Seniors would benefit in President Biden’s $6 trillion budget

Published in RINewsToday on June 14, 2021

On May 28, with the release of a $6 trillion budget for fiscal year (FY) 2022, President Joe Biden outlined his values and vision as to how he proposes to revive the nation’s sputtering economic engine as it emerges from the devastating impact of the COVID-19 pandemic. The 72-page budget document, “Budget of the United States,” (with more than a 1,400-page appendix) details his spending priorities that begin next Oct. 1. Biden’s generous budget depends on increasing taxes on America’s corporations (from 21 to 28 percent) and high earners, who received significant tax breaks from the President Trump/GOP tax cuts of 2017.

With the FY 2022 Budget pushing federal debt to the highest levels since World War 1I, Republican lawmakers quickly called the proposal “dead on arrival” in Congress.  However, Cecilia Rouse, chair of President Biden’s Council of Economic Advisors says the Biden Administration is willing to live with a budget deficit to invest in the economy now, especially with low interest rates to borrow; deficits can be reduced later. 

President Biden’s new spending under the just released proposed FY 2022 budget, recognizing his Administration’s priorities, reflects the major proposals already outlined under the administration’s $2.3 trillion American Jobs Plan and $1.8 trillion American Families Plan. Provisions in these two proposals would overhaul the nation’s aging infrastructure and invest in education, childcare, paid family and medical leave, fight climate change. 

President Biden’s spending plan also recognizes priorities outlined in the American Rescue Plan passed earlier this year as well as the Administration’s “skinny” discretionary budget request released in April. Most importantly, it reflects a commitment from the president to safeguard Medicare, Medicaid and Social Security.

Loving It or Hating It Depends on Where You Sit

In remarks delivered Thursday in Cleveland, President Biden made the case for his budget request and what he describes as an investment in the country’s future. “Now is the time to build [on] the foundation that we’ve laid to make bold investments in our families and our communities and our nation,” he said. “We know from history that these kinds of investments raise both the floor and the ceiling over the economy for everybody.”

In the FY 2020 Budget proposal’s “Message from the President”, Biden says, “The Budget invests directly in the American People and will strengthen the nation’s economy and improve our long run fiscal health. It reforms our broken tax code to reward work instead of wealth while fully paying for the American Jobs and American Family Plans over a 15- year period. It will help us build a recovery that is broad-based, inclusive, sustained, and strong,”

Of course, response to Biden’s Spending plan depends on which side of the aisle you are sitting.

House Speaker Nancy Pelosi (D-CA) released a statement strongly endorsing Biden’s fiscal blueprint. “Congressional Democrats look forward to working with the Biden-Harris Administration to enact this visionary budget, which will pave the path to opportunity and prosperity for our nation. The Biden Budget is a budget for the people,” she said.

On the other hand, Senate Minority Leader Mitch McConnell strongly opposing Biden’s Budget proposal. “Americans are already hurting from far-left economics that ignores reality,” said McConnell, in a statement. “The Administration’s counterproductive ‘COVID relief bill’ has slowed rehiring. Families are facing painful inflation, just as experts warned the Democrats’ plans might cause. And the Administration wants to triple down on the same mistakes?” said the six-term Republican Kentucky Senator.

With the Democrats holding the slim majorities in the House and Senate and controlling the White House, Biden’s FY 2022 Budget proposal will have more weight than if the Republicans were in the majority, says Dan Adcock, Government Relations and Policy Director at the Washington, DC-based National Committee to Preserve Social Security and Medicare (NCPSSM).

According to Adcock, Biden’s funding numbers will change as his FY 2022 budget proposal goes through the appropriation process in the upcoming months. With its release, Congress can now begin negotiating funding levels and spending bills. Competition for a finite amount of funding will ultimately result in funding level ultimately allotted to programs and agencies by each of the 12 appropriations under their jurisdiction. Funding for most programs important to older Americans is under the jurisdiction of the Subcommittee on Labor, Health and Human Services and Education.

“With 10,000 Baby Boomers turning 65 every day – and the number of seniors projected to double by 2050 – it’s clear that President Biden understands the need to safeguard the older Americans he calls ‘pillars of every community – now and into the future.” Says Max Richtman, NCPSSM’s President and CEO.

