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Jarrod32

The biggest issue this election

97 posts in this topic

By Jason White

Senior Editor

MSNBC

updated 11:51 a.m. CT, Mon., Aug. 11, 2008

NEW YORK - This summer, msnbc.com is presenting a weekly series, Briefing Book: Issues '08, assessing issues and controversies that the next president must confront.

This week, we look at the massive burden which future taxpayers must carry to redeem the promises Congress made in creating the Medicare and Social Security entitlements.

Why it’s a problem

The former head of the government’s in-house watchdog agency warns of the seriousness of the entitlement issue, saying it's a problem that could dwarf the nation's subprime emergency.

“I think we have the makings of a super-subprime crisis dealing with the federal government’s finances, and we need to defuse it,” said David Walker, former chief of the Government Accountability Office.

Government accountants estimate that, in the long-run, imbalance between federal spending promises and expected revenues is about $54 trillion in today’s dollars.

This is largely the result of two programs geared toward senior citizens, Medicare and Social Security.

Thanks to escalating medical costs and a large population of retiring baby boomers, a shortfall equivalent to roughly $470,000 per American household has been created.

Walker, a former trustee of Social Security and Medicare who now leads a foundation devoted to raising awareness of these issues, says we're just beginning feel the effects: “This is the tip of the iceberg.”

While neither Barack Obama nor John McCain have made this issue a central theme of their campaigns, the candidates, along with their advisers, acknowledge its severity.

Where the candidates stand

McCain “recognizes that the U.S. government will not achieve and maintain fiscal balance until we address the long-run spending in these two programs,” his chief economic adviser, Doug Holtz-Eakin told msnbc.com.

“The fiscal situation is serious. In the short run, what we need to do is stop digging the hole any deeper,” said Jason Furman, Obama’s economic policy director.

To help shore up Social Security, Obama has proposed a payroll tax increase on people making more than $250,000 per year. The tax currently applies only to the first $102,000 of income.

Last October, Obama described this tax increase as a way to make sure that "the wealthy are paying more of their fair share."

Furman said Obama hasn’t taken any potential fixes off the table, but that he is opposed to program changes that would lower benefits, including proposals to raise the retirement age.

He is also opposed to having private accounts supplant Social Security.

On Medicare, Furman said Obama believes that reforms can’t be done effectively apart from a larger health care overhaul. “So what you need to do is put in place a set of ideas that would slow the growth of health spending economy-wide,” he said.

According to Furman, Obama would encourage health providers to use electronic medical records, rather than paper, to help reduce administrative costs.

He would also create an executive branch office to conduct comparative effectiveness research, helping to facilitate a change in the way medicine is practiced.

Holtz-Eakin said McCain, who currently receives Social Security benefits, is unlikely to offer a specific proposal to change the program during the campaign. “It is a very specific proposal that would polarize the debate,” he said of the payroll tax.

McCain, who earlier this year said the way Social Security is funded is a “disgrace,” does favor one specific change: He backs the creation of private accounts, which he would like to see added on top of the current system.

As for Medicare, Holtz-Eakin said McCain would emphasize changes within the program to produce quality care at a lower cost.

“Medicare reforms can have a dramatic impact on the practice of medicine,” he said. “You can use Medicare as a tremendous lever.”

McCain would use Medicare to get more doctors to focus on disease prevention and to better coordinate efforts among different medical specialists, Holtz-Eakin said.

McCain also supports using Medicare to negotiate large-scale savings on prescription drugs.

Unanswered questions

With the U.S. economy sputtering, will Americans have an appetite for changes to these massive entitlement programs? Are they open to having their taxes raised or benefits cut during a time of economic hardship?

“We can turn this around with leadership,” said Walker. “But we’re also going to have to recognize that the regular order, the regular way of doing business in Washington is broken.”

Will anything short of a major crisis force Congress and the president to act? Is Washington even capable of dealing with such long-run problems?

President Bush failed in spectacular fashion when he tried to overhaul Social Security in 2005, with McCain acting as one of his plan's most prominent backers.

“Leadership is only going to come from somebody using the bully pulpit to create a mandate, so this is the opportunity for leadership,” said Maya MacGuineas, director of fiscal policy at the New America Foundation and an adviser to McCain’s 2000 presidential campaign.

“Otherwise, a crisis is what it will take. And that’s a real problem, because Wall Street is short-term focused,” she said. “The financial markets will make us deal with it, but it will be too late when they do.”

One of the great unknowns is how fast health care costs will grow in the coming decades.

Experts say rising health care costs are driving the long-run fiscal gap even more than demographics. Will these costs keep rising at double the rate of inflation or will they settle down?

