The next drama shaping up in Washington is one almost all Americans don’t want—cutting retirement benefits earned over a lifetime. At least nine Democratic senators are lining up with Republicans looking for big spending and tax cuts.
“It’s a horrible negotiating position,” said Warren Gunnels, senior policy advisor to Sen. Bernard Sanders, I-VT, who has been appointed to the 2013 federal budget conference committee, where the debate is taking shape.
“You hear these people saying, ‘We have to be the adults at the table and the Republicans don’t negotiate. Aren’t we reasonable?’” he continued. “A more reasonable position is a majority of Americans don’t want Social Security, Medicare and Medicare cut at all. Why don’t we have one political party represent what a majority of people want?”
October’s government shutdown and threatened debt default was disruptive and hurt the economy. But what is emerging is an entirely different drama, one that could shape the quality of tens of millions of people’s final decades. Most Americans do not have much in retirement savings and will live on Social Security now averaging $1,200 a month, and receive their healthcare under Medicare. Similarly, nearly two-thirds of Medicaid recipients are children from poor homes or adults with disabilities.
The National Journal, a leading conservative publication, did a nationwide poll in the first week of the shutdown and tilted its questions to try to show public support for the GOP’s intransigence and for cutting entitlements. What it didn’t put on its website but was buried in its results (see page 4) was that 76 percent said Social Security should be cut “not at all,” as opposed to cut “a lot” or “some.” Eighty-one percent said Medicare should be cut “not at all.” And 60 percent replied "not at all" to cutting Medicaid. These results tracked two otherNational Journal polls done in 2012 and other national surveys.
But, as Sen. Sanders’ policy aide noted, the mindset in too many Washington circles is taking a completely opposite view. You would expect corporate defenders among the GOP to do what they have been doing since the government reopened—clamoring for cuts to social programs, as their rich benefactors don’t need them, and cutting tax rates, which makes wealthy people and businesses even wealthier. That’s what GOP leaders said; they’ll end the across-the-board federal cuts known as the sequester if Democrats agree to future cuts in Social Security and Medicare.
Senate Majority Leader Harry Reid firmly said no to that. But a day after the government reopened, the nation’s top Democrat, President Obama, spoke about the need to address “long-term obligations that we have around things like Medicare and Social Security.” The Senate Budget Committee chairwoman, Washington’s Patty Murray, said “all issues are on the [negotiating] table.”
The Senate’s number-two top Democrat, Illinois’ Dick Durban, later in the week told Fox News Sunday that “Social Security is going to run out of money in 20 years…Medicare may run out of money in 10 years. Let’s fix it now.” Virginia Democratic Sen. Mark Warner told the same program, “We all know at the end of the day, Republicans are going to have to give on revenues, Democrats are going to have to give on entitlement reform.”
The list of Democrats who are entering these negotiations enbracing the GOP’s terms continues. There are at least nine in the Senate. California’s Dianne Feinstein, Montana’s Max Baucus, West Virginia’s Joe Manchin, Delaware’s Chris Coons and Tom Carper, and Colorado’s Michael Bennett have all said they support cuts to entitlements in letters to constituents, proposed bills or statements made after the President’s fiscal reform commission led by Eskine Bowles and Alan Simpson issued its 2010 report proposing capping or cutting entitlements while lowering or eliminating corporate taxes.
No wonder George Will, arguably the nation’s leading right-wing commentator, also boasted on Fox News Sunday about the upcoming budget negotiation, saying, “We are now talking entirely in Republican terms, in Republican vocabulary after this so-called defeat… No taxes, how much is spending goung to be cut? The federal workforce is being cut, discretionary domestic spending is being cut…” And theWall Street Journal quickly capitalized on the division among Democrats with its own report, titled, “Budget Discord Simmers Among Democrats.”
Who Will Defend Ordinary Americans?
The starting line or framing of political debates is critical in shaping the outcome. If Will is correct that the Democrats, led by Murray’s acquiescent “all issues are on the table” posture, is entirely on Republican terms, then there is little likelihood any outcome would bode well for current and soon-to-be retirees. There are 18 senators on the budget conference committee, including Sanders and Wisconsin’s Tammy Baldwin, who fervently oppose Social Security cuts. But Simpson-Bowles supporters Coons and Warner are also on the panel’s Democratic side.
If anything, Sanders has said the current level of benefits is too small and needs to be increased. He’s noted, as his policy aide Gunnels points out, that this debate has not included asking the wealthy to pay more toward fortifying society’s safety nets.
Some pundits suggested that Durbin’s comments on Fox Sunday were a trial balloon, testing the political waters. He provoked the AFL-CIO to lay down a hard line, with its policy director Damon Silvers telling the Washington Post that there “will be no cover for members of either party who vote for such a thing.” Progressives, such as Credo Action, launched an e-mail campaign telling Durbin, “Don’t sell us out.” It pointed out that Social Security’s finances are sound for at least two decades, saying, “As Senator Durbin knows, the Social Security trust fund was pre-funded by the Baby Boomers, to the tune of $2.7 trillion dollars, in order to pay for their retirement. But Social Security can never ‘run out of money’ because it has a constrant of dedicated tax revenue.”
But the biggest Democrat of all—and the one not drawing a line in the sand but possibly leading a historic sellout—is President Obama. In September 2008, when the senator from Illinois appeared before the AARP, Obama attackedRepublican nominee John McCain for suggested cuts to Social Security. As President, he has embraced those kind of cuts.
The Simpson-Bowles commission proposes freezing Medicare payments to providers, taking long-term care out of the Affordable Care Act, and limiting lawsuits against doctors and hospitals. On Social Security, it would change the way benefits are calculated—lowering the average today of $1,200 a month for a $50,000-a-year income by about 10 percent (see page 49)—and then changing how cost-of-living increases are calculated by a less-generous formula (called the chained CPI).
Last year, Sanders found 28 senators who signed a “Dear Colleagues” letter that opposed putting any Social Security cut into a deficit reduction deal. Murray, the Senate Budget Committee chairwomen who recently said that everything was on the table, signed it. So did Manchin, who held an event in his state with Simpson and Bowles to tout the panel’s proposals. Earlier this year, Sanders pushed the Senate to vote on revising the Social Security cost-of-living formula. His aide, Warren Gunnels, said some Democratics were relieved it was a voice vote, where each senator did not have to go on the record.
The emerging big picture is not encouraging. More Americans today need federal safety net programs than ever. It’s not their fault the economy has shifted. Productivity is up but wages have stagnated for decades. Less than a third of jobs offer pensions, and healthcare and housing costs keep rising. The implications of cutting retirement safety nets—by freezing what Medicare covers and cutting Social Security checks—clearly means that older Americans will face shorter and poorer final years.
It’s a bizarre spectacle to see the political leaders of the world’s wealthiestcountry buy into the premise that well-off Americans have run out of money and cannot do more to pay their fair share of taxes to help retirees and the poor. Worse, at least nine Democratic senators and a Democratic president aren’t drawing a line and saying no to future entitlement cuts. As former Secretary of Labor Robert Reich wrote this week, this is a “triumph of the right.”
“Conservative Republicans have lost their fight over the shutdown and debt ceiling,” he said. “But they’re winning the big one: How the nation understands our biggest domestic problem. They say the biggest problem is the size of government and the budget deficit. In fact our biggest problem is the decline of the middle class and increasing ranks of the poor, while almost all the economic gains go to the top.”