This report by the Kaiser Family Foundation about elder poverty is shocking. I don’t think people realize just how many millions of people are barely subsisting in their old age, but it’s many more than the government likes to admit to. Just as with the Chained-CPI, we’re dealing with how they are accounted for rather than the actual numbers these people are forced to live on.

Dylan Matthews explains why elder poverty is so much worse than we realize:

While the SPM takes transfer payments into account, it does the same with out-of-pocket medical costs. If you’re an unmarried senior with no dependents, make $15,000 a year, and spend $10,000 of it on medical care, under the official poverty measure you’d most likely not count as poor, as $15,000 is above the 2012 poverty threshold for a single senior ($11,011).

But under the SPM, you’d count as poor as $15,000 – $10,000 = $5,000, which is below the relevant SPM threshold. And despite having Medicare, many seniors struggle with out-of-pocket medical bills. As my colleague Michelle Singletary pointed out over the weekend, the Employee Benefit Research Institute has found Medicare only pays for about 60 percent of seniors’ total health costs. Sarah has written about how out-of-pocket costs tend to pile up particularly at the end of seniors’ lives.

Can you believe that we’re actually talking about whether or not $15,000 counts as poverty in America in the first place? And then it turns out they aren’t counting what these old people have to lay in medicare costs! That’s just mind-boggling.

In any case, the article is very interesting and shows that some of the places with the highest elderly poverty are in places like California where 20% of SS recipients are in poverty.

And yet, the president and members of both parties have been talking about cutting benefits. Unbelievable.

As always when I read about the necessity of a guaranteed old age pension that keeps people living in dignified circumstances after they are too old to work, I’m reminded of this great article by Arthur Delaney and Ryan Grim from a few years ago:

An employee of Associated Charities, a private organization dedicated to alleviating poverty in the District of Columbia, met an old black woman carrying a basket of cinders near the dump in Southeast D.C. on a bitterly cold day in December 1896.

The woman “could not give street and number, but could ‘fotch’ the agent to her place,” according to a case study labeled “Aunt Winnie” in one of the organization’s annual reports from near the turn of the century. “Old age, with a heavy load on top and a strong wind blowing, made the walk a trying one. At last the 8×10 cabin was reached. In it was a stove in many pieces held together with wire, a bedstead with rags for mattress and rags for covering. From the leaky roof the floor was wet through and through.”

Aunt Winnie, the report said, had no income save the 50 cents she made every two weeks for taking in wash. In summertime she raised herbs and greens, but in winter she “suffered for food and fuel.” Her children had all been sold away to slavery, and a nearby niece was too poor to offer any support. Her neighbors helped, providing money for the stove and cot, and a “colored friendly visitor was found to carry broth and other comforts to her.” The neighborly charity wasn’t enough to persuade the agent, who was essentially a private sector version of a social worker, that the old woman should be on her own.

“In the fall of ’98 agent asked her to go into the almshouse, but she would not consent. During the storm in February ’99, she was kept from perishing with a great effort. Every visit, and they were many, had to be made through snow up to the waist. It was during these visits that the promise was made that before another winter she would take refuge in an almshouse.”

When the weather warmed, Aunt Winnie backed off her promise to go to the almshouse. The social worker started to play hardball.

“It would be hard to say which, the agent or the applicant, suffered the more, because through all this distress had sprung up a loving confidence and perfect trust that seemed cruel to deceive. Attention and assistance were withdrawn gradually.”

It worked: In July, Aunt Winnie relented and said she’d go to the almshouse as soon she could sell her cabin. Nobody would buy it, so the social worker told her to tear it down and sell it for kindling. At 2 p.m. on Aug. 23, 1899, the social worker showed up in a wagon.

