AARP: Social Security is an Economic Generator

Published in Pawtucket Times, October 4, 2013

For those who view Social Security bennies as just a drain on the nation’s economy, just adding the nation’s spiraling deficit, AARP, the nation’s largest aging advocacy group has always seen it differently. Now, according to a new report, released by AARP’s Public Policy Institute on Oct. 1, 2013, researchers found that for each dollar paid to Social Security beneficiaries generates nearly two dollars in spending by individuals and businesses, adding about $1.4 trillion in total economic output to the U.S. economy in 2012. More over, the report’s findings indicate that $762 billion paid in Social Security benefits in 2012 helped Americans keep or find more than nine million jobs.

If Congress is successful in putting Social Security on the budgetary chopping block, the economy will take a hit, warns the AARP report. According to the reports analysis, “reducing benefits by 25 percent across the board in 2012 (by $190 billion), which the Social Security will project will occur around the year 2033, could cost the U.S. economy about 2.3 million jobs, $349 billion in economic output, about $194 billion in GDP, and about $83 billion in employee compensation.”

A Multiplier Effect When Benefits Spent

The 25 page report, Social Security’s Impact on the National Economy, authored by Gary Koening of AARP’s Public Policy Institute, and Al Myles, of Mississippi State University, details the powerful multiplier effect created when Social Security recipients spend their benefits and the companies which receive those dollars spend their profits and pay their employees, who in turn spend their wages. The report provides both national and state-level data.

The researchers use an economic modeling system known as IMPLAN to calculate the multiplier effect and trace the impact of Social Security spending through the national and state economies.

“This report tells us that any adjustments Washington makes to Social Security will have a profound effect on individuals of all ages, businesses and our economy as a whole,” said AARP Executive Vice President Nancy LeaMond. “That’s why AARP is fighting the chained CPI and calling for a national conversation about the future of Social Security – so those who paid into the system can have a voice in the debate and so future generations get the benefits they’ve earned.”

Social Security benefit payments in 2012 supported more than $370 billion in salaries, wages and compensation for workers. Of the more than nine million jobs supported by Social Security spending, about four million were in just ten industries. Nationally, the largest employment impacts were seen in the food services, real estate, health care and retail industries.

In addition to illustrating Social Security’s vital role in supporting national and local economies, jobs and workers’ incomes, this report reiterates the importance of Social Security as a vital source of income for millions of Americans. Social Security benefits keep 22 million people out of poverty, including more than 15 million older Americans, and serve as the foundation of a secure retirement for millions more.

AARP’s Public Policy Institute calls the Social Security Program critical in promoting the income stability among the nation’s seniors, by providing a steady stream of income to replace wages lost due to retirement. “About 1 out of 6 Americans – 57 million people – receive Social Security benefits, including 9 out of the 10 individuals aged 65 and older,” says the Washington, DC-based policy institute.

According to the Social Security Administration, the program is a key source of retirement income for the nation’s retirees, noting that “it is the only inflation-protected, guaranteed income they have. Among the age 65 and over recipients, 23 percent of the married couples and 46 percent of the unmarried couples rely on the program for 90 percent or more of their income. Also, 53 percent of the married couples and 74 percent of those unmarried in this age group receive 50 percent or more of their income from Social Security.

Experts Weighing in on AARP Report

According to Lisa Mensah, Executive Director, of the Aspen Institute’s Initiative on Financial Security, “The AARP study fills a key void in the debate around Social Security. Social Security is not only important for individual financial security but also it has a major impact supporting jobs and economic activity in every state. When weighing Social Security as a budget matter, the fiscal coin has two sides—what it costs and what it delivers—and too often what Social Security delivers for the broader economy is poorly understood.”

Adds, Dean Baker, Co-Director of the Center for Economic and Policy Research,
“In a context where the economy is below full employment, as is clearly the case today, Social Security provides an important boost to demand. The report it released showed the importance of Social Security in each of the 50 states. When the economy is near full employment, the demand generating by Social Security may not be needed, but for now and the foreseeable future this demand will be providing an important boost to growth.”

Impact on State Economies

The AARP report details the spending of Social Security checks on the economy on all fifty states. Of course, California, the state with the largest economy in the nation, has the largest impact. In this state along, Social Security benefits supported 888,000 jobs, $147.4 billion in output, and $8.7 billion in state and local revenues.

