the drug and insurance companies continue to rake in their profits?

It’s no wonder elders around the world are taking matters into their own hands. The only thing that’s surprising about the German geezer gang described in yesterday’s post is that it doesn’t happen more often. You hear about other incidents every now and then: an oldsters’ crime wave in Japan, or an octogenarian bank robber with an oxygen tank in San Diego. Maybe soon we’ll be seeing more elderly sapper gangs in action.

In the meantime, a reader dropped me a line last night with a reminder that there is indeed a precedent for all this, deftly portrayed by Monty Python. Seems to me that it might be time for Hell’s Grannies to ride again.

Categories: Medicare · Social Security · age discrimination · death / end of life care and choices · economy · generations / intergenerational issues · pensions / retirement funds · radical geezers
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German Geezer Gang Kidnaps Financial Advisor Who Lost Their Money

February 9, 2010 · 2 Comments

The British Daily Mail today reports on what it calls a “gang of Old Rage Pensioners” in Bavaria who are accused of kidnapping and assaulting their financial adviser because, they said, he had “taken us for a ride.”

Keep in mind that this colorful account is from a British tabloid: Terms like “torture” are there for sensational effect, the events are still under contention, and none of the geezers has yet been convicted. According to NPR’s “The World,” the old people are charged with abduction and grievous bodily harm–the latter, apparently, for injuries caused when they hit the financial advisor with their walkers.

The four German seniors said they were so incensed over the losses that American-born investment specialist James Amburn incurred that they hatched the plan to kidnap him in a bid to get their cash back. They are charged along with an accomplice of kidnapping, illegally confining and causing grievous bodily harm to Amburn, 56.

But the court also heard that Amburn himself is now under investigation by authorities in Karlsruehe for suspected fraud.

Amburn was ambushed outside his home in Speyer, west Germany, where he was bound with masking tape and bundled into the boot of a car after being hit over the head with the walking frame of one of his kidnappers.

Prosecutors charged the two married couples, aged between 60 and 79, as well as the co-conspirator, with carrying out the kidnapping in order to recoup losses amounting to £2.3 million in investments that soured due to the international financial downturn.

According to the prosecutors, kidnappers, Roland Koenig, 74, and Willy Dehmer, 60, attacked Amburn outside his home and bundled him into an oversize cardboard box which they wheeled to the boot of a silver Audi saloon car.

He was driven 300 miles to a house on the shores of beautiful Lake Chiemsee in Bavaria – but not before escaping at a service station. His elderly abductors recaptured him and beat him with the walking frame, causing Amburn two broken ribs.

The court in Traunstein heard prosecutors describe the kidnapping and torture as ‘almost surreal–except it happened.’

For four days Amburn was kept in the cellar of the house in June last year, beaten and tortured by the pensioners who saw their comfortable retirement dreams evaporating before their eyes.

Another couple, retired doctors Gerhard and Iris Fell, aged 63 and 66, who arrived to assist the kidnappers, admitted their roles in the plot. Mr Fell was not in court due to illness.

Koenig and his wife Sieglinde, 79, made a partial admission but he, bizarrely, told the court that Amburn was there ‘willingly.’ He said he and the others had met Amburn in Florida in the 1990’s and they possessed holiday homes in the state. ‘He said he was a business adviser and promised us yields of 18 percent on our savings,’ he told the court. ’At first that happened–but then he took the p**s.’

They met up co-incidentally with Dehmer who told them Amburn owed him $690,000. Together, say prosecutors, the plan coalesced to ‘teach him a lesson.’

‘The fear of death was indescribable,’ Amburn said, adding that he was beaten and tortured during four days of captivity in a cellar room where he was held naked. 

He was rescued when he was ordered to send a fax to release funds from a Swiss bank and managed to scribble a message on it for the recipient to call police. He said: ‘I told them that if I sold certain securities in Switzerland they could get their money and for this I had to send a fax to a bank.’