“[S]he was sitting on her trunk, without a stick of the cabin to be seen. Without a murmur she dropped a courtsey to the bare spot where once stood the cabin and turned away. After an affectionate separation in the almshouse the agent came away feeling that for such a balmy day in August it was a trying task to perform, but for winter’s blizzards, a blessed relief. In case of her death a promise has been made to her that the general secretary of the Associated Charities will keep her body from potter’s field.”

Aunt Winnie, whose story is preserved in the archives of the Historical Society of Washington, had been sent to an American institution that was by then some 300 years old and went by a variety of names: the county farm, the poor farm, the almshouse or, most often, simply the poorhouse. She would probably have been surprised to learn that more than a hundred years later, after the virtual eradication of elderly poverty, a powerful political movement would materialize with the mission of returning to the hands-off social policies that made the poorhouse the nation’s only refuge for the jobless, the aged, the infirm and the disabled.

David does a nice job unpacking the dreadful Politico gossip item in his post below. But as a long time Village observer from afar, I thought I might add a little more context. The first observation is that apparently Sally Quinn has officially passed the baton to Vandehei and Allen. How do I know this? Well, take the first sentence:

The town is turning on President Obama — and this is very bad news for this White House.

Recall Quinn’s famous “village” article:

When Establishment Washingtonians of all persuasions gather to support their own, they are not unlike any other small community in the country.

On this evening, the roster included Cabinet members Madeleine Albright and Donna Shalala, Republicans Sen. John McCain and Rep. Bob Livingston, Federal Reserve Board Chairman Alan Greenspan, PBS’s Jim Lehrer and New York Times columnist Maureen Dowd, all behaving like the pals that they are. On display was a side of Washington that most people in this country never see. For all their apparent public differences, the people in the room that night were coming together with genuine affection and emotion to support their friends — the Wall Street Journal’s Al Hunt and his wife, CNN’s Judy Woodruff, whose son Jeffrey has spina bifida.

But this particular community happens to be in the nation’s capital. And the people in it are the so-called Beltway Insiders — the high-level members of Congress, policymakers, lawyers, military brass, diplomats and journalists who have a proprietary interest in Washington and identify with it.

They call the capital city their “town.”

And their town has been turned upside down.

Their town:

“This is a community in all kinds of ways,” says ABC correspondent Cokie Roberts, whose parents both served in Congress. She is concerned that people outside Washington have a distorted view of those who live here. “The notion that we are some rarefied beings who breathe toxic air is ridiculous. . . . When something happens everybody gathers around. . . . It’s a community of good people involved in a worthwhile pursuit. We think being a worthwhile public servant or journalist matters.”

“This is our town,” says Sen. Joe Lieberman of Connecticut, the first Democrat to forcefully condemn the president’s behavior. “We spend our lives involved in talking about, dealing with, working in government. It has reminded everybody what matters to them. You are embarrassed about what Bill Clinton’s behavior says about the White House, the presidency, the government in general.”

Muffie Cabot, who as Muffie Brandon served as social secretary to President and Nancy Reagan, regards the scene with despair. “This is a demoralized little village,” she says. “People have come from all over the country to serve a higher calling and look what happened. They’re so disillusioned. The emperor has no clothes. Watergate was pretty scary, but it wasn’t quite as sordid as this.”

NBC correspondent Andrea Mitchell adds a touch of neighborly concern. “We all know people who have been terribly damaged personally by this,” she says. “Young White House aides who have been saddled by legal bills, longtime Clinton friends. . . . There is a small-town quality to the grief that is being felt, an overwhelming sadness at the waste of the nation’s time and attention, at the opportunities lost.”

Message: they care. About themselves.

There was one guy who got it right:

Lloyd Cutler, former White House counsel to Presidents Carter and Clinton and considered one of the few “wise men” left in Washington, gives yet another reason why people take the scandal more seriously here. “This is an excitement to us, a feeling of being in on it, and whichever part of the Washington milieu we come from, we want to play a part. That’s why we’re here.”