Slashing Drug Costs to Pay for Expanding Medicare Coverage

Richtman says that Biden’s fiscal blueprint calls on Congress to allow Medicare to negotiate prices for certain high-cost, life-saving drugs that many seniors currently cannot afford and to require manufacturers to pay rebates when drug prices rise faster than inflation. These reforms could yield over half a trillion in federal savings over 10 years, which could help pay for coverage expansions and improvements, including access to dental, hearing, and vision coverage in Medicare,” he notes. Today, traditional Medicare does not cover routine care like dental checkups or hearing aids.

According to Richtman, President Biden’s budget also includes more than $400 billion in new spending over ten years to expand Home and Community-based Services (HCBS) for low-income seniors and people with disabilities who prefer to receive skilled care in the comfort of their homes and communities, even moreso after the devastation COVID wrought on nursing homes.  

In states that have not taken advantage of Affordable Care Act (ACA) opportunities to expand Medicaid, the budget proposes providing premium-free, Medicaid-like coverage through a federal public option, along with incentives for states to maintain their existing expansions. 

Biden’s FY 2022 budget also urges Congress to improve customer service for Social Security beneficiaries to prescription drug pricing reform to expanded HCBS, adds Richtman.  It also proposes a $1.3 billion (or 9.7%) funding increase for the Social Security Administration.  The increase seeks to improve customer service, including services at SSA’s field offices, state disability determination services, and teleservice centers.

 The Older Americans Act (OAA) provides funding for a wide range of home and community-based services, such as meals-on-wheels and other nutrition programs, in-home services, transportation, legal services, elder abuse prevention and caregivers’ support. These programs help seniors stay as independent as possible in their homes and communities. 

For details about Biden’s FY 2022 Budget proposal and OAA funding levels, made available from the Washington, DC-based National Association of Area Agencies on Aging, go to: https://www.n4a.org//Files/FY22%20PresBudget%20and%20historical%20Labor-HHS%20Appropriations%20Chart.pdf

 Stay Tuned 

The House continues its work on hammering out appropriation bills through subcommittees in June and in the full House in July.  The Senate’s work is expected to begin in mid-Summer and to continue well into September. If the appropriate bills are not passed and signed into law by Oct. 1, Congress will need to pass a continuing resolution to fund the federal government into the first months of FY 2022.

Like most Budget proposals, especially in a partisan Congress, Biden’s spending plan will need to be rewritten to win support from lawmakers on both sides of the aisle. However, it will serve as a roadmap for a Democratic controlled Congress in crafting 12 appropriation spending bills. Partisan bickering during the appropriations process may well force passage of a continuing resolution before Oct. 1 to block a government shutdown. 

Protecting Retirement Savings Should Be a Priority

Published on March 7, 2015 in the Pawtucket Times

Last month, President Obama used his presidential bully pulpit to publicly support a proposed U.S. Department of Labor (DOL) rule, endorsed by a coalition of aging, labor and consumer groups, that reportedly limits conflicts of interest, increases accountability, and strengthens protection for Americans receiving retirement investment advice.

At the February 23 press conference held at the Washington, D.C.-based AARP headquarters, attended by Obama, Save Our Retirement Coalition members and lawmakers, the President called for the issuing of the proposed rule, still awaiting Office of Management and Budget (OMB) review and final DOL action. The updating of DOL rules and requirements would require higher standards for financial advisors, requiring them to act solely in their client’s best interest when giving financial advice, said Obama.

The Save Our Retirement Coalition says that the final rule is “needed to help protect Americans’ hard earned retirement savings from advisers who recommend investments based on their own interest – such as those that pay generous commissions – not because they serve their clients’ best interest.”

Existing Rules Outdated

In his remarks at AARP, Obama called the rules governing retirement investments written over 40 years ago “outdated,” filled with “legal loopholes,” and just “fine print,” needing an overhaul.  The existing rules governing retirement investments were written “at a time when most workers with a retirement plan had traditional pensions, and IRAs were brand new, and 401ks didn’t even exist,” the President explained.

At the event, Secretary of Labor Thomas E. Perez., claimed that his agency has substantially reached out to “a wide range of stakeholders,” to craft the proposed rule that was sent to OMB.  “The input we have received to date has been invaluable, but we’re not even close to being done. We have a lot more listening to do, and once the Notice of Proposed Rule Making is published in the coming months, I look forward to hearing from as many stakeholders as I can. We’re going to get this right, because the strength of the middle class depends on a secure retirement,” he says.