Allowed out of the cellar for a cigarette break in the garden while the kidnappers awaited their loot, Amburn attempted to escape over a wall. In the pouring rain he ran down the street pursued by his captors in the Audi A8 they had used to transport him to the house. Several people saw him, but Roland Koening shouted: ‘He’s a burglar!’

Amburn was then dragged back to the cellar.  Shortly afterwards, the Swiss bank telephoned police in Germany and a team of armed commandos stormed the house.

His captors now face a minimum of five years in jail each when the trial concludes in March. Their lawyer Harald Baumgaertl insisted before the court that his clients were not ‘big criminals.’ But the prosecution disagreed, saying they showed a ‘high degree of criminal energy.’

Categories: Wall Street / financial industry · legal issues · pensions / retirement funds · radical geezers
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David Brooks Goes After Greedy Geezers

February 3, 2010 · 7 Comments

David Brooks wants to pull the plug on us greedy, grasping old folks. Or more accurately, he wants us to pull the plug on ourselves, by giving up our generous “entitlements” and submitting to Social Security and Medicare cuts. We should be more than happy to do this, he says, out of an altruistic urge to rescue younger generations from misery and penury. Too bad Brooks fails to mention that what really needs rescuing is the nation’s system of social inequality and corporate greed.

In his Monday New York Times column, called “The Geezer’s Crusade,” Brooks zeros in on one of the increasingly popular straw men of our times–that enemy of the people known as the Greedy Geezer.

Dripping with condescension, Brooks runs through a list of all the wonderful things that come with old age in the 21st century. Instead of sinking into dimwitted oblivion, the modern geezer–lo and behold–is actually able to think and function. “Older people retain their ability to remember emotionally nuanced events. They are able to integrate memories from their left and right hemispheres. Their brains reorganize to help compensate for the effects of aging.” Brooks even has scientific proof for his claims: “A series of longitudinal studies, begun decades ago, are producing a rosier portrait of life after retirement,” he writes. According to these studies, old people “become more outgoing, self-confident and warm with age.” We “pay less attention to negative emotional stimuli,” and are just plain happier than the middle-aged.

Yet despite all these bountiful gifts (which undoubtedly offset such minor inconveniences as not being able to walk, see, screw, or control our bladders), we old coots just can’t shake the selfish idea that we ought to get a little help from society in our golden years. After working, raising and educating our kids, and paying taxes all our lives, we Greedy Geezers now want to sit back and rake in our “entitlements”–Social Security and Medicare. Can’t we see that in doing so, we are actually stealing  from the young, denying them a future, and worse, driving the nation into bankruptcy? Brooks writes:

Far from serving the young, the old are now taking from them. First, they are taking money. According to Julia Isaacs of the Brookings Institution, the federal government now spends $7 on the elderly for each $1 it spends on children.

Second, they are taking freedom. In 2009, for the first time in American history, every single penny of federal tax revenue went to pay for mandatory spending programs, according to Eugene Steuerle of the Urban Institute. As more money goes to pay off promises made mostly to the old, the young have less control.

Third, they are taking opportunity. For decades, federal spending has hovered around 20 percent of G.D.P. By 2019, it is forecast to be at 25 percent and rising. The higher tax rates implied by that spending will mean less growth and fewer opportunities. Already, pension costs in many states are squeezing education spending.

In the private sphere, in other words, seniors provide wonderful gifts to their grandchildren, loving attention that will linger in young minds, providing support for decades to come. In the public sphere, they take it away.

Brooks doesn’t specify the exact reforms necessary to correct this cancer on society, but we all know what they are: We need only reduce the entitlements, along the lines Pete Peterson has been strenuously advocating. That can be accomplished by setting up an Entitlement Commission to impartially hand down “fast-track” cuts to old-age entitlement programs, tell Congress what it has to do, and get the economy back on course. When Obama sees the happy-times oldster lolling about on his houseboat in the Florida Keys, he ought to react the way Reagan did when he observed the “welfare queen” who was supposedly ripping off  taxpayers: Cut off the supply of federal funds, and stop letting the Greedy Geezers feed at the public trough.