Yes. The president had made a grave mistake if he forgot that it’s not about the people and it’s not about the Party and it’s not even about his own legacy. It’s all about the Villagers:

Obama’s aloof mien and holier-than-thou rhetoric have left him with little reservoir of good will, even among Democrats. And the press, after years of being accused of being soft on Obama while being berated by West Wing aides on matters big and small, now has every incentive to be as ruthless as can be.

This White House’s instinctive petulance, arrogance and defensiveness have all worked to isolate Obama at a time when he most needs a support system.

Clearly, the president should have given them all frat-boy nicknames and insulted them in public. That’s what they crave.

VandeAllen is doing an excellent job of stepping up now that Quinn has semi-retired. The president — and the country — is on notice: the Village is upset. They feel they’ve been ignored. And they will not be ignored.

Are these bubbling scandals the consequence of official malfeasance or ineptitude? Are they threats to the constitutional order, the result of executive overreach or something that affects the balance of power in the government? You will never know. In the Village nothing like that is ever important. They are there to give us the inside information on how the Villagers are feeling and what has offended their sensibilities so we will understand how our government really works. We will not be able to tell the difference between a real scandal and a trumped piece of partisan nonsense because they cannot tell the difference and they don’t want to. And that works out very nicely for the permanent political establishment, doesn’t it?

I had the privilege of hearing Dean Baker and Mark Weisbrot speak about austerity the other night and it was as fascinating as you might imagine. I think most people who read this blog wouldn’t be surprised by what they said, but I think many in the audience were people who may be depending upon more mainstream sources and were very surprised — and alarmed — by what they heard. It’s hard to wrap your mind around.

The CEPR does yoeman’s work in providing the data and analysis that informs all of us and I’m very grateful for them.  And Chris Hayes is also doing something on his show that’s very important — telling stories about how austerity affects real people.

I thought this segment was quite brilliant — and horribly depressing. We’re losing at least one generation’s hopes and dreams with our elite’s obscene obsession with strangling the common good:

Visit NBCNews.com for breaking news, world news, and news about the economy

President Obama’s nomination of Hyatt heiress Penny Pritzker to be Commerce secretary gives me the perfect excuse to write about a fascinating conversation I had recently with Cathy Youngblood, a union activist and Hyatt employee who is on a campaign to get her employer to put one worker on its board of directors. She’s written a compelling blog post over at Huffpost today about the conditions of her job and her attempts to get Hyatt to listen to her proposal and I urge you to read it, particularly this part:

My problem is one that workers everywhere face daily. I know you’ve probably had the thought, “What was my boss thinking when he set up the work this way? I could do this better!” We have common sense solutions and ideas to help our respective businesses run better. But something is amiss. My voice needs to be heard in the boardroom, as well as in the hotel room. Unfortunately, the business owners, those captains of finance, are the last to listen. Our physical strength is required, our wisdom… not so much. But thousands of people like me want something in return for our services. We want their respect, to share in the decision making process of how we do our work. We know what is needed to run a hotel: proper tools and equipment, as well as procedures to ensure safer working environments.

What if a worker, someone like me, were allowed to sit on the board of directors of these companies? Think about it. If you were running a business wouldn’t you want to hear from the people who know your business best? Knowledge is power, but only if one knows how to use it properly. This is why we launched the Someone Like Me campaign. There are currently 12 members on Hyatt Hotels’ Board of Directors, from companies like Walmart, Goldman Sachs, and plenty of private equity. But not one member of the Board works in a hotel. I am calling on Hyatt to add a 13th member to the Board of Directors, and reserve that seat for a hotel worker. If I were on Hyatt’s Board of Directors, I would ensure that all workers at Hyatt are paid a living wage, have safe working conditions, and the ability to speak out about those conditions without fear.

But this campaign isn’t just about Hyatt Hotels, or Walmart, or the big banks, it’s about all companies. The idea that a rank-and-file worker should have a seat on a corporate board may be a novel idea in the United States, but it is very common in the European Union. In some of the world’s best known companies such as BMW, workers have a seat at the table.

