AARP: No change in Social Security position

[Focus]

In case you, like me, read an article yesterday indicating that AARP had suddenly shifted into an acceptance of Social Security benefits cuts, this subsequent AARP statement will clear things up. Bottom line: no change.

I know there are a lot of AARP nonfans in this forum, but I'm in full agreement with their stance as outlined in the statement.

 

[mickeyd]

“It has long been AARP’s policy that Social Security should be strengthened to provide adequate benefits and that it is sufficiently financed to ensure solvency with a stable trust fund for the next 75 years.

Seems like a nearly impossible task to me in the current political climate.

 

[samclem]

Bottom line: no change.

You might be disappointed, as it's clear AARP may be coming around.
Here's a link to the story that started the furor. From that story:

In an early sign of its new approach, AARP declined to join a coalition of about 300 unions, women's groups and liberal advocacy organizations created to fight Social Security benefit cuts. "The coalition's role was to kind of anchor the left, and our role is going to be to actually get something done," said Mr. Rother.

It's not altruism that is driving the changes at AARP--they see a shift in the public's preferences, and they don't want to be overwhelmed and seen as irrelevant due to their defense of an untenable position. According to their Chief of Policy:

AARP now has concluded that change is inevitable, and it wants to be at the table to try to minimize the pain. "The ship was sailing. I wanted to be at the wheel when that happens," said John Rother, AARP's long-time policy chief and a prime mover behind its change of heart.

Here's a CBS news story on the flare-up and AARPs damage control. In part:

(CBS News) Washington woke up to a new political reality.
The nation's most powerful senior's group telling the Wall Street Journal it was ready to deal on cutting Social Security benefits. The AARP's policy chief John Rother admitting "some of our members will no doubt be upset."
So upset that within hours the AARP was insisting this was always their position, CBS News correspondent Nancy Cordes reports.
"We can make changes that are modest and we can make changes with a great deal of lead time so we don't need to affect anyone who is currently retired today or near retirement," said said David Certner, AARP's legislative policy director.
But the group has long opposed such cuts.

AARP has steadfastly opposed any cuts to SS payouts. Now they are softening their position. The changes are even contained in the ref you provided, but you've got to look closely.

Any changes to this lifeline program should happen in a separate, broader discussion and make retirement more secure for future generations, not less.

i.e. "We'll accept cuts to SS for present retirees if it is seen as pain shared by many and if it keeps the system alive for future retirees (our future members)"

“Second . . .long term solvency is key to protecting and strengthening Social Security for all generations, and we have urged elected officials in Washington to address the program’s long-term challenges in a way that’s fair for all generations.

It sounds pretty good when you say it that way. But to which "generations" is SS the least "fair"--current retirees, who often receive far more in SS checks than the paid in, or future retirees who will not only get a smaller "payback" but a greater uncertainty of future cuts?

If AARP is willing to adjust their position to the fiscal realities, they'll move up a notch in my book. But they are still WAY down there . . .

 

[GregLee]

i.e. "We'll accept cuts to SS for present retirees if it is seen as pain shared by many and if it keeps the system alive for future retirees (our future members)"

That does not seem to me to be a plausible translation. Present retirees support AARP -- what sense would it make for AARP to turn on them? Present retirees are voters -- why in the world would anyone expect Congress to betray them? Future retirees? Who has a reason to care about them?

 

[Focus]

You might be disappointed, as it's clear AARP may be coming around.

I can't agree that it's clear at this point, although you may ultimately be right. It's hard to see the reality through all the media haze. From the latest article:

The group, which has 37 million Americans as members, adamantly opposes cutting Social Security benefits to help reduce the federal budget deficit, said David Certner, the organization’s director of legislative policy. But for years AARP has acknowledged that cuts to future benefits may be necessary to improve the program’s finances, he said.

“Our policy for decades has always been that we basically support a package that would include revenue enhancements and benefit adjustments to get Social Security to long-term solvency,” Certner said. “That has been our policy stated over and over again for, I mean, literally it has to be two decades, now.”

 

[pb4uski]

It is clear that something needs to be done and the more change is delayed then the bigger the change will have to be. AARP needs to be more receptive to change - their historical approach has obstructed changes that need to be made. My guess is that they make changes that is nibbling around the edges and probably won't significantly affect anyone who is currently 55 or older, but for people less than 55 retirement ages will lengthen, benefits may decrease slightly and payroll taxes will be slightly higher (particularly for high earners).