Meanwhile, for the littlest state in the nation, “People need to consider a Rhode Island economy without Social Security benefits,” said AARP State Director Kathleen Connell. “Could the state live without $2.9 billion a year in federal money being spent on medications, rent, food, utilities, clothing and services?

“When a person spends Social Security benefits, the lawn gets mowed, the driveway gets plowed, CVS sells toilet paper, and the corner market sells milk. Someone gets paid and then spends that money – which means retailers and service providers are getting paid. And then they spend. It’s a cycle, and each step along the way, sales tax is collected by the state – more than $280.7 million,” says Connell. The AARP study shows that this spending supports 33,000 jobs in the Ocean State. So, Social Security makes life better for retirees and people with disabilities, it supports Rhode Island jobs and Rhode Island taxpayers benefit significantly, she says.

“Social Security was engineered with this in mind. The money paid into the system is not doing much if it stays in the Treasury,” observes Connell. “Social Security allows people to live more comfortably, improves their health and quality of life, and benefits the economy,” she adds.

“Seen this way, what would we be saving if we cut Social Security benefits?” quips Connell.

Congressman David Cicilline notes, this report confirms that almost 80 years after it was established, Social Security strengthens Rhode Island’s economy and provides significant benefits for families across this state.” Cicilline, representing the Ocean State’s 1st Congressional District, states that while other lawmakers propose Social Security benefit cuts of one kind or another; he has introduced legislation to protect the program by strongly opposing the use of chained CPI to calculate cost of living increases.

In Conclusion

Inside the Washington, DC beltway, Congressional lawmakers continue to seek out ways to rein in rising Social Security program costs. Some call for a combination of reducing program benefits while raising revenues. Others support only benefit cuts warning that raising the payroll tax or bringing other forms of additional revenue would hurt the nation’s fragile economy.

After the Federal Shutdown, when Congress comes back to continue the people’s business and begins to seriously debate policies for reforming Social Security, it becomes crucial for these lawmakers to bring the AARP Policy Institute’s economic impact study findings into their discussions. Slashing benefit checks will hurt financially vulnerable seniors, but as shown by the findings of this recently released report it can also have a drastic impact on fragile state economies by slowing job growth, and reducing retail and other spending, even lowering tax revenues at the local, state and the federal levels.

For a copy of the report, go to http://www.aarp.org/work/social-security/info-09-2013/social-security-impact-on-the-national-economy-AARP-ppi-econ-sec.html.

Herb Weiss, LRI ’12, is a Pawtucket-based writer covering aging, health care and medical issues. His weekly commentaries can be found on his blog, herbweiss.wordpress.com. He can be reached at hweissri@aol.com.

AARP’s President Romasco Great Rhode Island Adventure

Published in Pawtucket Times, August 23, 2013

AARP’s top volunteer, President Robert G. Romasco, sees a key role for AARP in supporting the nation’s families, which is why he made a quick one-day trip to the Ocean State last week to help kick off the Back to School Celebration of RI, visiting three of the eleven sites throughout the state. Romasco came to endorse AARP Rhode Island’s strong involvement with this ongoing learning initiative. The state affiliate is a long-time Celebration Sponsor and Deborah Miller, Associate Director of Community Outreach, sits on the School Celebration’s Board of Directors.

Programs like Back to School Celebration of RI are important for AARP to strongly support, says Romasco, because of the changing demographics of its membership. Once viewed as an organization representing those in their mid-sixties and older, now aging baby boomers 50 plus make up one of the largest membership constituencies, over 100 million Americans.

AARP does not just serve the needs of these members, but their families as well, their elder parents, adult children and even grandchildren. AARP’s mission statement spotlights its focus, “issues that matter most to families such as healthcare, employment and income security, retirement planning, affordable utilities and protection from financial abuse.”

Years ago, a pair of shoes was seen as a status symbol for young students returning to school. Today it’s a backpack, says Romasco, who says that this annual community initiative gets children excited about going back to school after the long summer recess. “It’s also about helping families to prepare their children to have a successful school year,” he says.

The Back to School Celebration, in its ninth year, began with a modest effort to support children in struggling families. It all started with 300 backpacks. It has grown dramatically to 14,000 backpacks distributed this year, with local companies donating the school supplies for the initiative. Any parent will tell you that school supply costs add up, especially in large families. This assistance keeps back-to-school costs from sinking a tight family budget every fall.