If it isn’t politically expedient to cut us off (because we darned geezers insist upon voting), then convince us to do it to ourselves. What Brooks calls the Geezer’s Crusade is an imagined “spontaneous social movement” by elders to reduce their own benefits. He writes:

It now seems clear that the only way the U.S. is going to avoid an economic crisis is if the oldsters take it upon themselves to arise and force change. The young lack the political power. Only the old can lead a generativity revolution — millions of people demanding changes in health care spending and the retirement age to make life better for their grandchildren.

Brooks has audacity, I’ll give him that. Too bad his premise is as phony as a three-dollar bill. But Brooks is far from alone in advancing what I call the Myth of the Greedy Geezer, in which old people’s selfish attachment to their entitlements is the primary cause of the nation’s economic woes, and entitlement cuts are the only solution. The myth is circulated by pundits of all political stripes, and graces the editorial pages of some of the nation’s largest newspapers.

This fabrication serves a myriad of purposes. It substitutes a phony intergenerational conflict–a phantom battle between young and old–for the real conflict in American society: the conflict between the interests of poor and middle-class people, who pay more than their fair share, and the corporations and wealthy elite, who get an easier ride in America than they do anywhere in the developed world.  

In the past 30 years, according to Congressional  Budget Office data, the income of the top 1% of Americans has risen 176%, while the middle fifth have seen a 21% growth in income, and the poorest fifth just 6%. But hey–why talk about taxing the rich when you can balance the budget on the backs of those Greedy Geezers?

Wall Street had to be bailed out to the tune of $1 trillion, and they’re back to business as usual. But why take measures that might “stifle” the “freemarket” when we can just cut Social Security instead? (And never mind that the Greedy Geezers saw their retirement savings decimated and their home values plunge; they’ll manage.) 

Millions of Americans suffer and even die from inadequate health care, and medical costs drive thousands into bankruptcy every year. But why should we expect the drugmakers and insurance companies to reduce their hefty profits, when we can just reduce Medicare payments to those Greedy Geezers? After all, does grandma really need that hip replacement when it means taking money out of the hands of her grandchildren? Should grandpa have a triple-bypass, just to get a few more years of life, when it means bankrupting the country?

What we have here is a classic bait-and-switch. Politicians are talking about the urgent need to cut Medicare because Democrats and Republicans alike won’t take on the real enemies of affordable health care–the insurance companies, Big Pharma, and other providers of medicine for profit. They’re saying we have to “reform” Social Security (a program which, compared to Citibank and Goldman Sachs, is a model of financial solvency) because they are unwilling to really take on Wall Street. They’re devising ways to skim off of entitlements, which have lifted millions of old people out of dire poverty, because they won’t consider a more “socialist” tax structure–like, for example, the one we had in the United States during the Nixon Administration.

In the long run, the Myth of the Greedy Geezer also serves one of the most cherished items on the conservative agenda: permanent cuts to core social safety net programs that date back to the New Deal and the War on Poverty. Commenting on Pete Peterson and the other right-wing ”granny bashers” last year, Dean Baker of the Center for Economic and Policy Research wrote: “It should be evident that the granny bashers don’t care at all about generational equity. They care about dismantling Social Security and Medicare, the country’s most important social programs.” 

This quest just got a potentially big boost from David Brooks and his “Geezer’s Crusade.” I just hope we geezers don’t fall for it.

(For another take on Brooks’s piece, I recommend this post by FireDogLake’s pithy “Earl of Huntingdon.”)