When Youngblood first told me about this idea, it was like a bolt of lightning to me. I’m far from a labor expert and it sounded to me like something that should be obvious — in fact, it should be a requirement. I had no idea that this was commonplace in large European companies. And somehow they’ve managed to survive while mingling with the riff-raff.

She is going to try to get into the next Hyatt shareholder meeting in June. The last time she tried, they barred her from the room (and she’s a shareholder!) But she’s going to keep trying until she gets in there and can officially make the proposal to the other shareholders. And we’ll be watching.

Meanwhile, Penny Pritzker is presumable going to have some confirmation hearings. Maybe we could get one of our allies in the Senate to ask her about whether or not she would support this. A commerce secretary in an allegedly liberal, union backed, Democratic administration will certainly be in favor. Right?

… because if he were we could dismiss him as a typical stupid hippie to whom nobody should ever pay attention (particularly when sharp analysts like Newt Gingrich and George Will exist.) But now that people who the mainstream media can respect, like Tim Kaine, are saying it, now it’s respectable:

The two parties are miles apart on how to cut the deficit and national debt: Republicans want to slash spending even more. Democrats want to raise revenue.

And then there are the other Democrats — the ones who reject the entire premise of the current high-stakes fiscal fight. There’s no short-term deficit problem, they say, and there isn’t even an urgent debt crisis that requires immediate attention. This group could make it even harder for President Barack Obama to strike a grand bargain because they increasingly see no immediate need for either new spending cuts or significantly more revenue, both of which they say could further slow the economy.

These Democrats and their intellectual allies once occupied the political fringes, pushed aside by more moderate members who supported both immediate spending cuts and long-term entitlement reforms along with higher taxes.

But aided by a pile of recent data suggesting the deficit is already shrinking significantly and current spending cuts are slowing the economy, more Democrats such as Virginia Sen. Tim Kaine and Maryland Rep. Chris Van Hollen are coming around to the point of view that fiscal austerity, in all its forms, is more the problem than the solution.

This group got a huge boost this month with the very public demolition of a sacred text of the austerity movement, the 2010 paper by a pair of Harvard professors arguing that once debt exceeds 90 percent of a country’s gross domestic product, it crushes economic growth.

Turns out that’s not what the research really showed. The original findings were skewed by a spreadsheet error, among other mistakes, and it’s helping shift the manner in which even middle-of-the-road Democrats talk about debt and deficits.

“Trying to just land on the debt too quickly would really harm the economy; I’m convinced of that,” Kaine, hardly a wild-eyed liberal, said in an interview. “Jobs and growth should be No. 1. Economic growth is the best anti-deficit strategy.”

No kidding.

Look, I’m happy that some of the Democrats are finally beginning to see the obvious. It’s been a long haul. Unfortunately, we’ve already slashed the hell out of government for the past four years because nobody wanted to be seen as a hippie. But better late than never. What this does is give the Democrats in congress the ability to beat back the Grand Bargain and, if we’re lucky, maybe be just a little bit bolder on the sequester. Or bold enough to at least, cut some deals with Republicans instead of just agreeing to reinstate the funding for items that Republicans value. (You know — we’ll reinstate the FAA if you agree to reinstate cancer treatments or something like that …)

Anyway, this return to the “reality based community” is long overdue. And very welcome.

Update: Oh hey, it seems to be “hippies were right” day at Politico (Not that anyone will admit it, mind you.)

Democrats have used a clear and potent attack against Republicans in recent elections: Don’t vote for them because they’ll cut your Social Security and Medicare.

But using that playbook next year, as Democrats had planned, just got a lot more complicated.

President Barack Obama blurred the lines this month when he embraced entitlement cuts of his own as part of his budget plan. And Democrats now fear their leader’s tack to the center could blunt one of their sharpest weapons in the battle for the House of Representatives next year.

