By Sondra L. Shapiro
BOSTON, July 12 —
Medicare and Social Security should not be on the table during the deficit reduction conversation. Rather, Congress should reduce wasteful spending and close tax loopholes for the wealthy and corporations. That was the takeaway from today’s AARP Massachusetts telephone town hall meeting.
More than 7,000 state members joined in to hear and ask questions of Sen. John Kerry, D-Mass, and AARP policy experts, who were available to discuss the debt ceiling debate – and possible impact to Medicare and Social Security.
As the nation approaches the legal cap on its borrowing, Aug. 2, the president and Republican leadership are working to eke out a deal to raise the $14.3 trillion debt ceiling. Failure to do so could cause the government to default on its obligations. Just today, President Obama told CBS News he can’t guarantee that Social Security checks will go out after Aug. 2, unless Congress agrees to increase the debt ceiling.
Originally, the talk between Obama and the Republicans was for $4 trillion in a 10-year deficit reduction proposal. But House Speaker John Boehner, after seeking to forge a deal of that magnitude, told the president that a smaller, $2 trillion to $2.4 trillion deal was more realistic. The president said that without the tax increases the entire burden would fall on those who can least afford it including seniors and poor children. “And that’s not fair,” Obama said.
In the AARP telephone meeting, Kerry took to task Republican refusal to consider increasing the tax level for the wealthiest 2 percent of all Americans to 39 percent — pre-Bush era rates — from the current 36 percent. Sen. Scott Brown, R-Mass., was unable to attend the meeting.
“The reason we have the debt crisis today is largely because of Bush tax cuts. And the wars in Iraq and Afghanistan added more than $500 billion to the deficit in 2009 and ultimately they will account for about $7 trillion in deficits between 2009 and 2019,” Kerry said during the town meeting. “By 2019 just the wars and tax cuts will account for $10 trillion of the $20 trillion we are projected to owe.”
Rita from Norwood told the senator she was concerned about tax credits for oil companies who turn around and charge consumers too much money at the pump.
Louis from Dennis wondered why politicians get elected by making promises to voters, then once elected, serve special interests.
Carol from Waltham said that if Congress participated in Social Security it would help strengthen the program.
Gayle from Ware wanted to know why Republicans think seniors can afford to take a cut in Social Security when most beneficiaries are receiving barely enough to live on. “Are they so away from the average person on the street that they don’t know what is happening?” she asked Kerry.
Many Democrats were unnerved by the president’s proposals during debt ceiling discussions to curb costs to Medicare, Medicaid and a new inflation measure for Social Security. The Bay State’s senior senator said that he and his fellow Democrats would not consider entitlements as part of the negotiation.
“Under no circumstances should benefits be cut to try to balance the budget,” said Kerry during the town meeting. He said that Social Security is not the driving force of our “near-term deficits” and is not currently in crisis. But, he said it could be reformed to strengthen it for the rest of the century. And, he has no problem with those discussions “paralleling” deficit negotiations.
“Social Security is easy to fix. I am confident we can fix and strengthen it without cuts in benefits,” said Kerry. He added that the principals for Social Security reform should be:
•The need to return long-term solvency to strengthen Social Security for future generations;
•Opposition to any measure that privatizes or weakens the system;
•Opposition to any approach that slashes benefits for future generations;
•That no current beneficiary should see his or her benefits reduced;
•Strengthening retirement security for the most vulnerable, including low-income seniors; and
•Maintaining very robust disability and survivor benefits.
Social Security is the primary source of income for nearly two-thirds of older American households, Rhonda Richards, AARP health policy expert, said during the town meeting. “Nearly one-third of those households depend on Social Security benefits for nearly all of their income,” she said. “Social Security did not cause the deficit so it should not be used to cut the deficit.”
One of the measures being bantered about during the debt reduction talks is a change to the cost of living adjustment (COLA), which Richards said would result in the loss of thousands of dollars for today’s seniors and reduce the benefits for younger workers significantly. “It would cut Social Security by $112 billion over the next 10 years,” she said.
The option, called Chained CPI, would replace the traditional Consumer Price Index (CPI) now used to calculate cost of living adjustments. If Social Security adopted the measure, annual increases would be 0.3 percentage points smaller, according to Tom Nichols, AARP Social Security policy expert, who also attended the town meeting.
“It would have a cumulative effect. As you continue to get 0.3 percent less every year in terms of COLAs, over a 15-year span that results in about a 5 percent reduction in Social Security benefits. People on fixed incomes would be hurt. These are real dollars,” Nichols said. Average Social Security benefits are about $1,100 a month, or about $13,000 a year.
Kerry admitted that tackling Medicare would be tougher. Richards said AARP was working to prevent harmful cuts to the program. She said there are proposals that would impose arbitrary or harmful cuts into Medicare or shift additional costs onto beneficiaries. There are some proposals that would require people to pay more for their benefits through higher premiums or co-payments, or co-payments for services where there are currently none.
“Medicare should not be singled out. Congress should look at the issue of (containing costs) throughout the health care system,” Richards said.
She offered that tackling waste and fraud would help curb costs. Adding that AARP supports bipartisan legislation called the Medicare & Medicaid FAST Act that would call for stronger penalties for Medicare fraud; curb improper payments and establish stronger fraud and waste prevention strategies; curb identity theft; expand the fraud identification and reporting work of the Senior Medicare Patrol; take steps to help states identify and prevent Medicaid overpayments; improve the sharing of fraud data across agencies and programs; and deploy cutting-edge technology to better identify and prevent fraud.
Finally, members at the town hall meeting voiced concern about the price of prescription drugs. Richards said AARP supports legislation that would require prescription drug manufactures to provide rebates for drugs. She also mentioned a movement to shorten the 12-year approval of generic biologic drugs. And she said AARP supports legislation that would get generic drugs to market sooner and legislation that would enable the secretary of Health and Humans Services to use the bargaining power of Medicare’s 47 million beneficiaries to negotiate drug prices. “We also support bi-partisan legislation that establishes a framework for the safe and legal importation of prescription drugs from abroad.”
AARP is urging its members to tell their Congressional representatives not to use Social Security and Medicare to pay the nation’s bills by calling toll-free, 888-322-1334. For more information go online at www.aarp.org/states/ma/.