Categories: Congress · Medicare · Obama Administration · Social Security · Wall Street / financial industry · budget / tax policy · corporations · drug industry · economy · financial crisis / recession · generations / intergenerational issues · health care · health insurance industry · media · pensions / retirement funds · poverty · right wing
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Obama’s Disappointing State of the Union

January 27, 2010 · 4 Comments

Obama’s State of the Union message offered little that was new, bold, or inspiring. He spoke about the need for jobs, but avoided any specific proposals for creating them. While the unemployment rate runs 10 percent overall, and over 15 percent for blacks in some states, Obama is focused on tax credits for the middle class. Just how an unemployed worker can benefit from such tax breaks is a mystery.

The president’s economic plans eschew dramatic government action in favor of the market and the private sector. The administration is proposing the Heritage Foundation’s automatic IRAs to encourage savings by workers. To make this idea more appealing, the administration has suggested that the government might put $500 into each individual account to jump-start the program. As I wrote earlier, this scheme promises to be another boon to Wall Street. If the Democrats were willing to to ignore Republican attacks on big government, they might choose to put the $500 into Social Security instead.

Continuing the government-cutting theme, Obama proposed a freeze on spending, starting next year. The freeze wouldn’t include Medicare or Medicaid. But in another proposal, Obama said he would create by executive order a commission that would propose cuts in entitlements. That’s how, in Washington, you can support one program by undercutting it at the same time.

As for health care reform, it looks like what’s in store is a further weakening of an already weak bill, perhaps reducing it to a ban on some of the worst abuses by insurance companies, such as denying benefits to people with pre-existing conditions. There is likely to be no meaningful reining in of the insurance or pharmaceutical industries, and no control over costs. All in all, a lackluster, disappointing speech.

What would I like to have heard the president say tonight? Earlier this week, I wrote about FDR, and the ambitious initiatives he undertook in his first year. I thought about his insistence–which today sounds almost quaint–that the government exists to help its people, and when they need more help, the government should do more, not less. I thought about this particular historical moment, when the ruthlessness of Wall Street and the folly of conservative economic policymaking have been laid bare. It was a moment that might have been siezed for the purpose of real change. But tonight’s speech tells us, once and for all, that the moment has come and gone.

The historian and humanitarian Howard Zinn, who died suddenly today at age 87, said this in a speech made a few days after the 2008 election, and broadcast by Amy Goodman earlier this year: 

Why is all the political rhetoric limited? Why is the set of solutions given to social and economic issues so cramped and so short of what is needed, so short of what the Universal Declaration of Human Rights demands? And, yes, Obama, who obviously is more attuned to the needs of people than his opponent, you know, Obama, who is more far-sighted, more thoughtful, more imaginative, why has he been limited in what he is saying? Why hasn’t he come out for what is called a single-payer system in healthcare?…

I was really gratified when Obama called for “Let’s tax the rich more, and let’s tax the poor and middle class less.” And they said, “That’s socialism.” And I thought, “Whoa! I’m happy to hear that. Finally, socialism is getting a good name.”…But still, you know, he wouldn’t come out for a single-payer health system, that is, for what I would call health security, to go along with Social Security, you see, wouldn’t come out for that; wouldn’t come out for the government creating jobs for millions of people, because that’s what really is needed now. You see, when people are—the newspapers this morning report highest unemployment in decades, right? The government needs to create jobs. Private enterprise is not going to create jobs. Private enterprise fails, the so-called free market system fails, fails again and again. When the Depression hit in the 1930s, Roosevelt and the New Deal created jobs for millions of people. And, oh, there were people on the—you know, out there on the fringe who yelled “Socialism!” Didn’t matter. People needed it. If people need something badly, and somebody does something for them, you can throw all the names you want at them, it won’t matter, you see? But that was needed in this campaign….