The concern is that Republicans will have a ready retort — your own president proposed entitlement cuts — and force Democrats on the defensive. The issue is critical to senior voters, who turn out in disproportionately large numbers in midterm elections.

“I think it does make it more difficult for Democrats in the next election,” said Democratic Rep. Rick Nolan, who occupies a swing district in Minnesota. “I would think that Republicans will say this cycle that if you want your Medicare and Social Security cut, that’s what Obama wants to do. … And I imagine that’s what Republicans will campaign on.”

The president’s shift came after an election year in which Democrats made the GOP’s embrace of Wisconsin Rep. Paul Ryan’s controversial plan to overhaul Medicare a centerpiece of their campaigns. The offensive, Democrats say, helped them net eight House seats — a respectable figure but short of the 25 they needed to seize the lower chamber.
[...]
The White House did not respond to a request for comment.

Bill Burton, a strategist for the Democratic public affairs firm Global Strategy Group and a former deputy White House press secretary for Obama, said in an email “there is no doubt that Karl Rove and his allies will spend millions of dollars lying about what the President’s budget means in terms of the economic health of our country. What we don’t know is just how much Democratic donors are going to stand up to those lies.”

While Obama would love for his party to win the House — he has said he would do everything in his power to help Democrats take the speaker’s gavel from John Boehner — his budget highlighted tensions with congressional Democrats. The president has said he wants to reach a grand bargain with Republicans to tame the nation’s $16 trillion debt. And getting there, Obama signaled with his budget, requires taking a whack at entitlements.

“The White House is more concerned about his legacy,” said Paul Maslin, a longtime Democratic pollster. “It’s the classic dilemma of the second-term incumbent.”
[...]
In the days since Obama released his budget, many of the Democrats who have been quickest to distance themselves from his blueprint are those from senior-heavy districts. California Rep. Raul Ruiz, a freshman Democrat who represents a Palm Springs-area district where seniors compose about half of all registered voters, said “putting the burden of the national deficit on the backs of our seniors is wrong.”

Democrats are even concerned that Republicans could reverse the dynamic and portray Democrats as the bad guys on entitlements.

In an interview with CNN after Obama unveiled his budget earlier this month, National Republican Congressional Committee Chairman Greg Walden of Oregon called the plan “a shocking attack on seniors.”

“I’ll tell you when you’re going after seniors the way he’s already done on Obamacare, taken $700 billion out of Medicare to put into Obamacare and now coming back at seniors again, I think you’re crossing that line very quickly here in terms of denying access to seniors for health care in districts like mine certainly and around the country,” he said.

Walden’s remarks drew criticism from some in the GOP, which has come out in favor of chained CPI as a way of reducing the deficit. But the NRCC chairman’s point was made: Republicans had been given a free opportunity to hit back on entitlements, long a Democratic trump card.

Brock McCleary, a GOP pollster and former NRCC deputy political director, said Republicans couldn’t expect to gain an advantage on who’s most likely to defend programs but could try to fight the issue to a draw.

“The president has very clearly shown the way for how Republicans can keep voters in the lurch about which party is going to protect entitlements,” he said.

Indeed. But Democrats in congress have not taken any votes on this and if they’re lucky they won’t have to. I’m fairly sure that won’t stop the wingnut millionaires for tarring them with this absurd proposal anyway, but at least they won’t have to defend it.

If House members want to be very sure to end up on the right side of this one in 2014, they should all sign the Grayson-Takano letter. (And so should you …)

In case you’re wondering where the Bush apologists on your TV today are getting their bizarroworld opinions about Bush being the most awesomest president in the whole wide world, Politico conveniently published the official talking points:

Strengthened K-12 education, which resulted in dramatic improvement of math and reading scores across the board and narrowed the achievement gap between white and minority students.

Injected consumer and competitive forces into the healthcare system, imposing more discipline and lowering cost while improving quality.