“We know the people we represent have worked hard to save for retirement, and we believe that they deserve to have financial advisers who work just as hard to protect what they’ve earned,” said AARP CEO Jo Ann Jenkins, in her remarks.  AARP is a member of the Save Our Retirement Coalition.

“AARP, a major consumer advocate, has been fought for this consumer regulation for over five years to ensure that Americans of all ages get the best financial advice when planning for their retirement,” says Jenkins. “Recently AARP also found that 9 out of 10 employers who sponsor retirement savings plans support holding advice to such a ‘best interest’ standard,” she adds. .

“In today’s world, it’s hard enough to save for retirement and achieve your financial goals” added Jenkins. “We don’t need to make it more difficult by allowing some on Wall Street to take advantage of hard-working Americans. Bad financial advice is just wrong,” she says.

According to Save Our Retirement Coalition, “the need for the proposed rule was made starkly apparent in a White House report released showing that conflicts of interest are costing middle class families and billions of dollars annually. The 30 page report, released last month, details the current regulatory environment for financial planners, providing evidence on the negative financial impact of conflicted professional investment advice draining older American’s retirement saving accounts.

The White House report, issued by Council of Economic Advisors, cited evidence pulled from the literature, showing that “conflicted advice reduces investment returns by roughly 1 percentage point for savers receiving that advice” The report also found that “a retiree who receives conflicted advice when rolling over a 401 (k) balance to an IRA at retirement will lose an estimated 12 percent of the value of his or her savings if drawn down over 30 years.  For those receiving conflicted advice “takes withdrawals at the rate possible absent conflicted advice, his or her savings would run out more than 5 years earlier.”

Holding Wall Street Accountable

“Many investment professionals do what’s right,” said AARP Rhode Island State Director Kathleen Connell. ”But loopholes in the law are allowing some on Wall Street  to take advantage of hard-working Americans, recommending investments with higher fees, riskier investments, and lower returns to make even higher profits for themselves. Last year alone, hidden fees, unfair risk and bad investment advice robbed Americans of as much as $17 billion,” she states.

“AARP agrees that financial professionals of all types serve a valuable role in building the wealth and security of the investing public,” added Connell. “We simply want to achieve some consistency in the standards across the industry. Here is Rhode Island, many retirees are very concerned about their investment savings and they deserve protection. Our position is that retirement accounts managed by a broker should receive the same protections as regular investment accounts held with an advisor,” she says.

“Rhode Islanders have who have worked hard for their money and deserve a new standard that holds Wall Street genuinely accountable for helping them choose the best investments for themselves, their family and their future,” she adds.

Security Trade Group Concern

             The Securities Industry and Financial Markets Association (SIFMA), a trade group representing securities firms, banks and asset management companies, is waiting to see the details of the proposed rule.  SIFMA CEO Kenneth E. Bentsen, Jr., stated: “While we cannot comment on a proposal we have not yet seen, we have ongoing concerns that the DOL regulation could adversely affect retirement savers, particularly middle class workers.  The new regulation could limit investor choice, cause inconsistencies as different regulators would apply different standards to the same regulatory accounts, prohibit guidance, and raise the costs of savings for retirement.”

But, both Obama and the Save Our Retirement Coalition strongly disagree with SIFMA’s assessment of the potential impact of DOL’s proposed rule, which has not yet been issued and is ultimately subject to change after the public comment period.

A large majority of financial planners put their clients first when giving them investment advice. But, as you know a few bad apples can truly spoil the barrel.  If trade groups representing financial planners fail to act to rein in financial planners who give conflicted advice to pad their pockets, than federal regulations can quickly do that job by applying “simple, commonsense standards.”

It makes practical and political sense to me.

Here is a linked to President Obama’s comments at the AARP Press Conference: http://www.whitehouse.gov/photos-and-video/video/2015/02/23/president-obama-speaks-aarp.

Herb Weiss, LRI ’12 is a Pawtucket-based writer who covers aging, health care and medical issues.  He can be reached at hweissri@aol.com . Or call 401/ 742-5372.