Tuesday, October 27, 2015

Seniors spared big premium increase in Medicare by budget deal, which also extends debt ceiling

Vox has more details on the budget deal, which is said to avoid a possible crisis on the debt ceiling as early as Nov. 3, as well as relieve some seniors with possibly astronomical increases in their Medicare Part B premiums, story by Sarah Kliff, here
Seniors will get a “loan” from the Medicare general fund and have to pay it back with slightly greater premium increases over the next few years. 
The problem comes about because this year there is no COLA increase in Social Security, and current recipients are “held harmless” by laws.  The lack of COLA comes in part from lower gas prices, which doesn’t help seniors who don’t drive. 

Sunday, October 25, 2015

Same old questions on debt ceiling and payment priotization -- and Social Security -- are returning

Marilyn Geewax at NPR has an article Oct. 24 on the debt ceiling, whose progress this week seems very uncertain, “Why you shouldn’t stare up at the debt ceiling and yawn”, link here.   It seems relatively inconclusive, but it appears that some Republicans don’t take seriously how much damage they can do to financial markets.  Perhaps they’re used to playing chicken, because that’s how a lot of people manipulate others.

I’ll give the discussion link of payment prioritization from Lawrence Tribe’s comments (New York Times), from back in January 2013 again.  Notice I have a question where I pose a theoretical scenario where some Social Security beneficiaries could lose all future benefits suddenly.  The legal experts shoot me down (look for “Boushka”), thankfully.  They would also shoot down what NPR says.

Since Social Security is a “bond holder”, it has as good a claim as any other creditor.  But theoretically, Congress could impose immediate means testing on all future payments, even for current retirees, because of Flemming v. Nestor – which effectively means that FICA is a tax or possibly an “insurance premium” for social insurance like welfare, but not a contribution to a constitutionally guaranteed annuity payment (like an annuity premium in the life insurance business).

The surest way to protect existing past FICA “contributions” (as “property”) is to pass a law privatizing them – turn them over to the private life insurance business, but under heavy regulation.  I do support gradual or partial privatization.  The GOP supports this.  But why doesn’t the GOP guarantee that the US government will always pay its bills already due?

Update: Oct. 26

Jacob Lew's own op-ed in USA Today on the dangers of an "accident" with the debt ceiling.

Update: Oct. 27

Various media reports on a budget deal to raise the debt ceiling, such as ABC's here.  See posting Tuesday.  

Saturday, October 24, 2015

Social Security doesn't treat working women fairly compared to stay-at-home spouses

Max Ehrenfreund has a good summary on p. A12 of the Washington Post of the way Social Security seems to “penalize” working women, p A12 Saturday, October 24, 2015, link here

Social Security was, after all, implemented in the 1930s, when most families had one earner, the husband supporting the wife and children.  World War II would change that long before Betty Friedan, feminism and gay liberation came along.  But the math of survivors’ benefits works in such a way that non-working surviving spouses of long-standing one-earner (and high earner) marriages do very well. Women who worked but erratically (maybe because of motherhood, maybe because of poverty) are much less well served. 

Of course, same-sex couples will enter the mix, but this means little so far. 
But the idea of social security as an “annuity” that you paid for with FICA is somewhat weakened indeed when you see this argument. 

Keep in mind one other idea in reading the simulations in the article here -- they assume taking benefits at full retirement.  Many employers pressured retirees into taking Social Security early with "Social Security offsets" and "Social Security bridges". 
Keep your eyes on the debt limit situation, folks. 

Monday, October 19, 2015

Debt limit issue comes back, this time with some urgency; Social Security Trust Fund obfuscation comes up again

The debt ceiling issue has come storming back, with a scary analysis from the Bipartisan Policy Center here. Lew has a video about a possible “terrible accident” on Yahoo!  But it isn’t affecting markets yet.

The latest estimates are that the Treasury could run out of cash Tuesday, Nov. 3, 2015, -- haha, an election day in suburban northern Virginia.

Boehner’s leaving the House is said to complicate the issue.

My own November Social Security check comes Tuesday, Nov. 10 (because Wednesday Nov. 11 is a holiday).

Last two times around (in 2011 and 2013) I wrote a lot of columns about the legal protection to Social Security payments, because of the “Trust Fund Accounting Trick” (which some pundits say is the way Bill Clinton created the appearance of a budget surplus in the 90s).  I won’t rehearse these today, but I suspect that the debate on Social Security payment mechanics will resurface in the next few days.  The best discussion of this got written in comments in the New York Times in early 2013 by a couple of law professors (see Issues blog Jan. 13, 2013). Earlier cycles on this issue led to the coining of new words, like “Timocracy”.

Will Congress act at the last minute, as it always has?  BPC says that this time Halloween timing (and High Heels Race in Washington) could make it testier.  In the meantime, other moralists talk about sheltering seniors whose social security payments got missed.  Is it our responsibility to be ready for every possible failure of our system?  That drives the Second Amendment crowd.

