Social Security's "Sleeper Issue" Exposed By Kucinich

[Itsthetruth]

For Immediate Release
Thursday, February 10, 2005

Social Security’s “Sleeper Issue”:
Price Indexing Exposed By Kucinich

Congressman Dennis J. Kucinich (D-OH) today brought forth a new case against the Administration’s so-called Social Security reform plan by exposing the precipitous drop in future retiree benefits implicit in the Administration plan to switch from wage indexing to price indexing.

In a speech this morning on the House floor, Kucinich said:

“Social Security benefits have increased over the years because they long have been calculated to wage increases, which on the average go up 3.6% a year. So Social Security benefits increase with rising wages. The Administration wants to change all that. They want to index Social Security benefits based on a price index, not wages.

“As a result, millions of future retirees will see their future Social Security benefits reduced as much as 40%. Because prices do not increase as fast as wages.

“Let me give you an example. If you began working in 1959 and retired in 2003, at age 65, under wage indexing, your benefits rise with rising wages, you would get $1158 a month. Under price indexing, your benefits would be frozen, you would get only $701 a month. So it would be a 40% cut in benefits with price indexing, and a person would lose $100,000 in retirement benefits over a lifetime.

“Why the switch to price indexing? Because, the privatization of Social Security will create an additional budget shortfall. The Administration is going to have to borrow money to set up private accounts. The shortfall is going to be for 45 years, and the Administration is going to have to borrow $15 trillion dollars.

“They are going to get the money off the backs of America’s retirees. It is wrong, say no to privatization, no to price indexing.”

Kucinich added that while much attention has been focused on private accounts, price indexing, once understood by both the media and the American people generally, will create such an uproar that it will jeopardize not only the Administration’s plans, but could create great political risk for members supporting the plans.

[AllegroRondo]

1. Britain switched to price indexing in th 80's

When they started, the average payment was about 30% of the median wage. Now its about 10%.
now over half of their retiress cannot survive without additional state welfare.

[hfojvt]

14. actually, that might work

It is sort of a stealth "means testing". Cut the benefits and let the social programs pick up the slack. Benefits would get cut for many high income people as well. The system as it exists now has always bothered me - in a progressive sense.
Workers making $12,000 a year pay a 12.4% tax, and often they pay income tax on top of that (the $744 they pay in SS taxes is considered "taxable income"). Meanwhile the government sends out thousands of dollars to some very wealthy people who do not pay taxes on that income.
How about a compromise?
We will use price indexing for people who receive checks larger than the average, and wage indexing for people who receive checks smaller than the average.

[no name no slogan]

2. I recommended this

GREAT post! Once again, Kucinich is ahead of the pack, exposing RW chicanery to the bright light of truth.

GO DENNIS!

[robertpaulsen]

6. I second the recommendation!

DK in 2008!

:kick:

[mordarlar]

32. I agree Kucinich is time and again one of the few. Good Job.

[TwentyFive]

3. Another 'detail' overlooked by the MSM

This again proves that the left is having to become the fouth estate, if this country is to survive.

Used to be, reporters would dig this stuff out and confront the poltical leaders with it. Does anybody else think it is sickening ironic that the WH uses our tax dollars to keep information away from us about things they are doing to further rip us off?

[cthrumatrix]

4. it's not overlooked ...they REFUSE to talk about that "as the goal"

[Itsthetruth]

5. Treasury Secretary John Snow Campaigns For Price Indexing

Treasury chief brings Social Security campaign to bay area
By HELEN HUNTLEY and JEFF HARRINGTON

St. Petersburg Times
February 24, 2005


U.S. Treasury Secretary John Snow brought President Bush's campaign for Social Security overhaul to the Tampa Bay area Thursday, pledging not to cut benefits for older Americans, but offering some insight into how they might be trimmed for those who are younger.

Snow spent an hour addressing about 30 members of the Greater Tampa Chamber of Commerce's board, a decidedly pro-Republican, pro-Bush setting. He also met with Times writers and editors.

