[Update] Broadly speaking: "Gang of Six" Plan slashes Social Security

So everybody loves the "gang of six" suddenly. It's big a pool party.

Looking at the plan closely, however, it is pretty clear that the $3.7 trillion plan, including $1 trillion in new taxes, doesn't represent "shared sacrifice." It targets programs that aid the poor, working families, and other social programs far too much of the cost of deficit reduction. And this is on the heels of a recession from which working families have yet to recover. Even the tax portion, which we need more detail on to fully understand, seems like it could target tax credits for middle-income families, at least in part.

It seems that the Obama/Democratic strategy is to try to get the Republicans to accept massive new taxes, forcing huge divisions in their voting base over the issue, even major opposition to it. OK fine. But this neither solves the problem or protects the social programs working families rely on.

Right now, best bet is to tell your Senator not to jump in yet; someone may have peed in the pool.

Below are some additional comments:

Statement by AFL-CIO President Richard Trumka on "Gang of Six" Plan:

Both parties keep telling us that deficit reduction requires "tough choices" and "shared sacrifice" and "taking on sacred cows."  But then we keep seeing bipartisan support for plans like the so-called "Gang of Six" that cut Social Security benefits, kill jobs, give tax incentives for corporations to export good jobs overseas, tax health benefits, and lower tax rates for billionaires and corporations.  There's no shared sacrifice here.  The only sacred cows being gored are working people, the middle class, seniors and the poor.  Though the plan is very specific when it comes to spelling out tax cuts for rich people, there are still a lot of blanks to be filled in.  Even so, we've seen enough to know that there is nothing here for working people.  We need to keep asking our leaders: "Who got us into this mess?"  It wasn't working people.  The people who got us into this mess are getting off scot-free, and this Gang of Six proposal shows they have accomplices in both parties.

Statement from the Strengthen Social Security Campaign:

Gang of Six Plan Will Cut Social Security Immediately and Lead to Devastating Cuts Later

(Washington, D.C.) — The following is a statement from Nancy Altman, Co-chair of the Strengthen Social Security Campaign, in response to the release of the Gang of Six’s “Bipartisan Plan to Reduce Our Nation’s Deficits.”

“The Gang of Six proposes immediate and significant cuts to Social Security benefits, and a process for addressing the program’s funding shortfall projected to appear 25 years from now. The process would virtually guarantee devastating cuts. This plan breaks faith with the American people, who overwhelmingly oppose benefit cuts.

“The Gang of Six framework contains very few specifics but one is glaring – the immediate cuts that would affect all 55 million Social Security beneficiaries by changing the way the annual cost-of-living adjustment (COLA) is calculated. Their plan would substitute the less accurate and less-generous chained consumer price index (CPI) for the current CPI in calculating the COLA. This breaks a promise made by many politicians to not cut the benefits of anyone over age 55.

“Over the next ten years alone, the chained CPI would take $112 billion directly out of the pockets of beneficiaries with cuts growing larger each year and pushing many of the oldest old, primarily women, into poverty. The COLA cut would reduce benefits by 3.7 percent after 10 years, 6.5 percent after 20 years and 9.2 percent after 30 years. For a typical senior who retires at age 65, their Social Security benefits would be $1,000 less by the time they are 85 – on a benefit of just $16,000 a year. That’s a big loss of income that may be affordable for politicians in Washington but not for most people across the country.

“Adopting the chained CPI goes in the wrong direction. Most people who depend on Social Security devote a much larger share of their income to health care, and these costs are increasing at a much higher rate than other living costs. They need a more accurate formula that reflects these higher costs, which would result in a COLA increase, not a COLA cut. Seniors and other Social Security beneficiaries have not gotten a COLA for two years. Apparently some in Washington think that was too generous.

For more on the problems with the chained CPI go here.