A Jam Packed Schedule

On Saturday, August 17, after opening ceremonies at the William D’Abate School in Providence, Romasco traveled to the West End Community Center in the city to pass out backpacks, working side by side with AARP State Director Kathleen Connell and Phil Zarlengo of Jamestown, a past chairman of the AARP national board. From there, Romasco drove to Newport to observe backpack distribution at the East Bay Community
Action Program. While there, he toured the new facility, which provides community-based health services utilizing an innovative patient-centered approach to medical care.

Said Romasco at the opening ceremonies, “When people want to see how America can work, I say, ‘Let them come to Rhode Island … and see how a community can work together for the benefit of all families and the children who are our future.’”

Romasco concluded his visit with a luncheon in Newport with city officials and community leaders that included a presentation by Newport Director of Public Services William Riccio, who discussed the Broadway Streetscape redesign. AARP Rhode Island, as part of its statewide “complete streets” advocacy (as reported in my May 19, 2012 Commentary), supported the project, which will make Broadway more pedestrian and bike friendly while adding features embraced by retailers and business on the thoroughfare.

Breakfast at the Diner

Around 8:00 a.m., at Pawtucket’s historic Modern Diner on East Avenue, Romasco, 65, sat down with this columnist to explain the issues on the policy radar screen of the nation’s largest advocacy group.

We don’t oftentimes see powerful national leaders who oversee major aging organizations come to the Ocean State. But we did last week. As AARP President, Romasco’s 22-member volunteer Board of Directors approves all policies, programs, activities, and services and oversees a $1.5 billion operational budget for the Association’s 37 million members. The huge nonprofit, nonpartisan organization employs 2,400 employees, many based in every state and in the nation’s territories.

While many of AARP’s volunteer Board Members come up thru the rank and file in local State Chapters, this was not the case with Romasco. In 2005, at age 57, an old friend, who met him 35 years earlier when he consulted for AARP, urged him to respond to an open call for consideration for the top AARP leadership position. When the dust settled he was among “seven lucky individuals” chosen from a pool of 400 applicants.

According to Romasco, AARP brings in seven new board members every two years. “We look at a person’s diversity, not just in ethnicity and where a person lives, but what skills and points of views they bring,” he says, stressing that this creates a “good mix” on the group.

Many would consider Romasco’s appointment a very good choice. The retired businessman is a graduate from Harvard Business School with a Master of Business Administration, who previously received his Bachelor of Arts degree from Brandeis University.
During his 35 year working career, Romasco has held senior level positions at a number of prestigious national companies, including QVC, Inc., CIGNA, Inc. and J.C. Penny. Over the years at these companies, he has honed his skills in marketing, branding and organizational change. However, during his long career he did take a one-year sabbatical from his full-time job. “I actually got to see my kids go to school. I got to see them come home from the bus. ”

His presidency at the helm of AARP is very time consuming, “a full-time activity,” he quips. When responding to people who ask him if he is retired, Romasco nods, stating “I just don’t get paid anymore.”

Before becoming President, Romasco served as AARP board secretary/treasurer, and chaired the Audit and Finance Committee. He is a former member of the Board of Directors, of AARP’s Andrus Foundation.

Romasco personally gets it, that receiving a Social Security check can often times mean the difference between eating or not eating. With his mother bringing home a meager wage earned as a part-time seamstress, her survivor benefit check literally put food on the table for the young child and his sister.

His speaking schedule is jam packed, as he travels around the nation sharing his personal experiences as to the importance of Social Security impact on a family’s budget. These visits are used to get this message out: “Social Security is the only lifetime, inflation-protected guaranteed source of retirement income that most Americans will have.”

As the Congressional debate heats on Capitol Hill, as to modifying Social Security’s existing cost of living formula thru a chained CPI, Romasco warns that it’s not a minor tweak but one that can substantially reduce the amount of a retiree, a disabled person or veteran’s benefit check. According to AARP calculations, a 65 year old retiree would lose $662 over five years of retirement. After 20 years of Social Security, the benefit cut would amount to $9,139.

A chained CPI is just “bad policy, a bad idea” says, Romasco, one of the nation’s most visible aging advocates. “It is an attempt by Congress to balance the federal deficit on the back of the nation’s seniors,” he charges.