You know, I like him. I’m for him. I want him to do well. I’m happy he won….But when I saw Obama and McCain sort of both together supporting the $700 billion bailout, I thought, “Uh-oh. No, no. Please don’t do that. Please, Obama, step aside from that….I’m sure something in your instincts must tell you that there’s something wrong with giving $700 billion to the same financial institutions which ruined us, which got us into this mess, something wrong with that, you see.” And it’s not even politically viable. That is, you can’t even say, “Oh, I’m doing it because people will then vote for me.” No. It was very obvious when the $700 billion bailout was announced that the majority of people in the country were opposed to it. Instinctively, they said, “Something is wrong with this. Why give it to them? We need it.”…

Obama should have been saying, “No, let’s take that $700 billion, let’s give it to people who can’t pay their mortgages. Let’s create jobs, you know.” You know, instead of pouring $700 billion into the top and hoping that it will trickle down to the bottom, no, go right to the bottom, where people need it and get—so, yes, that was a disappointment. So, yeah, I’m trying to indicate what we’ll have to do now and to fulfill what Obama himself has promised: change, real change. You can’t have—you can say “change,” but if you keep doing the old policies, it’s not change, right?

Categories: Great Depression · Medicare · Obama Administration · Social Security · Wall Street / financial industry · budget / tax policy · drug industry · economy · financial crisis / recession · health care · health insurance industry · jobs / employment / unemployment · pensions / retirement funds
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State of the Union: Obama’s “Automatic IRA” Plan Could Make Bush’s Wildest Dreams Come True

January 27, 2010 · 3 Comments

In tonight’s State of the Union address, President Barack Obama is expected to propose what’s generally being called an “automatic IRA.” Under this scheme, the government would help set up a system of individual retirement accounts in which workers would be automatically enrolled if their employers don’t offer their own 401Ks. A minimum amount of pre-tax earnings–under current proposals, 3 percent–would automatically be deducted from employees’ pay and direct-deposited into their accounts. Individuals could increase the amount of the automatic deposits, or they could opt-out altogether. They would also have some choice about where to place their investments; otherwise, it would automatically be placed in what planners are calling a “diversified portfolio.” 

On the surface, it sounds like a sensible plan. AARP is supporting it, and says it could help some 50 million of the 75 million Americans whose employers offer no retirement plan.  It’s being touted as a “third way” or “common sense” approach to the retirement crisis–a rare bipartisan initiative, developed through a rapprochement between left and right. The idea emanates from a group called the Retirement Security Project (RSP), led by David John of the Heritage Foundation, who hammered out a joint scheme with William Gale of the Brookings Institution. It’s supported by the White House, and expected to breeze through Congress. The publication Life and Pensions reported earlier this week:

John, who is a senior research fellow with Washington, DC-based think-tank the Heritage Foundation, as well as holding a position on the RSP, said he welcomed the initiative’s inclusion in the state of the union address. Having the President speak about it on Wednesday will give it a far higher profile than it would otherwise get,” he said.

John said he expected the bill to have a fairly easy passage, given the lack of opposition. It was included in the 2009 budget, but the time taken over the controversial healthcare reform bill meant it slipped off the legislative agenda.

The presence of David John as the proposal’s spokesperson and primary architect ought to be enough to make progressives take a closer look at a proposal that’s promoted as an obvious no-brainer. With the exception of the automatic IRA, John is a sharp critic of Obama’s economic approach, including all of the other proposals the president is expected to outline tonight. “He’s basically giving tax money to people regardless [if] they have actually paid any taxes or not,”  John said yesterday. “And many of these [proposals] sound much better as they’re intended to than they would actually work in practice — so I think that some of those are going to have some severe handicaps.”

In addition–as a quick glance at his writing on the Heritage Foundation web site reveals–John was a huge booster of privatizing Social Security. The idea of privatizing this New Deal program, and turning over its billions to Wall Street, has been the fondest hope of the right since the days of the Reagan administration. Remember that it was just five years ago, in 2005, that George W. Bush made privatizing a portion of Social Security a centerpiece of his State of the Union address. Conservatives fought hard for this initiative, which would have diverted 2.5 % of Social Security withholdings into individual retirement accounts similar to those now proposed, and invested the funds in a similar ”diversified portfolio” of Wall Street products. But the pubic, wisely, distrusted Bush’s motives, and by the end of the year, it was clear that he would never win broad support for the privatization plan. In the early months of 2006, the Retirement Security Project, under John’s leadership, began actively promoting the automatic IRA scheme. 