“Especially troubling is that the Gang of Six plan would hold a gun to the heads of all those who contribute to and depend on Social Security.  If a supermajority of the Senate did not agree to a major overhaul of Social Security, then a deficit-reduction bill would not proceed. This leverage would virtually guarantee devastating cuts to Social Security benefits along the line of what Bowles-Simpson proposed, including raising the retirement age to 69 and dramatically changing the current benefit formula.

“Social Security should be considered on its own, separate and apart from the deficit because Social Security does not contribute a penny to the deficit. It should not be used as a bargaining chip in a Washington game of chicken. Social Security should be strengthened not cut. With stagnant wages, reduced savings, declining home values and fewer employers offering pensions, Social Security benefits should be expanded.  While it is fully funded for the next 25 years, Social Security’s long-range funding gap should be closed but not by cutting its modest benefits. Scrapping the payroll tax cap and requiring those with wages over $106,800 a year (and their employers) to pay taxes on all of their earnings would accomplish that.

“Social Security is too important to have a long-term fix be done when the focus is budget cutting, not protecting and improving the economic security of the American people.”

From the Campaign for America's Future:

The Campaign for America’s Future today is firmly opposing a bipartisan deficit reduction deal released Tuesday by a “Gang of Six” in the Senate.  Robert Borosage, co-director of the Campaign for America’s Future, today released the following statement:

“The deficit plan by a backroom Senate “Gang of Six” isn’t a New Deal or a Fair Deal; it’s a Raw Deal – one that every citizen concerned about rebuilding the middle class should oppose. It would add to unemployment in the short term, increase Gilded Age inequality, leave seniors more vulnerable, and shackle any possibility of rebuilding America. It puts the burden of deficit reduction on the elderly, the poor and the vulnerable, endangers jobs and growth, and lards even more tax breaks on the rich.

“The Raw Deal is a true marker – it marks how removed the Washington debate is from common sense and from the values of most Americans. That it has garnered bipartisan support indicates just how divorced Washington is from the struggles that Americans face. Rather than rebuilding America’s beleaguered middle class, it will add to its burdens and shred what little security it has. It will impede rather than aid economic recovery. It will exacerbate rather than reverse extreme inequality. It will undermine rather than defend the American dream.

“The Campaign for America’s Future counts on Senate Majority Leader Harry Reid and House Minority Leader Nancy Pelosi to fulfill their pledge to protect Social Security, Medicare and Medicaid, and to ensure that the burdens of deficit reduction are not placed on the most vulnerable in our society.”

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  • ee clay's comments, as always, are very much on target as is the article.

    The capitalist class is orchestrating a phony "compromise" which is no compromise at all.
    These policies can only see a huge reduction in the standard of living of the overwhelming majority of Americans. Income inequality will grow more rapidly. As life expectancy drops and real poverty grows substantially, the press will be talking about "trillionaires."
    The "gang of six" is more like a legal crime syndicate than a gang.
    We must organize against these and all similar policies. We must fight against them even as we fight politically against rightwing Republicans

    Posted by norman markowitz, 07/21/2011 2:31pm (11 years ago)

  • This "Gang of Sic-Six-opps" is a political smoke screen for broken monopoly capitalist government-but it is our government-the one we elected Barack Hussein Obama president of.
    The intensified oppression of women, people of color, children, the elderly, the ill, the imprisoned, the working poor, is its recipe for saving this broken government and the economic system that sustains it.
    In other words-more of the same.
    The "Bad Check" government of the capitalist system that the great MLK warned us about and demanded take care of its poor and victims of viscious, murderous, racial segregation for centuries, is still with us, with its "interposition and nullification".
    In a couple of weeks, it promises to issue "bad checks" to about 100 million tax paying, dues paying, economic and life blood contributors to this great country, including its workers and retirees.
    We have to communicate, unify and organize within and between all communities. We have to respond with direct action to continue our struggle in the future.
    A sort of conference for the Communists and friends on an immediate fight back strategy and 2012 election mobilization may be in order.

    Posted by E.E.W. Clay, 07/21/2011 11:11am (11 years ago)

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