“If there is one thing that could bankrupt us, it is health care costs,” Walker said. “We are the only country in the world that writes a blank check for health care, and that is mindless and it must end.”

Evolution and shifts in position

McCain’s position on tax increases to fund Social Security has been variable.

At times, he has been critical of Obama’s payroll tax plan even as he has said that everything is on the table — a stance which would seem to include tax increases.

But after McCain reiterated this position on ABC News, conservative activists were critical, and he backed off slightly.

“Any negotiation I might have, when I go in, my position will be that I am opposed to raising taxes. But we have to work together to save Social Security,” he later said.

This appears to mean that McCain won’t advocate for tax increases, but if they are part of a larger reform package, he might acquiesce.

“He’s very clear about the desire to keep everything on the table, so you can get an effective reform,” said Holtz-Eakin.

According to the Wall Street Journal, in 2000, McCain ran on a platform of diverting a portion of payroll taxes into private accounts — a plan that would take money out of the current system.

But now, McCain’s campaign maintains that he supports private accounts only as an add-on to the current system rather than a replacement.

Like McCain, Obama has been at times a vocal advocate of the “everything is on the table” approach to Social Security reform.

“Everything should be on the table. I think we should approach it the same way Tip O'Neill and Ronald Reagan did back in 1983,” he told George Stephanopoulos of ABC News in May 2007.

“They came together," said Obama. "I don't want to lay out my preferences beforehand, but what I know is that Social Security is solvable.”

Does this include raising the retirement age?

According to the Washington Post, Obama later ran an ad saying that protecting Social Security benefits is one of his core reform principles.

“He wants to protect middle-class families,” Furman said of Obama’s approach. “He thinks you can’t do that if you’re raising the retirement age.” How they have voted

Last year, the Senate considered an amendment that would require wealthy Medicare beneficiaries to pay a greater share of their prescription drug costs.

Obama voted against this amendment. McCain didn’t vote, but has said that he supports the idea of having wealthy beneficiaries pay more for their benefits. His campaign says that would save the government billions of dollars.

McCain has never been a big supporter of the Medicare prescription drug program, which was created in 2003 despite his opposition.

Fearing the program would be too costly, he was one of 21 senators to vote “no” on the Medicare prescription drug bill.

Obama was not in the Senate when the drug entitlement was created, but he has regularly voiced support for it, even as he’s backed some cost-saving measures, like giving the government the authority to use Medicare to negotiate drug discounts. In fact, he supported an amendment McCain co-sponsored to give the government this authority.

As far as Social Security is concerned, the candidates have not faced too many votes in recent years. But twice, McCain and Obama voted on opposite sides of legislation repealing a 1993 tax increase on Social Security benefits, once in 2006 and again earlier this year. McCain voted to repeal the tax increase, while Obama voted to keep it.

Surprises for the new president

If the economy keeps stumbling, neither candidate is likely to have much luck raising taxes or cutting benefits. But that doesn’t mean the shortfalls in these programs won’t affect a McCain or an Obama presidency.

Starting this year, the oldest members of the baby boom generation are eligible for Social Security, according to the GAO. In three years, they will be eligible for Medicare. As more boomers collect benefits, the budget will be pinched, with bigger and bigger percentages of total outlays going to support the programs for retirees.

Analysts say that will put the burden squarely on the youngest Americans, who may have to foot the bill someday through higher taxes, reduced benefits or slower economic growth.

“We’ve got massive taxation without representation going on right now,” Walker said. “In many cases, the people who are going to have to pay the bills are too young to vote or aren’t born yet. That is not only fiscally irresponsible it is morally reprehensible.”

© 2008 MSNBC Interactive

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I've read social security is in fine financial,but its medicare which is draining the funds,Social security would be even better shape if congress would quit borrowing from its funds,They borrow because they see the excesses in the program.They have taken billions that could have been paid into Medicare,For the boomers who contributed so much to it and made it have those excesses!

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I still think if these jokers had to live off of social security and medicare when they retire, it would be fixed. They just don't care.

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I think the biggest issue is the public's disinterest in the whole system.

Is is just me or does it seem like nobody cares?

I wonder how many won't even go to the polls this election.

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Ya sand your right!

I think people care,but their disgusted their voices are not heard,and instead of being activists when not heard they dont know what to do cause they figure what da heck they wont listen anyway.

I'm courious of this election results.

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thats exactly right dtro. We all have to care and get involved. For us, our children, and our country. Do what is right as a whole and for the future, not just your immediate pocket book.

