Category Archives: budget cuts

Social Security: "Bro" v Mom

My brother is one of those top earners we have all been eyeing up for tax revenues. My sister-in-law and my brother will lose some money if we raise taxes on those over $250,000 per year or more.

My mom who is 95, and who is, of course, also my brother’s mom has an income so low that she doesn’t have to pay any taxes. She has to live on less than $20,000 a year.

Obama wants to raise my brother’s taxes a bit.

The Republicans want a “chained CPI” for Social Security which would take money out of my mother’s budget right now.

Who do you think can better afford to make a small sacrifice, my brother and sister-in-law, or my mom?

Which side do you think my “bro” would come down on?

Would he rather raise his taxes or lower mom’s income? He knows how proud she is about paying her own way in life. He knows she will not ever accept financial help unless circumstances are dire.

I believe he would prefer that he take the hit rather than mom.

Some wealthy people took a hit on January 1st, but perhaps not my brother. In spite of income generated by raising taxes (not a whole lot of income) Social Security cuts are still on the table. I don’t want cuts to Social Security that will affect current recipients. Isn’t the “baby boom” a limited phenomenon? Eventually all the “boomers” will have retired and the number of new recipients will begin to fall. I remember when I was in college, campuses added new dorms and new gyms and new classrooms to meet the needs of the baby boom. What happened when the balloon broke? Do we really need to make drastic changes or even small tweaks to Social Security? If the balloon created by the boomers did not hit us during a recession when money is tight, would we need to adjust for what is an equal and temporary balloon in payments?

I keep touching base with the real people who will be affected by these cuts and one of those people is the one I worry about most, my mom. This whole idea of a “chained Comsumer Price Index” is fairly new and it would affect the payments people receive right now. My mom lives almost completely on Social Security. Once again I will remind you that she has reached 95 years of age, a time she should only have to worry about health issues, enjoying family and whatever small pleasures she can squeeze from life as her mobility dwindles. She has been fortunate enough to continue to live at home because one of my sister’s lives with her. She gets 1200 per month from SS and 250 a month from GE. This gives her an income of 17,400 per year, below the poverty level. Out of this, because she insists on paying her own way, she must pay her property taxes, her utilities, her groceries (which increase at the holidays), her medical expenses, and she still manages to save $200 a month. She grew up during the Great Depression and has been very poor throughout her life, although her circumstances improved while my Dad was alive, and now she is back to pinching pennies and saying no to most of life’s delights. I will fight a “chained CPI” because of what this would do to my mom’s carefully budgeted life. I know there are many seniors in these same straits, especially if they were homemaker’s and do not receive their own Social Security monies in addition to those of their husbands.

Will we agree to raise the age for recipients once again, assuming that because they live longer they are able to work longer, even though for most recipients this is not so? Will we take more taxes from people with higher salaries and give them lower benefits? Of course I do not have a problem with this idea probably because I have never been rich. Saving Social Security is different from making it part of a deficit bargain. Social Security is not, right now a deficit item and won’t be for several years. Let’s keep tackling health care to get our savings and cut other programs and drop those research grants to studies that amaze, amuse and shock us. Let’s make some cuts to the military. Is that off the table?

In today’s (January 3rd) on-line edition of the New York Times their Room for Debate feature takes on the issue of Social Security. Here are the issues that are discussed:

Debaters

·        

Leave It Alone; It’s Irrelevant to the Deficit

Dean Baker, Center for Economic and Policy Research

Social Security, with its own revenue, is totally separate from the budget. Our large deficits were caused by the collapse of the housing bubble.

·        

Act Now to Prevent Future Debt

Alice Rivlin, Former federal budget official

Modest adjustments would prevent an increase in debt as revenue from workers continues to fall short of what’s needed to pay benefits.

·        

No Need to Cut the Little That Recipients Get

Jeff Madrick, Roosevelt Institute

A modest increase in payroll taxes and a slight rise in the incomes covered by those taxes will largely take care of any future shortfall.