Is it paranoid to see the automatic IRA as a back door attack on Social Security–a foot in the door in the quest to cut entitlements? Maybe not. Unlike Bush’s plan, the automatic IRA would not take funds out of Social Security, but rather directly out of workers’ paychecks. But imagine, if you will, that at the same time, cuts are made to Social Security. Tonight Obama is expected to pitch his version of the fast-track ”deficit reduction commission” recently proposed (and defeated) in the Senate, which clearly would set its sights largely on entitlements, including Social Security. So we could see Americans’ Social Security cut by a small percentage (remembering that raising the retirement age is, effectively, a cut), while simultaneously, a small percentage of their pay is deducted and invested in the private sector. And suddenly–presto–George W. Bush’s wildest dreams have come true.

There’s yet another facet to the automatic IRA plan, which would effectively channel not only worker earnings but also government funds into private retirement accounts. On Monday, Obama and Vice President Joe Biden addressed the Middle Class Task Force set up a year ago. Biden pitched the automatic IRA proposal, saying “It’s a simple proposition, but it’s a big deal,” and then outlined the plan for a government “match” of individual savings:

It also means simplifying and expanding the saver’s credit, which helped working families save for retirement by providing a 50 percent match on the first $1,000 of retirement savings.  So if you put a thousand bucks into a retirement account, your government is going to add even more — another $500.  It’s an incentive, but long term it saves the government a lot more money than the 500 hundred bucks put in if in fact we find we have a generation that’s able to care for themselves and not have to look to the government to provide some basic needs they need.  This will not only help build up a nest egg for existing savers, but it’s going to encourage workers who currently have no retirement accounts to start to save.

The matching tax credit, too, might sound like a nice plan, until you think about what it actually means: Instead of going into the U.S. Treasury, this money, too, will go straight to Wall Street, in the form of IRA investments in private retirement funds. And suddenly–presto–it’s yet another government handout to Wall Street. Even without the tax credit, there’s no doubt that the automatic IRA could be the best thing to happen to Wall Street since the creation of the pre-tax 401K.

It’s hard to fathom why Americans would want to dump more money into an IRA that will end up in unguaranteed mutual funds, so soon after seeing our private retirement investments take a beating in the recession. Just a year ago, we were all kicking ourselves for trusting Wall Street with our nest egss, and thanking our lucky stars that at least we hadn’t privatized Social Security. 

Nonetheless, the automatic IRA plan seems destined to forge ahead, steamrolling over other, more secure options. One such proposal was made by pension expert Teresa Ghilarducci, who suggested setting up accounts that would have a guaranteed government return and be run by the Social Security administration. (I outline her plan in my recent Mother Jones article on 401Ks.) But once again, the American government prefers to skirt direct responsibility for looking after its elders, and instead pass us off into the greedy, grasping hands of Wall Street–which will no doubt be laughing all the way to the bank.

Categories: Bush Administration · Congress · Obama Administration · Social Security · Wall Street / financial industry · corporations · economy · financial crisis / recession · pensions / retirement funds · right wing
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Obama Cuts Deal To Reduce Social Security, Medicare, Medicaid

January 20, 2010 · 8 Comments

Hopes for any pretense of liberal change from the Obama administration collapsed yesterday, and not only because of the election in Massachusetts. While the Massachusetts voters were casting their ballots to install the upstart Republican Scott Brown to Ted Kennedy’s Senate seat, the White House was hammering out a closed-door deal to cut entitlements. Obama won the support of Democratic leaders for a plan to issue an executive order that would inevitably lead to reductions in Social Security, and especially Medicare and Medicaid.