I also agree with croixflats. I have read numberous books that say social security is fine, and that privitizing would be the worst possible thing. People that rely on SS are the ones that worked hard their whole life but never quite had enough to "stash away". They have payed their dues to society and the government and know in their final years deserve a break for their hard work.

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I think I was misunderstood, we the people care, it's the polititians that don't. Or rather pretend they do, but do nothing about it.

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I personally know alot of "politicians" that do very much care about this issue and others. But we the people need to get involved and help the ones that do care and are trying to do the right thing.

I know alot of you dislike politicians, but some, if not alot, are there because they care and want to make a difference. So instead of just blindly mistrusting them or blindly voting out all incumbents, maybe do your homework and stand behind the good ones. That may be the way to get things done.

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not to discredit your comments Tami, but there is so much clutter surrounding the majoirty of the politicians these days, it's next to impossible to know who the good ones are.

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Reelemin, I can agree up to certain point about them caring, but they care more about getting re-elected than they do about us. I think very few would take our wants and needs over the endorsement of their party. And that is both sides of the fence.

That is my gripe about the party system, it puts the party ahead of us. We have lost our voice.

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LEP - I agree, but getting involved really does help.

Upnorth - yes I agree. And what you point out is true about the party endorsement, unfortuntly.

BUt, that is why I am a party person, I endorse the party that holds the majority of my beliefs and principles. As a whole a party can get more done than a single person. That being said - - is our 2 party system the way to go? IMO , no. 3 or 4 parties would be nice to choose from.

Does the system work - yes

Does the system need fine tuning, maybe even a major overhaul? - yes

How do we do that? I have no idea - crazyfrown

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Quote:
BUt, that is why I am a party person, I endorse the party that holds the majority of my beliefs and principles. As a whole a party can get more done than a single person.

That is fine for the person whose beliefs falls mostly in line with one party or the other. Those of us that don't, well not so good frown

I am going to say this, endorsing or voting entirely by party line takes your voice out of the mix. That is putting party in front of the person, and I personally think that is wrong, we should be the the highest priority, not the party.

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Reelemin, I can agree up to certain point about them caring, but they care more about getting re-elected than they do about us. I think very few would take our wants and needs over the endorsement of their party. And that is both sides of the fence.

That is my gripe about the party system, it puts the party ahead of us. We have lost our voice.

Thats a great point. Voters have not been voting in their rational best interest for a while now. How many people have been sent to Washington or gotten to stay because they promise to be tough, look good in a suit, or speak about family values and the like. We as voters haven't done a good job voting for people whose policies are in our best interest. Voters seem to like the sizzle more than the steak. This applies to both parties.

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"That is my gripe about the party system, it puts the party ahead of us. We have lost our voice.

"Voters seem to like the sizzle more than the steak."

Therein lies the biggest part of the problem. The solution is even more difficult. How to get the voters to vote and then to vote with their hearts and minds and not with popular opinion.

It's not the partys' fault. They are only doing what their membership, the voters, want.

Bob

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Quote:
BUt, that is why I am a party person, I endorse the party that holds the majority of my beliefs and principles. As a whole a party can get more done than a single person.

That is fine for the person whose beliefs falls mostly in line with one party or the other. Those of us that don't, well not so good frown

I am going to say this, endorsing or voting entirely by party line takes your voice out of the mix. That is putting party in front of the person, and I personally think that is wrong, we should be the the highest priority, not the party.

but inessence the party is the person, they should act as one unit to get a job done. And yes WE the PEOPLE are and should be the greatest priority.

Upnorth this brings up an intersting thought.

Is a "party" system the way to go, or should ALL politicians be "independent". No parties at all .

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Social Security is a national disgrace, and one that will end up hurting my children a lot worse that it hurts my wife and I. Sometimes referred to as "The Third Rail" of American politics, neither party has had the cojones to stand up, admit the problem, and get the thing fixed.

Gutless on the part of the Republicans, just plain dishonest on the part of the Dems.

For quite a few years now, the Congress has proven itself entirely incapable of managing the system. The surplus' created in the SS system has been spent, time after time after time.

I've got news for you folks - that's OUR money. Yours and mine. We are told its going to SS benefits, but it gets spent on everything under the sun. What happens then??? Congress issues itself IOU's for the money they leach out of the system. (The lousy leeches!!)

Now a question. If you watch someone consistently mismanage your money, why on earth would you trust these same clowns to do better in the future?

For my part, I would just as soon privatize at least a portion of the system, so the Congress can't raid it. If I have a dedicated account, that Congress can't access, doesn't that solve at least a part of the problem? Congress and the President(s) have proven to be untrustworthy with our "safety net". Let's cut them out - and keep their hands out of that particular pocket.