During my breakfast, Romasco tells me that AARP has unleashed one of its largest outreach efforts in its history. Its “You’ve Earned a Say,” initiative educates Americans about the policy debates on Social Security and provides them an opportunity to voice their views and concerns on the ongoing retirement policy debates in Congress. Rhode Island AARP oversees this initiative in the Ocean State (as detailed in my Commentary published Oct. 26, 2012),

Just last week, he says that petitions from 1.5 million people who voiced their opposition to the chained CPI calculations for annual COLA adjustments on 10,000 pages in 15 large boxes were carried to the House Ways and Means Committee.

Romasco says that AARP, through its successful efforts to collect these petitions from 4,000 town meetings held nationally, has enabled citizens to have an opportunity to express their opinions to their elected officials.

He smiles, noting that Congress has certainly heard from the nation’s aging baby boomer and seniors. “Congress certainly cannot ignore us with those delivered petitions.”

Herb Weiss, LRI ’12, is a Pawtucket-based writer covering aging, health care and medical issues. He can be reached at hweissri@aol.com.

Susan Sweet Takes the Reins of AARP’s Community Educational Initiative

Published in Pawtucket Times, July 11, 2013

Accepting the challenge offered by organizers of Rhode Island AARP’s “You’ve Earned a Say”, veteran advocate and organizer, Susan L. Sweet, has come out of semi-retirement, stepping to the plate to coordinate a series of “community conversations” to continue efforts of promoting dialogue throughout the OceanState on the future of Social Security and Medicare.

After years of paying into Medicare and Social Security, AARP, a Washington, D.C.-based group representing 40 million Americans, believes that age 50 plus aging baby boomers and older persons deserve a voice in the Inside the Beltway debates that impacts their future retirement years. “You’ve Earned a Say” is a AARP-led national conversation committed to providing people with critical information about the domestic policy proposals being debated in Congress — simply put without the political jargon and spin.

Regional events to be held in Warwick, Pawtucket and elsewhere – free and open to all — will be scheduled throughout the summer into the fall as Congress and President Barack Obama begin to weigh in on policy changes for these critical domestic programs.

“Susan has a remarkable knack for encouraging people to become actively engaged in matters that deserve public attention and involvement,” said AARP State Director Kathleen Connell. “We are fortunate that she has agreed to take this on. She will bring great energy to AARP’s ‘You’ve Earned a Say’ outreach and engagement efforts. The fate of Social Security and Medicare is important to all Rhode Islanders and we hope many will take part in our forums. Working with our staff and other AARP volunteers, Susan will be a tremendous asset. She is a force of nature.” After seeing her in action for over 18 years this columnist agrees.

A veteran of the 1960s civil rights movement and the War on Poverty, Sweet joined the state Department of Community Affairs (DCA) in 1972, where she founded and led numerous Rhode Island Division of Women’s programs. She worked with the General Assembly to secure the first state funding for Domestic Violence Shelters. While at the DCA, she also wrote a grant, funded by federal dollars, to establish community health centers throughout the state.

In the late ‘80s and ‘90s, Sweet was Associate Director of the R. I. Department of Elderly Affairs (DEA), creating and developing a number of award winning programs, including the RI Pharmaceutical Assistance to the Elderly Program, popularly known as RIPAE. She initiated a first in the nation statewide Elder Housing Security program and various legislative and programmatic initiatives to assist elders in the state.

Sweet, a Rumford resident, earned the monikor as the mother of RIPAE by initiating, planning, organizing, managing and finally directing the state program that would ultimately assist 32,000 Rhode Island limited income seniors with state co-payment assistance for prescription drugs. After leaving the DEA, three attempts were made by sitting governors (both Independent and Republican) to eliminate the program and the advocate led all three successful efforts to restore RIPAE funding in the state budget.

After retiring as DEA’s Associate Director in 2000, Sweet has been a consultant and lobbyist on Smith Hill for nonprofit agencies and an advocate for vulnerable populations and issues such as immigrants, domestic violence, homeless and seniors. Her clients have included the Senior Centers Directors Association, the Alliance for Better Long Term Care, International Institute, the Coalition Against Domestic Violence and others.

On a personal note, Sweet, 72, cares for five adopted cats, all abandoned or abused, putters in her large backyard garden, spends time with two children and two grandchildren. Being an expert on Roman history she reads many tomes on that era, and on world archeology and history.

