Perfect Storm May Be Brewing for Social Security, Medicare Cuts

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Last Saturday – less than a year after cries of “death panels” dominated headlines about town hall meetings on health care reform – a new round of town hall events was held in 19 cities, and 40 smaller get-togethers around the United States, all joined together via a sophisticated online system.

This time the target was the National Debt.

Organized by the respected AmericaSpeaks group, Saturday’s event was blandly titled, “Our Budget, Our Economy.” It attracted 3,500 people in such cities as Portsmouth, N.H, Chicago, Ill., Dallas, Texas and San Jose, Calif.

Although AmericaSpeaks director Carolyn Lukensmeyer called the event “the largest and most diverse town meeting ever held in this country,” critics of the town halls are challenging the group for “stacking the deck” toward reducing the National Debt in part by cutting Social Security and
Medicare benefits.

From Town Halls to Halls of Power

Far from being a mere civic exercise, AmericaSpeaks will bring its town hall report to Washington’s halls of power. The group was invited to present the meetings’ nationally tabulated polling results at today’s meeting of the new National Commission on Fiscal Responsibility and Reform.

Also, Lukensmeyer will present the summary to key congressional committees, such as the Senate Budget Committee and House Ways and Means Committee.

Created by President Obama, with members appointed by the White House and Congress, the bipartisan debt commission includes 18 members of Congress plus a few prominent citizens. If 14 members agree to present a set of recommendations to Congress by their Dec. 1 deadline, chances are strong that the package will become the law of the land.

Critics worry that the debt panel includes too many deficit hawks – both Republicans and Democrats – and that even if they concur on some tax hikes desired by the President, the potential entitlement reductions, such as by raising the age for full Social Security benefits, would inflict disproportionate harm on lower- and middle-income Americans most in need.

Ethnic communities are especially vulnerable to potential reductions. According to the Social Security Administration, for example, in 2008, 62 percent of older Latinos and 54 percent of African American seniors living on their own “relied on Social Security for 90 percent or more of their income.”

Simpson’s “Lesser People” Gaffe

Not helping much to promote civil discourse has been the debt commission’s inflammatory co-chair, former Sen. Alan Simpson, R-Wyo. Two weeks ago he said in a video that the commission is considering benefit reductions and other measures to help “the lesser people.”

Simpson’s “lesser people” gaffe -- only a week after the chairman of BP remarked that the oil giant cares for the “small people” -- was only his latest incendiary remark. The former senator, age 78, recently derided seniors as “greedy geezers,” who disagree with proposed cuts in social supports.

In the “lesser people” interview, Simpson repeated the false statement that the Social Security’s trust fund is nothing but a pile of worthless “IOUs,” even though he agreed in the interview that the program’s trust fund is backed by “the full faith and credit of the United States government.”

What’s more, the commission’s Democratic co-chair, Erskine Bowles, who was President Clinton’s chief of staff and is a current board member of Morgan Stanely, recently told the North Carolina Bankers' Association that if the debt panel doesn't “mess with Medicare, Medicaid and Social Security ... America is going to be a second-rate power.”

The debt panel’s heavy emphasis on spending cuts in the federal budget has prompted numerous progressive economists and experts to call on it to balance any recommended program reductions by showing the human impact -- how many people cuts would affect and in what ways.

Perfect Storm for Cuts

Saturday’s AmericaSpeaks program received major funding from the controversial Peter G. Peterson Foundation. Although the foundation claims to have no say in the town hall sessions, it drew accusations from liberal critics that it influenced the content of program background materials to guide participants too strongly toward reductions in social programs.

Peterson, a Wall Street power, who was Commerce Secretary under President Richard Nixon, has aggressively militated against social-insurance programs for over three decades.

Compounding the worries of Social Security advocates that a perfect storm is brewing that could tear at America’s safety net program are international pressures on the United States from this week’s G-20 summit in Toronto.

Progressives are concerned that G-20 pressure to cut U.S. deficit spending will give the “Administration and Congress the cover they need to embrace the Commission's austerity measures,” said Maya Rockeymoore, president of Global Policy solutions and former research director of the Congressional Black Caucus Foundation.

While global finance seems remote and eye-glazing to most people who would be affected by cuts in Social Security and Medicare, conservative leaders in Germany, England and other nations are calling on the United States to slash its projected debt and secure its long-term position in global markets.

Rockeymoore notes that Social Security is not only the nation’s most successful anti-poverty program for elders, widows, children and people too disabled to work, but it is a completely separate program from the U.S. budget, and now boasts a very healthy $2.6 trillion surplus that guarantees paying its retirement and family benefits for decades to come.

Also, even conservative economists agree that cutting Medicare alone will not solve its long-range budget woes. Huge federal deficit costs stem from largely uncontrolled health care inflation that is unique to the United States among advanced economies. Health care reform passed this year does little to reign in escalating health care spending.

AmericaSpeaks Offered Limited Options

In a YouTube posting, one of Saturday’s AmericaSpeaks participants, a woman who identified herself only as Robin of Bucks Country, Penn., echoed others in saying that AmericaSpeaks provided participants with a limited set of federal budget areas and instructed them to cut $1.2 trillion in spending by the year 2025. “Our table refused,” she said.

Roger Hickey of Campaign for America's Future reported that during Saturday’s town hall meeting, AmericaSpeaks head Carolyn Lukensmeyer “had to acknowledge a rebellion in the ranks. People were demanding to have the option of voting for ‘single-payer’ [health care] reform, instead of cutting Medicare and Medicaid.” She eventually relented and announced “a complicated process of including the single-payer alternative as a write-in vote, he said.

After the final vote, though, Hickey joined other progressives in cautious optimism. “Despite a very biased and manipulated set of options presented to participants,” he said, some winning policy choices preferred by the participants turned out to be “pretty progressive.”

For example, AmericaSpeaks town hall groups voted to increase the amount of earnings that can be subject to Social Security tax among more affluent Americans. They also want to raise tax rates on corporate income and for those earning more than $1 million. And Saturday’s voters called for reducing defense spending by 10 to 15 percent, as well as for creating a carbon and securities-transaction tax.

However, they also favored cutting Medicare, reducing non-defense spending (transportation, education and so on), and raising Social Security’s full retirement age to 69.

Barbara Burt, executive director of the Frances Perkins Center, named for the original architect of Social Security, was among multiple observers who worried that raising Social Security’s full retirement age would unfairly burden vulnerable Americans, while doing nothing to increase the national debt.

“There's no reason why Social Security should even be considered in this discussion, as it is a pay-as-you-go program by law, and thus has no impact on the deficit,” she said.

Still, as the debt panel’s Republicans and blue-dog Democrats close in on social entitlement programs, the stale joke uttered by Federal Reserve Chairman Ben Bernenke may resound with little laughter.

When asked, during his Senate confirmation a few months ago, why he’d consider going after Social Security to help reduce the National Debt, Bernenke quoted bank robber Willie Sutton. He said, “That’s where the money is.”