The plan represents a capitulation to conservatives in both parties, and would leave Democratic liberals accepting unconditional surrender not only on health care, but on the most basic of all New Deal programs.  As hopes of even a tepid health care reform wane, the effect of this  plan, if accepted by Congress, will be to undermine the only single-payer health care programs this nation has ever known–Medicare for elders, and Medicaid for the poor. As an attack on entitlements, it has the potential to go beyond anything the Reagan and Bush administrations were able to achieve.

As the Washington Post explains this morning:

Under the agreement, President Obama would issue an executive order to create an 18-member panel that would be granted broad authority to propose changes in the tax code and in the massive federal entitlement programs — including Medicare, Medicaid and Social Security — that threaten to drive the nation’s debt to levels not seen since World War II.

The accord comes a week before Obama is scheduled to deliver his first State of the Union address to a nation increasingly concerned about his stewardship of the economy and the federal budget. After a year in which he advocated spending hundreds of billions of dollars on a huge economic stimulus package and a far-reaching overhaul of the health-care system, Obama has pledged to redouble his effort to rein in record budget deficits even as he has come under withering Republican attack.

The commission would deliver its recommendations after this fall’s congressional elections, postponing potentially painful decisions about the nation’s fiscal future until after Democrats face the voters. But if the commission approves a deficit-reduction plan, Congress would have to act on it quickly under the agreement, forged late Tuesday in a meeting with Vice President Biden, White House budget director Peter R. Orszag, and Democratic lawmakers led by Senate Majority Leader Harry M. Reid (Nev.), House Speaker Nancy Pelosi (D-Calif.) and House Majority Leader Steny H. Hoyer (Md.).

Senate Budget Committee Chairman Kent Conrad (D-N.D.), who has long advocated creation of an independent budget panel, called the agreement an “understanding in concept” that holds the promise of at last addressing the nation’s most wrenching budget problems.

“This goes to the question of the country’s credibility with managing its own finances. This is essential for the nation,” Conrad said.

The commission is likely to form the centerpiece of Democrats’ efforts to reduce projected budget deficits, which have soared into record territory in the aftermath of the worst recession in a generation. Government spending to bail out the troubled financial sector and to stimulate economic activity have combined with sagging tax collections to push last year’s budget deficit to a record $1.4 trillion. The budget gap is projected to be just as large this year and to hover close to $1 trillion a year for much of the next decade. 

In other words: The national treasury has been driven into deep deficits by a financial crisis caused by Wall Street greed, compounded by two wars, tax cuts for the rich, and the high prices charged by health care profiteers. And where will we turn to make up for this loss? To the poor and the old, who cling greedily to their “entitlements.”

The claim is made that we need to make these entitlements “solvent” and “sustainable” in their own right, so they don’t “run out of money”–but that’s just political flim-flam. Social Security is in fact perfectly solvent, and the fiscal problems of the Medicare and Medicaid programs stem from the excesses of profit-based health care. If cuts are made to these programs, which have saved millions of Americans out of desperate straits, it will be because there’s simply no political will to do anything else to address the deficit.

All this represents a major victory for the corporate take-over mogul Pete Peterson whose foundation has put up $1 billion to lobby the proposal. His efforts have even involved  a financial news service that pushes this rich man’s plan, and that  has wormed its way into the Washington Post.  William Greider, who has long been covering the Peterson story, writes in The Nation:

The retired mogul has created a digital news agency he dubs “The Fiscal Times” and hired eight seasoned reporters to do the work there. “An impressive group of veteran journalists,” Peterson calls them. I hope they have shaken a lot of money out of this rich geezer. Because I predict doing hack work for him will seriously soil their reputations for objectivity and independence.

With his great wealth, Peterson could have also bought a newspaper to publish his dispatches, but he did better than that. He hooked up with the Washington Post, which has agreed to “jointly produce content focusing on the budget and fiscal issues.” (This media scandal was first uncovered by economist Dean Baker.) The newspaper is thus compromising its own integrity. It’s like buying political propaganda from a Washington lobbyist, then printing it in the news columns as if it was just another news story. Shame on the Post, my old newspaper. I predict a big stink like the one that greeted the Post when its publisher decided to hold pay-for-access “salons” for corporate biggies.