This issue will evolve in the next few days.  No doubt we will hear from Porter Stansberry and Ron Paul.  Is this why they were predicting an October crisis? I get concerned when I hear "conservative" persons in Congress threaten government shutdowns of Planned Parenthood.  Conservatives pay the bills already incurred.

Saturday, October 17, 2015

Getting the relevant points right on Social Security sustainability: big NYTimes story Saturday

The New York Times continued the debate on Social Security Saturday with a long article in the “Your Money” section here.

The upshot is that Democratic proposals to increase the FICA tax rate and/or limits to tax higher earners probably would shore up the solvency of the system.

Looked at more closely, some GOP proposals, like that of Chris Christie, seem to focus on lowering the expected benefits for younger workers.  I’m OK with this if there are some alternative savings vehicles (partial privatization, essentially the purchase of very long term annuities from life companies) to make up the difference.

One of the points in the article is that longer lifespans is not the big deal it is usually said to be;  longer lives would account for 20% of the shortfall.  More of the difficulty comes from lower birthrates. Ironically, admitting more refugees, if employable, could help with the problem long term.

Friday, October 16, 2015

Means testing for current Social Security retirees? The idea won't go away, partly because rich people live longer than poor people

There is another desperate Letter to the Editor in the Washington Post this morning on Social Security, “Don’t reduce benefits for current retirees”, as a reaction to Douglas Elmendorf’s Oct. 12 op-ed, “A fairer approach to fiscal reform”, all links from here.
Indeed, Elmendorf seems to be back into means testing territory. He even recognizes, near the end, that most middle and upper income class people believe they “earned” their benefits through paying FICA (which their employers matched) and would have saved the same amounts privately if allowed to.

He, as have other observers (even Republican Governor Chris Christie of New Jersey) is also concerned that richer people live longer, and that raising the retirement age gradually (in expectation of longer lives) affects the poor more.  So are we back in the world or welfare, or “personal responsibility”?

One thing to note, seniors need better ways to extend their work careers than the shallow hucksterism that was pushed at me.
In the meantime, CNN Money has a column “What older workers don’t know about social security”, here. Note that if the Trust Fund is depleted, current retirees are guaranteed 75% of their current benefit indefinitely. Also, if retirees have benefits reduced because of the Annual Earnings Limit, they can recover what was withheld after reaching full retirement age.

Sunday, October 11, 2015

Part B Medicare premiums will rise sharply, and not everyone shares the burden fairly

The New York Times warns Social Security recipients in an editorial “The Unlucky Millions Paying More for Medicare”) Sunday, October 11, 2015, p. 8, that new recipients are likely to pay much more for Part B premiums starting in 2016, link here. Medicare Part B premiums are normally deducted from Social Security checks or direct deposits. 
Social Security recipients will not get a cost-of-living increase in 2016.  (Some media sources report that falling gasoline and crude oil prices are the primary reason.)  Under current 1997 law, current recipients are “held harmless” for increased costs from Part B, so they are passed on to new benes.

The Part B Medicare deductible will increase from $147 in 2015 to $223 in 2016, and fall back to $169 in 2017. Make sense?

Monday, October 05, 2015

Downsizing and retirement: Probably a good idea when the kids are gone (or when there are no kids)

Assisting living centers like Emeritus and Sunrise sometimes offer seminars on “downsizing”.  Harriet Edelson has a story in the New York Times, “Downsizing offers a fresh start for older adults”, here.

Indeed, in my situation, I’ve disposed of some quantity of mother’s material goods, but a lot remains.  It’s incredibly time consuming to go through it and physically dispose of it.
For my own life’s possessions, the CD and record collections are valuable, but I like the way younger adults build their collections in the Cloud with mpeg and pdf’s.  Books can be kept on Kindles or Nooks (which could, however, fail – but then it seems Amazon or BN will move the collection to a new device).

The biggest problem that older adults, still active, have is taking care of oversized older houses, that have components that overt time can break.  Travel requires extensive preparation, which gets a lot easier if you move to a modern high rise (even not for seniors, just a well supervised building).
For me, the most convenient location in the world would probably be around Columbus Circle in NYC – high enough to be safe from floods and hurricanes, but close to everything.  (The Village and SoHo are exposed, as is lower Brooklyn).  But that’s why Donald Trump can charge such unaffordable amounts for his condos in the area.  They are convenient.   Security is generally good. 
They do make life for some independent people work smoothly, where you don’t need a car and so much is within walking distance, let alone subway.

I’m not the kind to put a lot into a Barbara Cochrane-style showing of a house.  Imagine owning one alone in a flood-prone coastal area (like S.C. this week – even far inland), or wildfire-exposed area in California.  You’d need contingency planning done A+.