 

[Focus]

for people less than 55 retirement ages will lengthen, benefits may decrease slightly and payroll taxes will be slightly higher (particularly for high earners).

When did 55 became the new cutoff for changes to entitlement programs (e.g., Ryan plan for Medicare)? It used to be assumed that those 50 and above would be spared, which at least allowed some time for those affected to make adjustments. Since I'm just over 50, I fall in the group that had the Social Security full retirement age raised to 67 in the last reworking of the program. That resulted in a huge benefit reduction, but I adjusted accordingly. I would not find it acceptable to have the goal post moved on me yet again at this point.

Removing the income cap altogether needs to be the first step, as argued in this Oregonian column (Time to live up to Reagan's Social Security deal):

As Harry J. Holzer, public policy professor at Georgetown University, put it seven years ago, "Thus the Social Security surplus -- financed by payroll tax increases on the lower and middle classes -- has been used to fund income tax cuts that overwhelmingly benefit high-income people."

And to use that reality to raise retirement ages for waitresses and security guards would be grotesque.

Retirement is now a considerably different reality than when Reagan and O'Neill shook hands on the Social Security fix in 1982. Private pensions have withered, and savings and personal retirement accounts have melted away like the Greenland ice cap. To postpone Social Security would just stretch more barbed wire across the path to retirement.

Americans keep telling pollsters they'd prefer other approaches, such as raising the income level of the Social Security tax, which would at least get to the people who most benefited from the tax cuts.

 

[samclem]

as argued in this Oregonian column (Time to live up to Reagan's Social Security deal)

"Thus the Social Security surplus -- financed by payroll tax increases on the lower and middle classes -- has been used to fund income tax cuts that overwhelmingly benefit high-income people."

This is the kind of ridiculous "logic" that gets us nowhere. No one, including Mr Holzer, can say what the extra SS money has been spent on. It has been spent on everything the federal government buys. And to the large degree this spending benefits the approx 50% of people who pay zero (0) federal income tax, (mostly low income folks) they got a lot of benefit out of it.

When someone says the federal government "spends money" on tax cuts, the unstated assumption is that the tax money "lost" was somehow the government's to begin with. Nope.

 

[gindie]

I remember reading one time that the entire SS mess could be solved for many years simply by tying the COLA to a different (lower) inflation index. I seem to recall that the current index has something to do with wage inflation, which is (or has been) traditionally greater than regular inflation.

Haven't heard any more about this for quite awhile, though.

 

[chinaco]

That does not seem to me to be a plausible translation. Present retirees support AARP -- what sense would it make for AARP to turn on them? Present retirees are voters -- why in the world would anyone expect Congress to betray them? Future retirees? Who has a reason to care about them?

Part of it seems like a plausible outcome to me...

It is in all of our interest to balance things out. That shared pain will be in a restructuring of programs and increases in taxes.

IMO the most likely changes will be:

1. Increase in age for full retirement for younger people to reflect longer life.
2. Higher income tax on SS for retired people that earn above a certain level (e.g., All SS will be taxed if total earnings are above $50k.. or some level).
3. Higher FICA taxes.
4. Other increases in taxes to pay back the SS IOUs that accumulated since the Reagan Administration when they began spending the last SS fix!
5. Medicare premiums will increase. Probably more for wealthier retirees. (Our entire health care program (including medicare) needs to be overhauled in the US).

This is a middle ground approach politically and is most likely to be tolerable for the majority of people... shared pain!

 

[samclem]

This is a middle ground approach politically and is most likely to be tolerable for the majority of people... shared pain!

Shared? Which of your proposals affect those who are presently retired?
Of course we'd have to put numbers against all these proposals, but, just as a thought experiment, see if we can think of a total package that doesn't involve a still greater wealth transfer from high earners to low earners.

 

[ziggy29]

That does not seem to me to be a plausible translation. Present retirees support AARP -- what sense would it make for AARP to turn on them? Present retirees are voters -- why in the world would anyone expect Congress to betray them? Future retirees? Who has a reason to care about them?

I think you need to play to their sense of love and concern for their grandkids. Unless folks can directly tie AARP's position to one of adding to the screwing their grandkids are getting, it's easy to defend the AARP "status quo" of "everyone else has to sacrifice but not us.