The deal is based on rickety interpretation of the country’s basic laws governing taxation.  Normally, any change in taxes must be passed first by the House, with legislation wending its way through the Ways and Means Committee up to the floor. This proposed arrangement short cuts—indeed appears to bypass—this procedure. The appointed commission is to make a recommendation on the budget after the election and that recommendation then goes straight to Congress where it might go through hearings,floor debate and a vote,or as some proponents of the idea would like, just get an up or down vote. To rub salt in the wounds, it was largely crafted not by members of the House, but by vice president and former Delaware senator Joe Biden along two senators–Kent Conrad, the North Dakota Democrat, once considered heir to the Great Plains progressive tradition, and conservative Judd Gregg, from New Hampshire. The man behind the commission plan is Pete Peterson.

The National Committee to Preserve Social Security and Medicare, which has been fighting against the creation of the commission, recently sent a letter to Congress, saying in part: 

We appreciate the concerns of legislators who are looking for a means of reducing the federal deficit and slowing the growth in the debt. However, we have significant concerns about any process – including the Conrad-Gregg Commission – that would disenfranchise American voters and subject Social Security beneficiaries to harmful cuts in benefits. As supporters of Social Security, we are surprised to see the federal deficit and the federal debt cited as the reason a commission needs to be established to make cuts in Social Security. The truth is that neither the $1.4 trillion deficit nor the nearly $12 trillion debt has anything to do with Social Security benefits.   

For nearly three decades, Social Security has taken in more revenue each year than it has paid out in benefits. These excess funds have been invested in special issue U.S. government securities. Thus, Social Security has effectively been loaning its excess funds to the federal government to spend on other programs. Rather than increasing the federal deficit, Social Security’s annual surpluses have actually been covering up the true size of the deficit in the general fund.

 

Categories: 2010 elections · Congress · Congressional Democrats · Congressional Republicans · Medicare · Obama Administration · Social Security · older workers · pensions / retirement funds · right wing
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How CEOs Rip Off Pensions

November 23, 2009 · 1 Comment

What’s left of the American pension system is a  pit of unexplored corruption.  Corporate management has used the pension fund as a piggy bank to make speculative investments, and cover its ass in any number of ways. The pensions themselves are supposed to be guaranteed by a government insurance fund, but during the Bush administration there was much speculation it was being used by its leaders to speculate in stocks and bonds.

As for the  happy-go-lucky “seniors”  enjoying their  so-called “golden years”–well,  a lot of them are scrounging around trying to make ends meet due to their companies having dumped them into loser 401k plans. Those that were left with old fashioned pensions are getting screwed by their CEOs who rip off the company for millions, leaving the pension in arrears, then bundle everything up and sling it to the government  backed pension insurance fund. 

USA Today provides some particularly grotesque examples:

Top executives at four companies that jettisoned their employee pension plans received $49.5 million in retirement and severance benefits in the years before the companies filed for bankruptcy, while retirees saw their benefits cut by as much as two thirds, congressional investigators conclude in a report released Thursday….

The Government Accountability Office (GAO) reports that pensions at the companies, United Airlines, US Airways, Polaroid and Reliance Insurance, were underfunded by more than $11 billion when the companies turned them over to a government-backed insurance fund. The report says executives at those four companies and six others that abandoned their pension plans took in a total of $350 million in pay and perks in the years leading up to the bankruptcies.

“If the pension is getting deeper into trouble and the executives are getting richer, there’s something wrong with that picture,” said House Education and Labor Committee Chairman George Miller, D-Calif.

No kidding.

Categories: Bush Administration · Wall Street / financial industry · age discrimination · financial crisis / recession · pensions / retirement funds · poverty
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