What you Need To Know

Opinions expressed in my articles are my own, and opinions in the articles and comments section written by others are strictly those of the author or commenter and not me.

Please be civil, it adds nothing to the conversation to engage in name-calling.

Friday, June 17, 2011

Why is AARP Selling Out Seniors?

The leadership of AARP has announced that it is okay with benefit cuts to future retirees as part of some kind of budget deal. WHAT?

There are a number of problems with this.

FIRST: There is no structural problem with Social Security. A complete and total fix for any so-called funding problems that are 40-50 years in the future is to either raise or remove the cap on earnings. The original design was for 'capture' of 90+% of total earnings. Right now, capture is sitting at about 83%. Raising the cap to get it back to 90% would solve the very far in the future funding issue. Eliminating it altogether would allow for benefit INCREASES! I know, what a concept. Additionally, it might be worthwhile exploring some kind of 'capture' of FICA tax on unearned income - that is, the kind of income that rich people get from stock market investments and the like. And that is only taxed at 15% for income taxes as well...but that is a discussion for another day.

SECOND: There is absolutely zero, zilch, nada, no impact whatsoever from Social Security on either the debt or the deficit. Social Security is also not an "entitlement" - it is an insurance program that people have paid into, and then get money out of. It is completely self-funded and receives no money from general revenues - and thus has no impact on budgets or anything else.

The Republicans are trying to say that because the Social Security Trust Fund is held in Treasury Bills (T-Bills) that will have to be 'cashed in' or 'paid back' that it is part of the deficit and therefore the program must be cut or destroyed because of that. This is not true.

The majority of the deficit is held by us. You and me. It's in our pension funds, both private and public. It's in our mutual funds that are in our 401(k)s and IRA accounts. It's in our stock portfolios (if we have one) in the form of T-Bills and US Government Bonds. So, according to the same logic - that means that because individual citizens, institutions like unions, state governments and corporations, should all be dismantled or ...what...because they also hold instruments of the deficit? And what about China - they too hold about 20%. We gonna tell them they need to do ....what exactly?

THIRD: If you are going into a negotiation - you don't begin by telling the other side what you are willing to give up before you even start. That is a recipe for not only losing on that issue but having to give up even more since that issue will become the starting point for the negotiation. Witness what happened during the health insurance bill debacle. Single payer came off the table before it started. The public option soon followed. Negotiating for drug prices was given away before it started, along with a host of other very helpful things - all because the Democrats signaled early on that they were willing to give these items up. And so they were gone and nothing was gained in return.

SO......the problem is NOT Social Security. What then is the problem with AARP? Well, as usual it is very simple. Money. AARP has gone from an advocacy group to

-Hawks health, auto, motorcycle, home, mobile home, long-term care, dental and life insurance; besides offering discounts and incentives for travel, eyeglass, hearing aid and many other services;

– Sells annuities, mail order prescription drugs and credit cards and has seven no-load mutual funds;

– Has one of the largest mailing lists in the nation and publishes one of the nation’s most widely circulated and lucrative magazines etc

(You can read more about this at Time to Burn My AARP Card)

I join with Professor Eric Kingson, author of the quoted article, in saying if you must join some senior advocacy group then choose one of these:

Alliance for Retired Americans or
National Committee for the Preservation of Social Security and Medicare

Both of these fine organizations still remain true to their advocacy goals and positions, have large memberships, and will benefit from new ones and will benefit all seniors by having increased power to lobby on behalf of us all.

No comments: