Tag Archives: retirement age

Obama’s Fiscal Commission Prepares to Carve Its Turkey

The dread report of the White House’s National Commission on Fiscal Responsibility and Reform is due out this week.  One of the Commission’s co-chairs, the putative Democrat and consummate wheeler-dealer Erskine Bowles, has been up on the Hill flogging their plan to reduce the debt by cutting the country’s already skimpy programs for the old, the sick, and the poor. His partner, motor-mouth Republican Alan Simpson, continues his ranting and ravings against the greedy geezers who want to sink the entitlement-cutting ship before it’s launched. Both of them have taken to boo-hooing because no one appreciates all the work they are doing to save the nation from certain fiscal doom, and nobody is willing to pitch in to meet this noble goal.

Fiscal Commission's Plan: Starve the Old to Stuff the Rich

Personally, I’m still waiting to hear how Wall Street is going to pitch in and do its part–or the people with high six-figure incomes who claim they still aren’t rich enough to give up their tax cuts. Or, for that matter, Bowles and Simpson themselves, who retired on fat  pensions and don’t have a financial care in the world.  Since none of this is likely to happen any time soon, we’d better take a good hard look at what these sanctimonious old coots have come up with.

We already know a lot about what to expect from the Fiscal Commission Plan, since the co-chairs released their own preliminary proposals (as yet unapproved by the 18-member Commission) earlier this month. According to people with access to the Commission’s thinking, they seem to think their best bet is to achieve consensus on a proposal to change the way Social Security’s annual cost of living increases (COLAs) are calculated. What seems like a mere accounting adjustment would, in reality, severely affect benefits over time. The National Committee to Preserve Social Security and Medicare explains the impact of this scheme:

This proposal will affect current and future beneficiaries uniformly.  The impact would occur after benefits are initiated, with each COLA, as the yearly increase in benefits would be slightly lower than would have been the case without the change.  The impact would be greater with each successive COLA.  For example, the Social Security benefits paid to someone collecting benefits for 10 years would be about 3 percent lower, on average, if the chained-CPI was used for the COLA instead of the current CPI-W.  After 20 years this reduction would reach 6 percent and 9 percent after 30 years.

This is is bad enough–especially since old people’s cost of living increases faster than the national average because of exploding health care costs. But of course, there’s more, in the form of a plan that would raise the retirement age to 67 and eventually 69. Working until you drop dead or  literally are forced out of the labor market is utilitarian nineteenth-century thinking. But at that time, at least there was an expanding need for workers in a burgeoning industrial capitalist economy. The one big profitable industry surviving in America today is so-called financial services, which consists of a small number of overpaid people passing money back and forth amongst themselves. They certainly don’t need any more workers, and if they do, they’ll get them in India. Vermont Senator Bernie Sanders said of the idea that it was not only “reprehensible,” but “also totally impractical. As they compete for jobs with 25-year-olds, many older workers will go unemployed and have virtually no income.”

There was no such ringing takedown of the plan, of course, from Senate Majority Leader Harry Reid, whose mealy-mouthed statement tells us what we can expect from our Democratic Senate. “I thank the leaders of the bipartisan debt commission for their work,” Reid said. “While I don’t agree with every one of their recommendations, what they have provided is a starting point for this important discussion. I look forward to the full commission’s recommendations and to working with my colleagues on both sides of the aisle to address this important issue.”

Nancy Pelosi had somewhat stronger words, calling the preliminary proposals “simply unacceptable”–but then, she’s nothing but the soon-to-be-ex-Speaker of the House. In fact, co-chair Simpson has been predicting, with something close to glee, the “bloodbath” that’s likely to ensue next spring, when the new Republican House refuses to extend the debt limit and threatens to send the nation into default “unless we give ’em a piece of meat, real meat, off of this package.”

