Published in Woonsocket Call, April 21, 2013
President Barack Obama, missing the federal mandated budget submission deadline by over two month, finally unveils his fiscal blueprint on April 10, giving Capitol Hill a peek as to how he would fund the nation’s federal agencies, programs and services.
The President proposed a $3.8 trillion budget plan for fiscal 2014, that seeks to slash the huge federal deficit by a net $600 billion over 10 years, raises taxes on the wealthy, and puts the breaks to rising costs of two very popular senior programs, Social Security and Medicare.
Senior groups call President Obama’s the first budget proposal of his second presidential term, a “mixed bag.” His fiscal blueprint would eliminate the draconian cuts of the sequester, that is the arbitrary, across the board cuts Congress imposed this year. However, Obama seeks to reduce the federal deficit by calling for another $200 billion in cuts to discretionary programs – half from defense programs and half from domestic programs.
Braking the Rising Costs of Social Security Despite the Social Security Trustee’s 2012 Annual Report that the entitlement program has the financial resources to pay all benefits through 2033 (see my June 1, 2012 Commentary in Pawtucket Times), Social Security benefits are targeted in the recently released budget plan for substantial cuts by adopting the “chained” consumer price index (CPI) for the purpose of calculating Social Security cost-of-living adjustments, or COLAs.
According to the Washington, D.C.-based, National Committee to Preserve Social Security and Medicare (NCPSSM), the Obama Administration sees this switch as “a technical adjustment.” Aging group warn that using the “chained” CPI will substantially reduce the Social Security benefits of current and future beneficiaries. “If it is adopted, a typical 65 year-old would see an immediate decrease of about $130 per year in Social Security benefits. At age 95, the same senior would face a 9.2 percent reduction—almost $1,400 per year,” notes NCPSSM.
While all beneficiaries will feel the impact of this change, its effect will be greatest on those who draw benefits at earlier ages (e.g., military retirees, disabled veterans and workers) and those who live the longest, says NCPSSM, especially “women who have outlived their other sources of income, have depleted their assets, and rely on Social Security as their only lifeline to financial stability.”.
With Republican Congressional lawmakers generally supportive of Obama’s push to rein in Social Security costs, through the use of the “chained” CPI, liberal Democratic lawmakers, including Rep. David Cicilline, representing Rhode Island’s 2nd Congressional District, strongly oppose the President or any Congressional efforts to cut Social Security to lower the nation’s federal deficit.
Rep. Cicilline calls for reforming the nation’s tax code by ending subsidies for “Big Oil,” along with “making responsible target spending cuts,” to slash the nation’s huge federal deficit .
AARP Poll Says, Keep Your Hands Off Social Security
In a statement, AARP Executive Vice President Nancy A. LeaMond, quickly reacted to the Democratic President’s efforts to use the “chained” CPI to control rising Social Security program costs.
While AARP recognizes the need for the President and Congress to confront budget challenges facing the nation, the nation’s largest aging advocacy group calls for “responsible solutions, not harmful proposals” that would hurt older beneficiaries or threaten the retirement security of the generations that follow, says LeaMond.
LeaMond said, “AARP is deeply dismayed that President Obama would propose cutting the benefits of current and future Social Security recipients, including children, widows, veterans and people with disabilities, to reduce the deficit. Social Security is a self-financed program that doesn’t contribute to the deficit, so it shouldn’t be cut to reduce it.”
AARP’s polls indicated that older Americans, across the political spectrum, agree with nonprofit group’s opposition to the “chained” CPI. LeaMond, notes. The recently released national survey found that “fully 84% of voters age 50 and over oppose cutting Social Security benefits to reduce the deficit.”
“Instead of making harmful cuts to Medicare or shifting additional costs onto beneficiaries, we need to look for savings throughout the health care system, including Medicare,” suggests LeaMond. She says that also “lowering the costs of prescription drugs, innovations that promote better care, reward improved outcomes and make health care programs more efficient and less wasteful have the potential to hold down systemic high health care costs, including costs in Medicare.”
Finally, LeaMond adds, “We know that prescription drugs are one of the key drivers of escalating health care costs, so we appreciate the President’s inclusion of proposals to find savings in lower drug costs. And we applaud his plan to accelerate closure of the ‘donut hole’ in Medicare Part D by 2015, which would reduce seniors’ often burdensome out-of-pocket health care expenses.”
A Snap Shot of Other Aging Budget Issues
Howard Bedlin, Vice President for Public Policy and Advocacy at the National Council on Aging (NCOA), in a written statement calls Obama’s budget proposal a “mixed-bag” when it comes to seniors.”
Bedlin acknowledges that the recently released Obama budget eliminates the sequester cuts to critical programs like Meals on Wheels and other Older Americans Act services, elderly housing, and other vital senior services. “It is unfortunate that cuts are proposed for low-income energy assistance and senior job training and placement programs,” he says.
According to Bedlin, the President’s budget also protects SNAP (Food Stamps) and Medicaid, in sharp contrast to the drastic cuts approved in the Republican-controlled House budget proposal. “Cuts in Medicaid would be devastating to the millions of vulnerable seniors who rely on the program for long-term care and Medicare low-income protections,” he says.
Meanwhile, a major concern for NCOA with the President’s budget surrounds Medicare and Social Security. While the organization supports some of the Medicare reductions, the proposed $370 billion in additional cuts are “excessive and several will harm” beneficiaries (more than half having incomes below 200 percent of the poverty line), says Bedlin, these cuts in addition to the $716 billion in Medicare cuts under health reform and significant reductions in spending growth over the past three years.
Also, the proposed new home health co-payment will fall primarily on lower-income older women with multiple chronic health conditions, and lead to premature nursing home placement, predicts Bedlin. “The proposed increase in the Medicare Part B deductible would be especially harmful and unaffordable to millions of seniors with incomes just above the federal poverty line ($958 per month),” he says.
Finally, Bedlin notes that the proposed Medigap surcharge would penalize seniors for decisions made by their doctors, cause major market disruption, and seriously confuse many current policy holders. The proposal to further increase Medicare premiums based on income could result in those with incomes of about $47,000 being forced to pay more.
NCOA joined AARP and NCPSSM and virtually every other national aging organization in opposing the President’s proposal to cut the Social Security Cost of Living Adjustment (COLA) through the use of a “chained” CPI.
A Final Note… With Obama’s proposed budget now thrown in the ring with the House and Senate budgets already drafted and voted on, will Congressional gridlock keep the Democratic President, the GOP-Controlled House and Democratic Senate from working together to hammer out a consensus, bipartisan compromise? Only time will tell if elected lawmakers clearly get the message from the American people, “put the people first and not your political party.”
Herb Weiss, LRI ’12, is a Pawtucket-based freelance writer covering aging, health care and medical issues. He can be reached at email@example.com.