The cost of such privatization is going to be an issue, and one that has been addressed by a number of commentators and bipartisan panels over the years. We know what the issues are. We know what needs to be done.

Frankly, I'd just as soon take a hit on my own SS benefits as see this problem fall to my children. Not facing the problem head on and making the changes necessary to ensure not only long-term solvency of the system but also giving the citizens a chance to amass a nest egg is selfishness. Political and personal selfishness.

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what happens to the people that can't nest away some savings. If SS is privatized, those hard working peole once again are left out.

SS is not the problem , it is what you said, the government spending it on things other than SS, that is what needs to be stopped.

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Great question Reel!

That's the beauty of the partial privatization plans such as the one that Daniel Patrick Moynihan (D-New York) touted in the past.

Currently we are all forced via payroll withholding to pay into the Ponzi scheme known as Social Security. Congress is getting more money than it needs to pay the current benefit obligations - so it "borrows" the money.

What if part of the money you are currently paying in would go into a private account? Reel's own private account! And Rob's private account - and Sand's, and Chode's, etc. We all have our own private accounts - that WE are unable to touch until we hit retirement age or die.

Right now Reel, if you die prior to hitting retirement age, all of the money you paid in is gone. Nothing left except a measly little death benefit which might cover the cost of paying the priest/pastor/swami.

If your witholding would have been heading into Reel's private account, that money would be available on your death to give to whomever you designate. Maybe you want a spouse or kids or the Red Cross to get your benefits. You could do that. Right now, you can't.

Again, the idea is to designate a portion of your CURRENT withholding amount into a private and untouchable account. Rather than "borrowing" your money, Congress and the President will have to honest about what money they are actually spending.

Other than a few selected categories (like Congress) most everyone is paying into SS already. Why wouldn't we want a better rate of return on that money, as well as having the peace of mind of knowing that our heirs can benefit from our contributions even if we can't?

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Originally Posted By: upnorth
Quote:
BUt, that is why I am a party person, I endorse the party that holds the majority of my beliefs and principles. As a whole a party can get more done than a single person.

That is fine for the person whose beliefs falls mostly in line with one party or the other. Those of us that don't, well not so good frown

I am going to say this, endorsing or voting entirely by party line takes your voice out of the mix. That is putting party in front of the person, and I personally think that is wrong, we should be the the highest priority, not the party.

but inessence the party is the person, they should act as one unit to get a job done. And yes WE the PEOPLE are and should be the greatest priority.

Upnorth this brings up an intersting thought.

Is a "party" system the way to go, or should ALL politicians be "independent". No parties at all .

Good point.

So all person seaking an elected position are independent. A large segment of the population decides to contribute financially and promotionally to the candidate's campaign in an effort and hope to getting him/her elected. Even without the party name, the candidate is still represented and supported by a large group of people, which is precisely what a party is. Nothing gained unless we were to pass a law forbidding us to openly support a candidate of our choice. How would that fit into our representative system?

Bob

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Why wouldn't we want a better rate of return on that money, as well as having the peace of mind of knowing that our heirs can benefit from our contributions even if we can't?

Because then we couldn’t fund the people who don’t contribute. wink

Any party that has an agenda of moving towards (me) keeping my own money gets my vote. Plain and Simple cool

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Social Security is a national disgrace, and one that will end up hurting my children a lot worse that it hurts my wife and I. Sometimes referred to as "The Third Rail" of American politics, neither party has had the cojones to stand up, admit the problem, and get the thing fixed.

Gutless on the part of the Republicans, just plain dishonest on the part of the Dems.

For quite a few years now, the Congress has proven itself entirely incapable of managing the system. The surplus' created in the SS system has been spent, time after time after time.

I've got news for you folks - that's OUR money. Yours and mine. We are told its going to SS benefits, but it gets spent on everything under the sun. What happens then??? Congress issues itself IOU's for the money they leach out of the system. (The lousy leeches!!)

Now a question. If you watch someone consistently mismanage your money, why on earth would you trust these same clowns to do better in the future?

For my part, I would just as soon privatize at least a portion of the system, so the Congress can't raid it. If I have a dedicated account, that Congress can't access, doesn't that solve at least a part of the problem? Congress and the President(s) have proven to be untrustworthy with our "safety net". Let's cut them out - and keep their hands out of that particular pocket.

The cost of such privatization is going to be an issue, and one that has been addressed by a number of commentators and bipartisan panels over the years. We know what the issues are. We know what needs to be done.