When all is said and done, there’s pretty much no way this so-called debate will end up without most of us, old and young alike, getting screwed. An already stingy program that ought to be expanded to cover elders as their numbers grow instead  is going  to be reduced, and the only question is how and by how much. It makes no sense, but it may well have political traction because the pols can sell it as an attack on rich grannies–“the greediest generation” as Simpson calls the old–while the young are hoodwinked into thinking it’s good for them. And since its full effect will take  years to be felt, the current crop of opportunistic politicians will be long gone into splendid retirement by the time these young people realize how wrong they are. Alan Simpson was frank about this fact in the Washington Post on Friday, using another one of his nauseatingly folksy metaphors:

 It takes six to eight years to pass a major piece of legislation. . . . On a piece of legislation that you know is going to go somewhere someday, you want to get a horse on the track. That might be not much. Then the next session you want to put a blanket on the horse. Nobody’s paying attention then. Then you put some silks on the horse. Then you clean the outfield and the infield. And then you put a jockey on the horse in the sixth year, and you can win it. Because the toughest part is to do the initial thing, and so it’s usually so watered down, it’s just gum, you could gum it. Then you begin to build it the next year, the next year and then you get it done. That’s what I see.

And just in case you thought it couldn’t get any worse, consider this warning from Allan Sloan, Fortune’s senior editor, who wrote an op-ed in the the Washington Post on Thanksgiving day:

[P]rivatizing Social Security, slaughtered when George W. Bush proposed it five years ago, seems about to rear its foul head again. You’d think that the stock market’s stomach-churning gyrations – two 50 percent-plus drops in just over a decade – would have shown conclusively the folly of retirees’ having to bet their eating money on the market. But you’d be wrong. Stocks have been rising the past 18 months, and you can bet that we’ll see a privatization push from newly elected congressmen and senators who made it a campaign issue.

Why is privatizing Social Security such a turkey? Because retirees shouldn’t have to depend on the market’s vagaries for survival money. More than half of married couples older than 65 and 72 percent of singles get more than half of their income from Social Security, according to the Social Security Administration. For 20 percent of 65-and-older couples and 41 percent of singles, Social Security is 90 percent or more of their income. That isn’t projected to change.

Arrayed against these grim prospects are a small group in Congress, led in the Senate by Bernie Sanders and Sheldon Whitehouse of Rhode Island, and in the House by Jan Schakowsky of Illinois. Says Shakowsky

Social Security has nothing to do with the deficit. Addressing the Social Security issue as part of the deficit question is like attacking Iraq to retaliate for the 9/11 attacks – there is simply no relationship between the two and attempting to conflate them does a grave disservice to America’s seniors. Taking money from Social Security retirees whose average total income is $18,000 per year and average benefit is $14,000 ($12,000 for women) is simply wrong. It places them at fiscal risk and hurts the economy because they will be unable to purchase the goods they need.  Americans in poll after poll have indicated their opposition to benefit cuts – particularly at a time when Wall Street bankers are making record bonuses.’

Schakwosky has her own plan, which will be an antidote to whatever the Fiscal Commission comes up with. But her ideas are unlikely to make any headway in the lame duck Congress or with the Democratic leadership, as they wait, already on bended knee, for the coming of the Republicans.

On Memorial Day in Normandy, Evidence of What We Won–and Lost

Photo: Eisenhower National Historic Site, National Park Service

On June 5, 1944, the eve of the largest invasion in history, General Dwight Eisenhower visited the English airfield where paratroopers were preparing to take off for their drop into France. “Quit worrying, General,” one of the soldiers told him. “We’ll take care of this thing for you.’’ The following day, 175,000 men landed on the beaches and fields of Normandy.

For children growing up in Washington, D.C., shushed into silence behind the blackout curtains while our parents bent over radios bringing the long-awaited announcement of the attack, it was all beyond  comprehension–save that every little boy was climbing into a tree to pretend he was flying his Spitfire over the Channel, or parachuting into the French countryside.

At age seven, I was one of those boys. Last week I had the good fortune to meet another member of my generation, whose experience of D-Day was something quite different. His name is Pierre Bernard, and he is retired to his family’s farm in the village of Maisons, a stone’s throw from the beaches that became the site of what the French call the Débarquement. In the spring of 1944, Pierre was twelve; with his parents and siblings, he worked the farm and waited for the Allied troops to arrive and free them from Nazi occupation. When that day finally came, Pierre recalls, the Germans simply vanished. British and then American troops soon passed through the village, moving quickly inland. His family was luckier than many others: Some 12,000 French civilians were killed during the battle for Normandy, along with more than 75,000 troops on both sides.

Today, long retired from his job as a cook in Paris, Pierre oversees a bed and breakfast in his old stone farmhouse. He’s never learned to use a computer, so his daughters help arrange who is to come, while Pierre, along with his two dogs, goes out each morning to bring back fresh baguettes and croissants. He serves them along with the jams and pates he makes himself, and sits quietly at the head of the family table, contentedly watching his guests eat breakfast.  And he’ll gladly trade war stories with a visitor who, like himself, is too young to have fought, but old enough to remember.