·        

Major Changes Are Needed

Andrew Biggs, American Enterprise Institute

Raising the retirement age and other measures would guarantee the program’s solvency and ease our debt burden.

·        

Too Important to Ignore

Alicia H. Munnell, Center for Retirement Research

Fear for the system’s future, as outlays are projected to exceed income, leads many to retire early, with reduced benefits.

 

How can there be so many different views of Social Security and its role in our deficit? The numbers should speak here, but we can no longer trust numbers as we have seen statistics “bent” to back up a particular political point of view. Who can we believe on this?
This is the view from the cheap seats.

Promises, Promises

Andrew Cuomo is such a mixed blessing. It is wonderful to feel the wheels of the New York State government grinding onward once again, after some very strange times when our legislators refused to work with weak or flawed leaders. It is refreshing to have a leader who works well with others and who seems to have the respect of our representatives in Albany.
But I have to say Andrew Cuomo is beginning to look just the slightest bit like he is running NYS all alone, without bothering to take into account anything the residents of NY who elected him have to say. He’s out there on his own in a sort of cowboy-rounding-up-the-cattle kind of mode. Our representatives and even our unions are being surprisingly quiet about some decisions that have been quite difficult to swallow. I get the feeling that they are keeping quiet because it is not a good moment for direct confrontation. I can’t even get a grip on what factors tie Andrew Cuomo’s “projects” together so we can perceive an organized political approach. He seems to have no favorites. He turns his stern paternal gaze on all equally and lets the chips fall where they may (no pun intended).
Most recently he has joined a long line of those who have decided that there is no need to honor agreements that were made with workers because a tough economy has made it too difficult. I used to watch with such fear and loathing as one company after another filed bankruptcy and abandoned employee pension plans. What happened to those workers? Some were probably young enough to start their retirement funds over, but many were not. Over and over people who were promised, and who worked and saved for, some security in their senior years were left flapping in the wind. Maybe they found a way to survive on their social security or relatives helped, or they just worked ten to twenty more years. America began to lose some of that bulletproof shine it once had as it allowed these companies to renege on their promises to America’s workers. Isn’t it just possible that when people lose their trust, when they are betrayed by their employers and/or their government they might lose that edge that made American workers great and it might be hard for them to get it back.
Time marches on. The corporations took America’s prosperity with them when they left. We haven’t replaced it yet. It will take time. Our economy is in a period of decline and now our governments (federal, state, and local) want to abandon retirees in much the same way that they corporations did. They feel they have to do it because paying retirees is making our federal, state, and local governments broke. There were some loopholes in the public pension system and some workers took advantage of them (or their supervisors did). Most people in the government pension system get pensions that are quite reasonable in size. Since we don’t have one-size-fits-all pensions we shouldn’t look for a one-size-fits-all solution. For whatever reasons, it seems that once again I am watching America break its promises and abandon its seniors. Once again I am shocked because I never believed this could happen. This time I am one of the seniors who stands to lose some of my security. I am still hopeful that I will squeak through, but I am worried about those who follow me.
So this brings me back to Andrew Cuomo, Governor of NYS who wants to institute a Tier VI for the state employee’s pension funds. The savings from this new pension level will not really affect NYS for many years we are told. It is unclear why we are looking so far down the road when we need so many things done that will help us right now. How will “fixing” the future fix the present? Andrew Cuomo gets what he wants. He seems to expect to get what he wants. He doesn’t ask for our opinions, he doesn’t seem to mind our protests. He is Clint Eastwood, we are the townspeople who may be saved or not; individuals don’t really matter. Why do we need Tier VI? Why are we likely to have hydrofracking whether we want it or not? There is a new sheriff in town and this is the new dust bowl. Governor Cuomo is not the only leader with carte blanche to make budget cuts without our input. Unexpected cuts will also be raining down on us from the federal level also. The American people somehow let themselves be cut out of this budget cutting process. Hunker down!