Category Archives: deficit

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.