Show them, in no uncertain terms, how much worse the deal will be for today's young adults and children (largely the grandchildren of the AARP crowd), how much MORE they will have to pay out and how much LESS they will receive, and maybe you've made them think. Ask them to look their grandchildren in the eye and explain why it's right that they should not share in the sacrifices needed, and why Grandpa thinks his grandchildren should bear all the sacrifice when they are already going to get a far worse deal even without more sacrifice.

IOW, if you want the AARP members to listen, you may have to personalize it. Love your grandkids and want the best for them? Prove it.

 

[haha]

Show them, in no uncertain terms, how much worse the deal will be for today's young adults and children (largely the grandchildren of the AARP crowd), how much MORE they will have to pay out and how much LESS they will receive, and maybe you've made them think.

This may or may not be good politics. Ever seen a motorhome going down the road with "We're spending our children's inheritance?"

Also, while it sounds convincing there are so many degrees of freedom that the IMO the whole structure does not really make sense.

Maybe the young will insist on a less corrupt, less Wall Street oriented policy? Maybe they will kill the current system of campaign finance. Maybe they will decide that it is cheaper for grandma to be in there trying to hold her own against public worke's unions, special interest groups, etc, then for her kids to support her. The US has gotten away from 3 generation households, one reason is that SS and Medicare have made it more possible for older people to support themselves.

IMO, in politics it is almost always better to get whatever your group can get now, and let other groups worry about themselves and later. Whatever your sacrifices might save for the "common good" will just be stolen by politicians and their favored groups anyway.

Ha

 

[Mysto]

I love all the arguments about how cutting current SS benefits will "save" SS. SS is in its current state because congress spent the money. If there is any savings by cutting benefits congress will spend that money as well. The problem isn't SS the problem is congress.

 

[GregLee]

Unless folks can directly tie AARP's position to one of adding to the screwing their grandkids are getting, it's easy to defend the AARP "status quo" of "everyone else has to sacrifice but not us.

I think it's rather odd to expect the AARP to go to bat for grandkids. It's not the AAGK.

 

[ziggy29]

I love all the arguments about how cutting current SS benefits will "save" SS. SS is in its current state because congress spent the money. If there is any savings by cutting benefits congress will spend that money as well. The problem isn't SS the problem is congress.

Not quite. Even if the SS trust fund (such as it is) wasn't "spent" because it's all government debt securities or because it's used to mask the real size of the deficit, the bottom line is that demographic changes are *requiring* that adjustments be made. Even in the absence of smoke and mirrors, these changes don't allow the deal to be as generous as it used to be.

The question is -- what groups have to make the sacrifices.

 

[ziggy29]

I think it's rather odd to expect the AARP to go to bat for grandkids. It's not the AAGK.

And in turn, I think it's "rather odd" that you apparently parsed my comments as if I expected AARP to be doing this. AARP won't, My point is that AARP members themselves may need to be made aware (outside of AARP, obviously) of what AARP's position is doing to the financial future of their grandchildren.

 

[Mysto]

Not quite. Even if the SS trust fund (such as it is) wasn't "spent" because it's all government debt securities or because it's used to mask the real size of the deficit, the bottom line is that demographic changes are *requiring* that adjustments be made. Even in the absence of smoke and mirrors, these changes don't allow the deal to be as generous as it used to be.

The question is -- what groups have to make the sacrifices.

Sorry - it doesn't fly - The fixes for the baby boomers were made in 1983. That was good for 75 years based on known baby boomer population. Congress said so. So it's not really demographics - it's congress.

The seniors didn't make the deficit - congress did.

I recognize that nothing is black or white but take the money from seniors and pay the consequences

- lack of jobs for the grandkids - grandpaw took it

- a swamped medicade and welfare program that will overwhelm the system

or we can always let the old people die in the streets - now that's real sacrifice for the next generation.

Most ss seniors are not rich and actually use the money to eat and get medical care.

 

[ziggy29]

or we can always let the old people die in the streets - now that's real sacrifice for the next generation.

Most ss seniors are not rich and actually use the money to eat and get medical care.

Ah, yes, let the usual scaremongering and the "let grandma starve in the streets" demagoguery begin. Unfortunately, your rhetoric -- that ANY suggestion of ANY shared sacrifice among seniors means advocating devastating cuts to the lower income elderly -- has been incredibly effective.

Who said that any sacrifices by the older generations means that ALL of them have to accept cuts? The problem is that AARP's position is that even the wealthiest among them not be forced to accept benefit cuts and/or means testing of benefits.