Normandy today still inspires awe at the courage of the men who stormed Fortress Europe: Omaha Beach, so wide and unprotected; the cliffs of Point du Hoc, higher and steeper than I could have imagined. But by now, the genuine remnants of the war—half-buried German bunkers, wrecked ships, and thousands of well-tended graves—are outnumbered by nostalgic renderings of the real thing: Army surplus stores are filled with Eisenhower jackets, berets, and rucksacks (many of them supplied by German companies). Towns compete for tourists–and a place in history—with tanks on their village squares and little museums dedicated to every aspect of “Jour J.” In Sainte-Mère-Église, where an American paratrooper famously got caught on the church steeple, a dummy is suspended from a parachute to commemmorate  the event. Then there are the British and American visitors tearing around in rented World War II jeeps, windshields down, and even a half-ton olive drab truck.  They look far too young to be veterans; too young even to have been alive at the time. The men and women who fought that war are fast disappearing (some 850 U.S. WW II vets die every day, according to the VA), and those who lived through it as children are now well into our old age.  

I was struck by how different Pierre’s old age in France is from mine in the United States—not because of anything that happened during the war, but because of what happened afterwards. In the postwar years, along with most other European countries (victors and vanquished alike), France implemented guaranteed pensions as well as national health care. Under a social welfare system that epitomizes what’s derisively referred to in the U.S. as the “Nanny State,” the average worker in France retires at age 60 on a full pension with complete medical care and various tax breaks. (And that’s after years of working 35-hour weeks, with two-month vacations.)

And what about aging Americans–including the waning ranks of the “greatest generation” that came before mine, who helped free the French and the rest of Europe, and then financed the continent’s recovery through the Marshall Plan? What can we expect? The most minimal of public pension systems, which was created before the war and has been under attack ever since; a private pension system that is now a shell of collapsing structures; personal savings decimated by Wall Street; and a partial and increasingly expensive health care system. More and more of us plan to work quite literally until we die–that is, if we can manage to keep our jobs, since we have little protection against age discrimination and no job security of any sort. In America, the war fought by “Citizen Soldiers” made our world all too safe for wealth and corporate power, often at the expense of the very men and women who won it.

In France, conservative President Nicolas Sarkozy has been chipping away at the Nanny State. His latest scheme—to raise the retirement age to 62—brought mass demonstrations across the country last week, and threats from the still-powerful unions. But even if Sarkozy’s latest initiative succeeds, as it well may, France’s elders will still be better off than their American counterparts have ever been.

Here in the U.S., we face a political juggernaut—most recently manifested in Obama’s “debt commission”–intent on cutting Social Security benefits, raising the costs of Medicare, extending the formal retirement age from 65 to 67 and beyond, and further tying our retirement and that of future generations to the vicissitudes of the securities markets through 401Ks and IRAs. Few voices are raised in protest against this attack on old-age entitlements. In fact, it seems to be one of the only true examples of bipartisanship in American politics, now that the Democratic Party, which once fought to build what social safety net we have, has collapsed into the arms of Wall Street. I expect it will progress with no more difficulty than “welfare reform,” in which another Democratic administration gutted our meager provisons for the poor.

In a Washington Post op-ed last Sunday, American Enterprise Institute president Arthur C. Brooks declared that “America’s new culture war” is a “struggle between two competing visions of the country’s future. In one, America will continue to be an exceptional nation organized around the principles of free enterprise–limited government, a reliance on entrepreneurship and rewards determined by market forces. In the other, America will move toward European-style statism grounded in expanding bureaucracies, a managed economy and large-scale income redistribution.” If only this were remotely true.  In fact, that battle was lost long ago—if it was ever fought at all.

Perhaps I only imagine that Pierre’s life is more tranquil than mine because he enjoys the security that comes with “European-style statism,” while my own well-being remains “determined by market forces.” But I don’t think so. Sixty-six years ago, as a small boy playing pilot in the lush green trees of a Washington spring, I could not have guessed that Pierre, waiting in his farmhouse nestled in the hedgerows of Normandy for the jeeps and tanks of the First Army, would someday become a symbol not only of my country’s greatest victory, but of its saddest defeat.

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