Social Security on the Chopping Block

Democratic President Obama and a Democrat-controlled Senate and a GOP House of Representatives are trying to reach a budget deal in the coming months. President Obama has proposed a change that would slash $127 billion from Social Security benefits over the next ten years, hurting many older beneficiaries who are already living on very tight budgets stretched far to thin by costly prescriptions, rising utilities, and increased health care costs. AARP and other aging groups are pushing hard against these cuts, mobilizing their troops to oppose.

Social Security is a self-financed program, not a piggy bank for deficit reduction, noting that aging baby boomers and seniors have paid into this pension program their entire working lives. According to AARP polls, older Americans expect their elected representatives in Washington to fiscally secure Social Security for future generations and keep the promise Congress made 78 years ago: that this retirement program would provide a financial safety network in their later years.

According to Sweet, the proposed chained CPI is a flawed policy that will hit Social Security beneficiaries in their pocketbook. Each year the Social Security Administration (SSA) makes the determination, based on market prices, whether to adjust the Social Security payment to beneficiaries and, if so, by how much. The chained CPI is a formula that assumes that people will simply buy cheaper products. “But that is not the case for seniors, whose greatest expenses are health care, utilities and other costs that can’t often be replaced,” So, the chained CPI is just a term that means that the average senior will lose more than $2,000 in the next 10 years and even more after that. It also means that people reaching retirement age and/or planning for retirement will have even more of a reduction.

Furthermore, Sweet finds it extremely disappointing that a Democrat President would offer, as an opening gambit in the budget process, a reduction in Social Security benefits by using a new and inappropriate method for computing Cost Of Living Adjustments (COLAs). In fact, Social Security, a program that pays for itself and has never run a deficit, should not be used to offset deficits in other programs. We should be talking about how to strengthen the program, not reducing it, she states.

State Pension Changes Hits Retirees, Too

But, with Social Security COLA cuts looming if Congress takes legislative action to endorse chained CPIs, aging baby boomers in the OceanState who will shortly retire or those already receiving their municipal or state pension checks will see less retirement income because of actions of the Rhode Island General Assembly.

“Any additional loss of retirement income is certainly a concern for public employees who, as a result of the 2011 slashes in their promised retirement income,” said AARP’s Connell. “Lawmakers need to understand that there are earned benefits. People plan their retirement based on what they are told they can count on – whether it is a public or private pension, or Social Security. As we have said for the past two years, Congress and the President should not address the deficit by pursuing harmful cuts to Social Security and Medicare.”

Sweet agrees stating that “Rhode Island was at the very front of the attack on older folks with an extraordinary coup which stripped public service retirees and workers of hard earned compensation for their work. They called it “pension reform”, but that is not what it was. Everyone knows that it is not fair to change the rules in the middle of the game and certainly not after the game is over. But that is what is happening around the country, in private and public employment.”

Social Security and other pensions are not “entitlement programs” but more like insurance programs that you pay into with the promise and expectation of a certain coverage, notes Sweet. The aging advocate asks: “Should the insurance company be allowed to change the benefits upon payout? Should government (state or federal) cut benefits to retirees absent the most pressing of circumstances?”

But, certainly in the case of Social Security, there is no emergency, but rather a timely need to insure that the program can continue to fulfill its mission, she says.

Robert A. Walsh, Jr., Executive Director of NEA, National Education Association Rhode Island, representing 12,000 members in education and in city and state government, refers to the recalculation of COLAs by using chained CPIs as “voodoo economics.” While supporters of this recalculation policy note it reins in Social Security costs, they should at least be honest about the fact that it personally hits the retiree financially, right in their checks, he says. “If you’re going to cut people’s COLAs, just be honest about it,” he says.

Many of Walsh’s union members only receive their city or state pension as they are not eligible for Social Security benefits. People retired with certain expectations [as to what retirement income they had] and to make pension changes after they retire is patently unfair, says Walsh, noting they had no opportunity to plan for the decreased income.

Throughout the nation there is a growing movement of aging baby boomers and seniors, fueled by AARP’s educational efforts, who tell Congress to simply “Leave Social Security Alone”. Strengthen it for future generations, they say.

Sweet and millions of others tell Washington politicians that “Social Security is not a cookie jar to fund other programs.” Sweet says you can make this known to Rhode Island’s Congressional Delegation, Senators Reed and Whitehouse, Representatives Cicciline and Langevin, by attending the upcoming “community conversations.” Support their position opposing the change in the COLA and urge them to support Social Security by leaving it out of any budget deal, she urges.

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