Increased the involvement of faith-based and community organizations in the delivery of social services, improving efficiency and effectiveness.

Strengthened the border and fought for rational updates to America’s immigration system, laying the foundation for future reform.

Proposed strengthening Social Security for future retirees by allowing younger workers to put some payroll taxes into personal retirement accounts and by changing the benefit formula so that those who depend on the program the most would see their benefits rise over time more quickly than wealthier Americans.

President Bush made tough decisions that kept Americans safe after 9/11

Combated terror and tyranny by standing for freedom abroad and removing threatening regimes in Afghanistan and Iraq.

Ensured that the next president had every tool and capability available to protect the United States.

Merged more than 20 federal agencies to create the Department of Homeland Security.

Worked with Congress to pass the USA PATRIOT ACT and other measures to update American intelligence capabilities, many of which continue to be used today in the war on terror.

Established a Director of National Intelligence and tore down the wall between law enforcement and intelligence agencies.

Transformed the FBI’s focus from investigating events to preventing and stopping acts of terrorism.

Dismantled al-Qaeda by removing it from its safe haven and decimating its key leadership.

Persuaded Libya to disclose and dismantle WMD program and renounce terrorism.

Broke up A.Q. Khan network, which was selling nuclear enrichment capability to rogue states.

Used speeches, executive orders, public statements, and day-to-day leadership to keep the federal government focused on the threat of terrorism. This focus ensured that the federal government, at all levels, took all the steps it could within the law to keep America safe.

President Bush promoted freedom abroad

As President Bush said, “The survival of liberty in our land increasingly depends on the success of liberty in other lands.” The idea of freedom is essential to keeping the United States safe and we reduce the risk of terrorism when extreme poverty and hopelessness are confronted head on

Fundamentally changed American foreign policy in the Middle East by refusing to pursue stability at the expense of democracy, and instead agitating for more democracy everywhere.

Doubled foreign assistance worldwide, while holding governments that accept U.S. assistance accountable for making democratic and economic reforms to increase transparency, strengthen their economies, improve the lives of their citizens, and ultimately decrease their dependence on aid.

Fought AIDS, malaria and other globally neglected diseases by providing life saving treatment for 2 million people and care for 10 million people, including more than 4 million orphans and vulnerable children.

Promoted international partnerships with India, Brazil, Mexico and Central America, to enhance global security and increased the number of countries partnering with the United States on Free TradeAgreements (FTAs) from three to 17.

President Bush created the conditions for private sector growth and rescued the financial system from the worst crisis since the Great Depression

President Bush believes that economic growth comes from the private sector, with firms competing to create new innovations and wealth in a free market. Government’s role is to set the rules for workers and firms rather than substitute for private efforts.

In his first year in office, President Bush responded to the recession created by the collapse of the tech bubble with a mix of economic reforms that included tax cuts for all Americans. In 2003, President Bush signed into law another round of tax cuts. What followed was more than four years of strong economic growth and strong employment.

President Bush’s policies rescued the financial system from the worst crisis since the Great Depression, provided tax relief for all Americans, submitted budgets that reduced and reigned in discretionary spending, and advanced the nation’s energy security.

No really. The put this out and have people using it on the TV today. And cable news gasbags are kind of into it. (makes ‘em feel young I guess.) They are even spewing this bilge with straight faces.

Oh hey, did I forget the last page?

President Bush presided over both a catastrophic terrorist attack and a catastrophic financial crisis. He bungled the response to both of them.

He also invaded a country that hadn’t attacked us and tried to legalize torture and indefinite detention.

He left office the most unpopular president in history.

Oh, and here’s Condoleeza Rice, torture apologist, throwing away what’s left of her reputation once and for all:

Not sidestepping controversy, Condoleezza Rice will defend the Bush administration’s enhanced interrogation and rendition program at the dedication of the George W. Bush Presidential Library and Museum on Thursday.