Frankly, I'd just as soon take a hit on my own SS benefits as see this problem fall to my children. Not facing the problem head on and making the changes necessary to ensure not only long-term solvency of the system but also giving the citizens a chance to amass a nest egg is selfishness. Political and personal selfishness.

Funny you say that, I view SS as a national treasure and symbolic of an intact social contract between people and the government. A good hearted country that wont let its poor and old die in the streets.

As Keillor wrote:

"The fear of catastrophe could chill the soul but the social compact assures you that if the wasps come after you, if gruesome disease strikes down your child, if you find yourself hopelessly lost, incapable, drowning in despair, running through the rye toward the cliff, then the rest of us will catch you and tend to you and not only your friends but We the People in the form of public servants. This is a basic necessity in a developed society... This is Democratic bedrock: we don't let people lie in the ditch and drive past and pretend not to see them dying. Here on the frozen tundra of Minnesota, if your neighbor's car won't start, you put on your parka and get the jumper cables out and deliver the Sacred Spark that starts their car. Everybody knows this. The logical extension of this spirit is social welfare and the myriad government programs with long dry names all very uninteresting to you until you suddenly need one..."

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No one is talking about throwing orphans and the elderly into the streets Chode. No one is even suggesting such a thing.

The fact of the matter is that for many years we have been paying more into SS than has been going out in SS benefits. The "extra" has been spent by Congress, which then issued IOU's to itself/us/U.S.

The fact of the matter is that we are a approaching a time when we will start needing to pay out more in benefits than is being taken in - - - and we have no surplus to cushion the shock of that event.

So what do you propose?

I would love to hear your suggestions.

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Great question Reel!

That's the beauty of the partial privatization plans such as the one that Daniel Patrick Moynihan (D-New York) touted in the past.

Currently we are all forced via payroll withholding to pay into the Ponzi scheme known as Social Security. Congress is getting more money than it needs to pay the current benefit obligations - so it "borrows" the money.

What if part of the money you are currently paying in would go into a private account? Reel's own private account! And Rob's private account - and Sand's, and Chode's, etc. We all have our own private accounts - that WE are unable to touch until we hit retirement age or die.

Right now Reel, if you die prior to hitting retirement age, all of the money you paid in is gone. Nothing left except a measly little death benefit which might cover the cost of paying the priest/pastor/swami.

If your witholding would have been heading into Reel's private account, that money would be available on your death to give to whomever you designate. Maybe you want a spouse or kids or the Red Cross to get your benefits. You could do that. Right now, you can't.

Again, the idea is to designate a portion of your CURRENT withholding amount into a private and untouchable account. Rather than "borrowing" your money, Congress and the President will have to honest about what money they are actually spending.

Other than a few selected categories (like Congress) most everyone is paying into SS already. Why wouldn't we want a better rate of return on that money, as well as having the peace of mind of knowing that our heirs can benefit from our contributions even if we can't?

the problem I have with this senerio is, - lets say -

George has worked hard his whole life including his duty in the military. He has made an honest living and has never relied on any form of social services. But raising his family on only a high school education was difficult and alot of times they went without, not only luxory items but many staples of a normal american family life. And if he didn't have SS taken out of his paycheck each week he never would have been able to "tuck away" a nest egg for retirement. The reason, any "extra" money would have gone to those staples I spoke of earlier. ie. real milk instead of powder milk. Know its time for George to retire, and thank god he has SS because other wise he would be out on the street. Because all his hard earned money went to his family and kids.

This is why privitization can't work, because a very large chunck of americans are in the very same boat that George is in.

If I die early and I never get to take advantage of my SS payments, well for me thats OK, because it took away my worries while I was trying to earn a living and enjoying life, and I know its all about a better society as a whole.

Some earn things, some don't, thats just the way it is. Life isn't fair, but SS is one small way of leveling the playing field for all.

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No one is talking about throwing orphans and the elderly into the streets Chode. No one is even suggesting such a thing.

The fact of the matter is that for many years we have been paying more into SS than has been going out in SS benefits. The "extra" has been spent by Congress, which then issued IOU's to itself/us/U.S.

The fact of the matter is that we are a approaching a time when we will start needing to pay out more in benefits than is being taken in - - - and we have no surplus to cushion the shock of that event.

So what do you propose?

I would love to hear your suggestions.

SS in and of itself is in no danger. Its the taking from SS by the government that needs to be fixed. How do handle this, well maybe one way, would to not cut taxes when we are at war and need billions more! , By taxing the upper 10% the way that everyone else is taxed. - .......

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I don't get it.

The money still comes out of your check.

It just stays in YOUR name and is invested in private funds.

Plus......."they" can't nickel and dime it for "their" pet projects

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