Snow talked about one of the ideas that he finds particularly appealing - changing the way benefits are calculated. "Since wages grow faster than prices, every generation is being promised the opportunity to retire better than every prior generation, which would be a wonderful thing if we could afford it," Snow said. With price indexing "people will continue to retire at levels at least as good as prior generations."

Snow says the new system could be phased in gradually by applying price indexing only to future earnings. For example, someone who had already worked for 20 years would have the old formula used for those earnings and the new formula only for future earnings.


http://www.sptimes.com/2005/02/24/Business/Treasury_chief_brings.shtml

[0007]

8. ....tis as sickening as the goddamn feather-headed media &

greedy fucks being bought off by this fascist crime czar.

Go Dennis go, and shove junior's fuzzy arithmetic where Gannon finds sex. :bounce:

[AuntiBush]

26. Every detail overlooked by this adm

Its' all sickening to me. What's ironic is how quickly it all came about... in a matter of 4 or so months. I mean, they had to have planning this for eons, while we were going through life assuming our country was fine, economically our deficeit was solid, thanks to the Clinton years. And there we were, on Nov 3 with Bu$h & C$ ready to pull rugs from underneath each and everyone of us with that man-date.

And our media. What media? You're thinking of 4 1/2 years back. Now, their a bunch of corporate ladder-climbing propoganda pumping machines who only care about their jobs, investments, and god knows what but it isn't us anymore. The only reporters you can trust on left-minded news-reporters on the internet, internet and regular radio, and a few newspapers around the country.

Radio-Free America. Who would have ever had thought. Now. That's ironic.

[Up2Late]

7. I have a Question: Could the SS raises linked to Wage increses...

...be holding down Price Inflation?

Would Prices go up more, if U.S. companies know it wouldn't raise what they pay in S.S. Taxes when they gave employees a raise?:shrug:

[Itsthetruth]

9. I Don't Think So

I'm hardly an economist but pegging social security benefits to price indexing rather than wage indexing would have no affect on an employers payment of social security taxes.

Now increasing the cap on wages taxed for social security would mean the employers would have to pay more for high income employees.

Maybe someone else with a background in economics can give you better explanation.

[wishlist]

10. The indexing involves how the benefit is calculated, not amt of SS taxes

This indexing is part of the formula used to figure a person's baseline Social Security benefit when they retire. Changing the indexing method would not change the amount of Social Security payroll taxes paid in, but it changes the amount of benefits paid out when you retire.

This indexing being talked about is not the yearly cost of living raises that are based on the Consumer Price Index, but the method used to arrive at the initial computation of a person's benefit.

When Kerry alluded to this big cut in benefits from the change in the benefit computation, Bushco denied it and the media treated the subject as if Kerry and Dems were just exaggerating and fearmongering.

[info being]

11. If the dollar continues to slide, prices will go through the roof

As will stock prices. Maybe Bush is trying to tell us something. Maybe he knows the dollar will collapse and he wants to at least do something to protect Social Security. Think about it.

[Itsthetruth]

12. Down Not Up

I think it is far more likely stock prices will drop like a lead weight, rather than increase. If that happens soon the "private investment accounts" scheme will also collapse.

I don't think very many workers will be interested in putting their money in the stock market. Their reaction to privatization might be: "Are you fricken nuts!"

[info being]

13. Wrong

I don't follow your logic. Why would a devalued dollar hurt American companies? As a matter of fact, workers would put their money anywhere but the bank...that means investments like GLD and stocks, etc.

A lot of the investors in the US stock market are overseas...using other currencies. I've noticed an inverse relationship with the value of the dollar compared to the Dow. What looks like an increase in the Dow has often been simply an exchange rate adjustment. One more reason these guys like the decline of the dollar.

When a currency is devalued, prices go up. There's no way around that.

[Itsthetruth]

15. Stock Market Collapse Would Crash Privatization Scheme

From what I have read the danger of a stock market crash and economic collapse is great if foreign investors (people and governments) abandon the dollar. I really don't think very many people would be interested in so-called private investment accounts should that happen.