I dont know of ANYONE who wants to see the benefits of a low to moderate income SS recipient cut. But I do think it would be a good faith effort in the spirit of shared sacrifice to see significant means testing on retired CEOs, for example. "No generation should be exempt from some sacrifice" is NOT the same thing as saying "all seniors should give some back." And that needs to be made clear so remarks like yours will be seen for the scaremongering straw man that it mostly is.

 

[rescueme]

Sorry - it doesn't fly - The fixes for the baby boomers were made in 1983. That was good for 75 years based on known baby boomer population. Congress said so. So it's not really demographics - it's congress.

The seniors didn't make the deficit - congress did.

Correct. You recognize that those of us that were not seniors (but now are) had to "bite the bullet" early on, to "improve" the system going forward.

If the law has to be changed again (due to congress raiding funds, and/or increased lifespans), then change the system to increase inflow to SS - not ask those that already had increased contributions over their working lives but are no longer working, to cut benefits.

Additionally, SS at one time was not taxed, but that changed over the yeares. In 1993, it was changed from 50% to a maximum of 85% FIT and I've already accounted for the eventual increase to at least 100% taxable for DW/myself. This change to the tax situation means that currently those retired and at the high end of SS are just pouring more $$$ down the tax toilet, without any advantage to the SS system at all (and it will be worse in the future). The government has made SS worth even less over the years by their mis-directing of assets, along with increased taxability of benefits. That dosen't affect those of future generations, but current beneficaries of the program.

As far as my grandkids? Regardless of the fact that I don't nor will ever have any, the system was changed to support not only my future under SS, but also for my parents/grandparents back in 1983 to ensure the solvency of the system not only for my lifetime, but also for theirs.

Shared sacrifice? Sorry; I've already contributed at the office ...

 

[Mysto]

Ziggy I have no intention of getting into a p match with you. The truth is that current baby boomers have already made a sacrifice in 1983. Our contribution increased and our benifits were cut.
There is an indexing of benefits - it's called income tax. The rate at which ss is taxed is not indexed and I don't belive has changed since about 1981

The cola is also less than a seniors CPI and actual ss value of SS is dropping.

It's all in the way you wish to color it.

Why should we have means testing on retired CEOs but not increase working CEOs SS contribution

I'm tired of being made out a greedy senior - it's not fair and it's not true. And it's not a strawman - I stand by my statements of fact.

I won't post on this subject again - I understand where you are coming from - I don't agree - but please do not try to dismiss my arguments - they are at least as valid as yours.

 

[ziggy29]

Ziggy I have no intention of getting into a p match with you. The truth is that current baby boomers have already made a sacrifice in 1983. Our contribution increased and our benifits were cut.

If one believes that current seniors "played by the current rules all their lives" and should not be asked to share the sacrifice or accept a change to the rules on their benefits, that is fine. I disagree (at least for the most affluent seniors even as a symbolic gesture that we're all in this together), but I'm not going to vilify or demonize those who feel otherwise.

That's not the "peeing match" here. That comes from your remarks acting as if those who disagree want to screw all seniors and starve the poor ones. THAT is what boils my blood, not merely believing that older folks should be exempt from any future "pain" in SS changes.

Believe what you want. But please stop mischaracterizing the intentions of those who believe differently. That is my beef here, not that you may disagree with me. I'm just sick and tired of any suggestion about shared intergenerational sacrifice being equated by those who oppose it with advocating that we "let Grandma starve". Fair enough?

[Edit to add: By the way, I started working and paying SS tax in 1982. So didn't I also make the sacrifice in 1983 by paying higher rates and seeing my FRA rise to 67? Plenty of folks below the "magical cutoff age" above which people may be exempt from further screwing already "made the sacrifice" in 1983 as well.]

 

[chinaco]

Shared? Which of your proposals affect those who are presently retired?
Of course we'd have to put numbers against all these proposals, but, just as a thought experiment, see if we can think of a total package that doesn't involve a still greater wealth transfer from high earners to low earners.

They are not proposals per se.... they are the combination of things that will (likely) happen. How much (money) each of those items will contribute to the solution will be the great debate.

I suppose in theory I might be aligned with A on some issues and B with other issues. But I do not believe these issues will or should wind up as A or B... rather a compromise that will result in AB.

That is the reality my friend. If for some reason they (the politicians) do not compromise.... you and I (the middle class are at risk and) will likely lose!