[Mb-civic] Reich and Krugman on the real crisis and the fraud

[ean at sbcglobal.net]

http://www.commondreams.org/views05/0502-23.htm

Published on Monday, May 2, 2005 by USA Today
Social Security Reform is Simply a Diversion
by Robert B. Reich
 
The president just ended a 60-day whirlwind tour to try to sell his Social 
Security plan. But almost everyone inside the Beltway, and a growing 
number outside, know it's going nowhere.

Polls show most Americans don't want to tinker with Social Security. 
Many Republicans, facing re-election, don't want to touch it. Why still 
flog it?

Because Social Security is a place holder. As long as it remains on the 
domestic agenda, it blocks consideration of the real domestic crisis 
President Bush doesn't want to touch: the health care system.

Consider the symptoms. Medicare, the government's health care 
program for the elderly, is heading toward bankruptcy faster than 
Social Security. Its future unfunded liabilities are seven times larger. 
Social Security is projected to be in financial trouble in four decades; 
Medicare, within 10 years.

Medicaid, the government's health care program for the poor, is also in 
trouble. Its costs are rising so fast the White House and congressional 
Republicans want to whack it by $10 billion over the next five years. 
But governors don't want Medicaid cut. States pick up half its cost. If 
the feds bow out, states will have to make up the difference.

Symptom No. 3 is the increasing number of Americans without health 
insurance. Ten years ago, when President Clinton's proposal for 
universal health care tanked, 38 million lacked health insurance. Now, 
44 million are without it at some point during the year.

Meanwhile, Americans who get health insurance through their 
employer are suffering sticker shock. That's because companies are 
rapidly shifting the escalating costs onto their employees. They're 
doing it through higher co-payments and larger deductibles and 
premiums.

The last symptom is the huge financial burden on companies that can't 
shift rising health care costs onto employees because of union 
contracts. For example, every car General Motors produces costs 
thousands of extra dollars because of GM's health care tab. Health 
care is the single most contentious labor-management issue today.

But it's possible to control health costs and at the same time give 
Americans far more health security.

One step is to use the government's bargaining clout to cut the prices 
medical providers and suppliers charge. Through Medicare and 
Medicaid, the U.S. government is the biggest health purchaser in the 
world. It has the heft to get pharmaceutical companies to agree to far 
lower drug prices. The same bargaining power could be used to bring 
down prices of other health care supplies and services.

Another step is to offer every American the chance to buy basic health 
insurance for the family at say, a few hundred dollars a year. The low 
cost would be possible because so many Americans would be in the 
same plan, generating vast economies of scale. In such a uniform 
system, transacting with a doctor or hospital of your choice would be 
as easy as using an ATM.

As a result, far more Americans would get regular checkups, and 
health problems could be prevented. Chronic illnesses such as heart 
disease could be identified before they got out of control. And 
catastrophic illnesses such as cancer could be treated early. We'd end 
up with lower costs and better care.

It's the perfect time to respond to America's health care crisis. With the 
middle class squeezed by soaring costs, big companies reeling and 
governors screaming, the political momentum is there.

But the Bush administration doesn't want to tackle it. Doing so would 
require an active role for government, and they're ideologically 
opposed. They know the nation can pay attention to only one big 
domestic crisis at a time. So they're using the fake crisis of Social 
Security as a diversion.

That's a shame. The real crisis of health care demands the nation's 
real attention.

Robert B. Reich, former U.S. secretary of Labor, is professor of social 
and economic policy at Brandeis.

© 2005 USA Today

###

http://www.commondreams.org/views05/0502-24.htm
Published on Monday, May 2, 2005 by the New York Times
A Gut Punch to the Middle
by Paul Krugman
 
By now, every journalist should know that you have to carefully check 
out any scheme coming from the White House. You can't just accept 
the administration's version of what it's doing. Remember, these are 
the people who named a big giveaway to logging interests "Healthy 
Forests."

Sure enough, a close look at President Bush's proposal for 
"progressive price indexing" of Social Security puts the lie to claims 
that it's a plan to increase benefits for the poor and cut them for the 
wealthy. In fact, it's a plan to slash middle-class benefits; the wealthy 
would barely feel a thing.

Under current law, low-wage workers receive Social Security benefits 
equal to 49 percent of their wages before retirement. Under the Bush 
scheme, that wouldn't change. So benefits for the poor would be 
maintained, not increased.

The administration and its apologists emphasize the fact that under the 
Bush plan, workers earning higher wages would face cuts, and they 
talk as if that makes it a plan that takes from the rich and gives to the 
poor. But the rich wouldn't feel any pain, because people with high 
incomes don't depend on Social Security benefits.

Cut an average worker's benefits, and you're imposing real hardship. 
Cut or even eliminate Dick Cheney's benefits, and only his accountants 
will notice.

I asked Jason Furman of the Center on Budget and Policy Priorities to 
calculate the benefit cuts under the Bush scheme as a percentage of 
pre-retirement income. That's a way to see who would really bear the 
burden of the proposed cuts. It turns out that the middle class would 
face severe cuts, but the wealthy would not.

The average worker - average pay now is $37,000 - retiring in 2075 
would face a cut equal to 10 percent of pre-retirement income. 
Workers earning 60 percent more than average, the equivalent of 
$58,000 today, would see benefit cuts equal to almost 13 percent of 
their income before retirement.

But above that level, the cuts would become less and less significant. 
Workers earning three times the average wage would face cuts equal 
to only 9 percent of their income before retirement. Someone earning 
the equivalent of $1 million today would see benefit cuts equal to only 1 
percent of pre-retirement income.

In short, this would be a gut punch to the middle class, but a fleabite 
for the truly wealthy.

Beyond that, it's a good bet that benefits for the poor would eventually 
be cut, too.

It's an adage that programs for the poor always turn into poor 
programs. That is, once a program is defined as welfare, it becomes a 
target for budget cuts.

You can see this happening right now to Medicaid, the nation's most 
important means-tested program. Last week Congress agreed on a 
budget that cuts funds for Medicaid (and food stamps), even while 
extending tax cuts on dividends and capital gains. States are cutting 
back, denying health insurance to hundreds of thousands of people 
with low incomes. Missouri is poised to eliminate Medicaid completely 
by 2008.

If the Bush scheme goes through, the same thing will eventually 
happen to Social Security. As Mr. Furman points out, the Bush plan 
wouldn't just cut benefits. Workers would be encouraged to divert a 
large fraction of their payroll taxes into private accounts - but this would 
in effect amount to borrowing against their future benefits, which would 
be reduced accordingly.

As a result, Social Security as we know it would be phased out for the 
middle class.

"For millions of workers," Mr. Furman writes, "the amount of the 
monthly Social Security check would be at or near zero."

So only the poor would receive Social Security checks - and regardless 
of what today's politicians say, future politicians would be tempted to 
reduce the size of those checks.

The important thing to understand is that the attempt to turn Social 
Security into nothing but a program for the poor isn't driven by 
concerns about the future budget burden of benefit payments. After all, 
if Mr. Bush was worried about the budget, he would be reconsidering 
his tax cuts.

No, this is about ideology: Mr. Bush comes to bury Social Security, not 
to save it. His goal is to turn F.D.R.'s most durable achievement into 
an unpopular welfare program, so some future president will be able to 
attack it with tall tales about Social Security queens driving Cadillacs.

© 2005 NY Times, Co.

###


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