-----------------------------------------------------------------


An Economy Dancing With Disaster
Sunday, February 27, 2005
Washington Post


All it took was a vague suggestion by Korea's central bank last Tuesday that it would keep less of its holdings in dollar-denominated assets to send tremors through global financial markets. The Dow Jones industrial average fell 174 points, the dollar gave up half of its recent gains, and oil prices spiked to $51 a barrel.

On one side are the nations of Asia, along with Canada, Mexico and oil-producing countries everywhere. Their lopsided economies are growing nicely these days, but only because of over-reliance on selling clothing, electronics, autos and auto parts, oil and natural gas to the United States -- and then lending the extra dollars they earn back to this country so Americans can afford to buy those goods. In other cases, foreigners have invested their export dollars in U.S. stocks, helping to prop up the stock market, or U.S. commercial real estate, where a bubble has developed in such places as New York and Washington.

At some point, however, those foreigners -- individuals as well as central banks -- are apt to worry about the size and vulnerability of their dollar holdings. All it would take would be a decision for enough of those foreign entities simply to cut back on new loans and investments and the whole arrangement would begin to come unraveled. The dollar would decline, interest rates and prices would rise, and economies would slow both here and abroad.

The question isn't whether all these things will happen, only when and how fast. It remains possible, even probable, that things could unwind slowly, over many years. But they could also unwind with the speed and rush-to-the-exits panic that characterize all financial crises. Certainly last week's jitters were a reminder of just how nervous markets have become about the size of those imbalances and the risks they pose for the global economy.

http://www.washingtonpost.com/wp-dyn/articles/A55219-20...

[iLoveKPOJ]

17. I know people Buying Euros in anticipation

They are making money as the value of the US dollar drops every day... once Japan and China decide to cash in, we're hosed.

[newyawker99]

21. Hi iLoveKPOJ!!

Welcome to DU!! :toast:

[Vincardog]

16. Why would a devalued dollar hurt American companies?

Because little or nothing is made here any more. Declining dollar = increasing cost for material and even 'cheap' foreign labor. When the cost of materials goes up and the cost of labor goes up inflation sets in. That is for every thing valued In Dollars. The cost of things valued in Euros would be cheaper. More imports more pressure on the dollar. A fiscal Cliff. Welcome to Bu$h World.

`

[TahitiNut]

40. Companies also engage in currency 'speculation'.

The dollar-denominated balance sheet of a typical Fortune 500 corporation with significant overseas assets tends to mask the windfalls due to accounts and liquid assets held in foreign currencies. It's one of the "arts" of keeping the books in a public company. FASB is very carefully 'flexible' in the ways in which such assets are reported in dollars, but there's no lack of appreciation (pun intended) on the part of corporate insiders for the valuation of off-shore assets.

Trust me - it often becomes an internal political 'hot potato' among senior management jockeying for position in a multinational company.

[EFerrari]

34. He does want to protect Social Security.

He wants to put it in Wall Street's wallet, where it will be safe.

Dollar collapsing? Do you think, in your very wildest dreams, that he and his kind give a damn about the US economy?

[DearAbby]

18. Link to the speech please. :)

[Itsthetruth]

19. Sorry

It's a news release from his office, not a speech.

http://www.house.gov/apps/list/press/oh10_kucinich/050210ss1min.html

[goodhue]

20. great post

I think price indexing is sleeper social security issue.

[Sick_of_Rethuggery]

22. If Rethugs continue to rule this country,

then maybe price-indexing may be better than wage-indexing, if you know what I mean :-(

[Mairead]

23. There's something funny about this claim

We positively know that family income hasn't begun to keep up with the cost of living.

What the hell is the cost of living a function of if not prices?

If incomes haven't kept up with the cost of living, that sounds to me as though prices increase faster than wages. So is there some kind of simplification going on, or what?

[SoCalDem]

24. The govt changed the way they figure cost of living

a while back.. They now exclude lots of things that are going through the roof, and would make the COLA "look bad"..

