FAARP

The American Association of Retired People (AARP) is running ads on local Boston radio trying to scare retired seniors (its bread and butter) about upcoming “cuts” to Social Security benefits.  The gist of these ads is that Congress is looking into what AARP calls “'change CPI,’ another fancy Washington term” which is obviously the way that the Social Security Cost Of Living Adjustment (COLA) is calculated … which then determines how much retirees benefits increase each year.  AARP is urging seniors to call their Congress persons and tell them to not change this calculation … “which will slash Social Security benefits by $112 billion in the next ten years.” See: AARP Document.  In other words, please keep applying the possibly too large COLAs.  Only Democrats can claim that a reduction in the rate of increase as a “cut” … and only AARP can advocate that we seniors (my family is on Social Security) should keep robbing from our children and grandchildren.

There is something rotten in the state of AARP.

Six Old Men on Entitlement Reform

Not the Real Signers

This blog entry is an user-submission by a reader (Brad Stroup).  I must relay the fact that Brad is generally of the liberal persuasion … as are most of his friends.  But this areopagitica is very conservative in its tone and purpose.  I will not divulge the other five signers of this pledge other than to indicate that their first priority is their country.  Here is their argument for entitlement reform: 

We six old men [all from Tucson, Arizona)] oppose the “me first” culture of the elderly who demand no reforms in entitlement especially in “retirement” states like Arizona.  Most of us over 65 have been guaranteed subsidies in the form of Social Security and Medicare for the rest of our lives that far exceed our contributions.   If we include the “baby-boomers” retiring in the next few years, we elderlies have more annual income than people our age have ever had, and yet we expect the rest of you to take care of us in our leisure years.  Thanks to the profligate generosity of our nation over the past 50 years, we have created an approaching train wreck no one wants to face.  

The AARP’s lobbying efforts to protect old people at everyone else’s expense make no moral or economic sense.  The nation simply cannot afford Medicare and Social Security without some cost reductions.  Medicare co-pays to patients should be increased; Social Security retirement ages should be increased to 67 or 70.  Both entitlements should be means-tested so that those who have more do not take from those whose needs are great.  If we don’t reform these programs now, they won’t be there when younger people go to the window for benefits.

To my amazement, most of the return-e-mail dissenters to this pledge were usually liberals … often radical (and semi-famous) liberals … offering lots of AARP-inspired me-first excuses ranging from “I paid for this benefit and don’t you dare touch it” to “when defense spending is brought under control, then our entitlements will be affordable” (thinking defense spending represents “over 55% of Federal spending" – a liberal chimera.)  For the real facts, see: Heritage Foundation Analysis).  And, if you want to see how an uber-liberal mind works, please see the link I received back as justification for this original outrageous statement: War Resisters League Rationales.  I guess [too] many Americans believe Obama when he said [to Boehner], “[government] spending is not a problem.”

I have volunteered to Brad to be added to the “List of Six.”

Cooking the COLA

My previous blog discussed the fact that monetary inflation seems the only way that our federal, state and local governments can dig their way out of their huge unfunded liability overhangs (see: Good News Bad News).  Now, this discussion left out one key (un)mitigating factor.  That is -- inflation cannot be used by the feds to solve these overhangs ... if cost-of-living-adjustments (COLAs) to these unfunded mandates (mainly Social Security payments) erase the discounted current-value erosion of these benefits.  But this is not happening currently for one key reason -- COLAs for the last two years have been zero, nada, zilch, the cipher (see: Social Security COLAs) and I predict they will continue being zero into the foreseeable future.  How can this be?  Certainly, large U.S. cost-of-living inflation is obvious to anyone who who goes to the grocery store or fills their gasoline tanks. 

Ah, the trick that AARP and the main-stream media have conveniently pushed to the side is that the way COLAs are calculated has been changed.  Instead of cost inflation, COLAs are now computed using wage inflation which, obviously during a severe recession, is essentially zero (or negative ... except, of course, in the public sector).  Although, this might be one way to reduce the extreme severity of this country's unfunded liability overhand, zero COLAs are not good for our senior citizens or anyone living on a fixed income.  Why no one is raising a Wisconsin-no-collective-bargaining-like hew and cry about this federal financial trickery is a little befuddling.  But then I'm generally always surprised by what raises populus passions and what doesn't in a country that gets its news from The Daily Show.

It might even be a good political move for Republicans to raise this issue a year from this September ... right before the next Presidential elections (even though it would be a bad fiscal move).

Horns of a Dilemma

The Congressional Budget Office (CBO) has just scored the latest Baucus Senate health-care bill and said that it would be revenue neutral -- producing a $81 billion return to the Treasury over a ten year period. This has been a requirement that Obama has imposed on any health-care reform plan ... otherwise he would not sign the bill. However, the CBO also included in its calculations a $404 billion cut to Medicare benefits over this same period (see: Medicare Cuts) -- something else that Obama has vowed to oppose in a well-publicized AARP meeting (see: Obama Vows No Cuts).

So Obama is now on the horns of a dilemma. Does he, with the help of the main stream media, ignore these draconian Medicare cuts hoping that AARP and the U.S. public will not focus on this fiscal slight-of-hand (in my Google search I could find only one news article that even mentioned these Medicare cuts -- the Wall Street Journal)? Or does he refuse to sign the Baucus bill and keep his promise to America's seniors? And, even more interestingly, does AARP campaign against the Baucus bill, pointing out how its membership will bear much of the burden of health-insuring an additional 21 million non-elderly Americans? I think I know how this story will progress ... how about you?