Figures lie, and liars figure:)

[info being]

27. I don't know, but I think it should adjust to prices.

The purpose of Social Security is to help seniors buy what they need. The most direct way to do that is to attach benefits to prices. I am a Kutizen, but I disagree with him on this one.

[Bullshot]

25. Therein lies the problem.

There are hardly any people in the media smart enough to understand the shortfalls of price indexing. They're too busy kissing Bush's ass to analyze or investigate anything.

[ellenfl]

28. may i post this elsewhere?

i have been trying to inform members of my orchid forum and would like to post this there. they mostly ignore me but i still post things there for anyone who might be interested.

tia
ellen fl

[eridani]

31. Go for it!

It was a press release, and that's what it's for.

[lonestarnot]

29. Wages not increasing with cost of living... Increases are up 5% to CEOs

So 40% probably not a big enough loss calculation! We're doomed by this administration!

[deek]

30. (sigh)

If only............

[Ms. Clio]

33. kick n/t

[radfringe]

35. win-win for fat cats (toon)

Social Insecurity http://radfringe.tripod.com/id1.html

Model#Bs-2005 Payola-Pundit-O-Matic http://radfringe.tripod.com/

[enough]

36. kick

[Desertrose]

37. Dennis always "gets" the truth and thank heavens he speaks up.....

I trust his take on things and this is one of the things I've been hearing about SS too.

Bush is out to screw the country. Its obvious he only cares about the wealthy. If ANYONE things this will benefit people other than his rich buddies....well you better wake up and smell the reality.

DK in 08!!!!!!!!:thumbsup:

[Mugsy]

38. I get lost at "frozen". Please explain.

I don't quite understand.

Dennis looses me with "Under price indexing, your benefits would be frozen..."

What does that mean and how does he arrive at that conclusion? Wouldn't benefits have continued to rise (albeit slower) under "price indexing" as with "wage indexing"?

Someone please explain.

[Itsthetruth]

39. Kucinich Speaks Out Again Against Price Indexing

Social Security crisis 'manufactured' — Kucinich
By Eric J. Eakin, Bay Village, originally published by Westlife, Westlake, Ohio
February 18, 2005

Rep. Dennis Kucinich, no stranger to controversy, is again in the thick of the fight. The battleground? The Bush Administration's plans to privatize Social Security. Before a crowd of more than 150 people Sunday in Bay Village, Kucinich took aim at the proposal, riddling it with derision and distain.

In a presentation Kucinich said he spent more than 100 hours researching, the congressman examined the history of the Social Security system, reviewed the administration's planned changes, and explained how these proposals would gut a system he says is sound now and well into the future.

He said a number of simple actions could be taken today to shore up the system. He suggested the cap on the amount of income taxed could be raised from the current $90,000 to $140,000; Congress could rescind the tax cuts passed in 2003 that benefit the top one percent of earners (those earning $1.2 million per year or more); the government could increase payroll taxes in 2042 or 2052 when the shortfall begins or designate general funds for the system anytime.

Kucinich was especially perplexed that the Bush Administration would link Social Security benefit levels to the Consumer Price Index rather than an index of wages. "Price indexing has decimated the value of pensions in Great Britain," Kucinich said. In the current system, the value of Social Security's benefits is protected from inflation by a yearly cost-of-living adjustment, Kucinich said. If Social Security were privatized, benefits would no longer be fully protected from inflation.

http://www.ilcaonline.org/modules.php?op=modload&name=News&file=article&sid=1854&mode=thread&order=0&thold=0

[LWolf]

41. Once again, Dennis exposes the underbelly

of this administration.

Will our Democratic leaders and the MSM listen this time, or are they still doing their best to "ignore" him, even when he is waging their battle for them?

Will we hear about the difference between wage and price indexing in the discussion at large?

[anarchy1999]

42. Please tell me why, again, is this man not our President?

He is amazing, awesome and one hell of an intellectual. Along with being a tremendous statesman and citizen of what used to be the US.

Instead we have Condi and George stomping round the globe, cancelling meetings with whomever disagrees.