The remarks will appear in a five-minute video presentation, which was obtained by Foreign Policy in advance of the dedication. In the clip, Rice emphasizes Bush’s deep commitment to civil liberties and national security while making “difficult decisions” following the Sept. 11 terror attacks. She also claims the interrogation program prevented future attacks on the homeland.

“The president asked two very important questions in the decision to use these techniques,” says Rice of her former boss’s interrogation program. “He asked the CIA if it was necessary and he asked the Justice Department if it was legal. Both departments answered yes.”

“Only when he was satisfied that we could protect both our liberties and our security did he signal that we could go ahead,” says the former secretary of state. “The fact that we have not had a successful attack on our territory traces directly to those difficult decisions.” A portion of the clip appears below:

I went to the old Nixon library that was run by a bunch of weirdo loyalists.  (It’s changed hands in recent years .) But I don’t think I saw anything in it that compared to the brazen bullshit in that clip.

Update: Here’s a great story about that Nixon library changeover.

So, they’ve crunched some real numbers and determined exactly how much money the average Social Security recipient can expect to lose if the Chained-CPI is implemented. I’m going to assume that if someone told you that the government was going to seize $15,000.00 from your 401k you’d think it was a cut:

Cognizant of the harm this benefit cut would do to seniors and people with disabilities over time, the Administration has proposed cushioning the effect by providing a partially compensatory bump in benefits from age 76-85 for retirees (or in the 15th-24th year of benefit receipt for people with disabilities). Yet for the average worker, this “benefit enhancement” never restores one’s annual benefit to what it would have been without the switch to the stingier COLA. And what is more, the bump does not return to the elderly the income they will lose between retirement and their 76th birthday — represented by all the space between the black and red lines above (for more detailed analysis, consult our fact sheet). Benefits decline steadily again from age 86 onward, when the vast majority of seniors have exhausted their savings and ability to work, and may have lost their partner as well.

To rich people, 15 grand amounts to tip money so they cannot see why average Americans shouldn’t be willing to give up such a paltry sum especially if it will “save” Social Security for their grandchildren.

Funny thing about that — it won’t. Save Social Security, that is. The green line is the present course of the trust fund. The dotted blue line is with the Chained-CPI:

As you can see, it adds about two years to the trust fund. If this so-called “shortfall” is the problem they seek to solve by switching to the Chained-CPI, I think we can agree that it’s a pretty pathetic solution. (And certainly, if we continue on the bipartisan path that says the only option is to cut the program, I’m going to guess all you young people will see an age 75 retirement age and a tiny, withered welfare program instead of this universal one when you get old.)

The only rational way to shore up the Social Security trust fund is to raise the cap on how much income is subject to the SS tax. In fact, there’s no good rationale not to at least go back to the Reagan standard in which 90 percent of wages were subject to SS taxes. Today only 83% of wages are subject to it because the the 1% hogs so much more of the nation’s wages.  And the rest of their bounty from investments isn’t subject to the payroll tax at all.That would mean that $200,000 of its wages would be subject to the tax this year instead of $110,100. Honestly, I’m hard pressed to see why this is off the table ( especially considering that the Chained-CPI also raises taxes!)

And look at it this way, once the deadbeat baby boomers have finally shuffled off their mortal coils, the whole system will stabilize again and you can even talk about lowering the retirement age and the level of taxation back to where it was before all of us losers agreed to pay for the mistake of being born between 1947 and 1964 by retiring later and paying more all of our adult lives. It’s win-win.

Personally, I’m for Bernie Sanders’ plan to raise the cap on income above 250k. I happen to think that President Obama’s apparent desire to create a Grand Bargain to fix all fiscal and funding problems for all time is tilting at windmills at best (and hubristic nonsense at worst.)  But if he really wants to do this, Sanders’ plan solves SS funding for at least 75 years, which would make a hell of a run at it. Barring that, we can at least go back to the Reagan era funding levels before we start chopping away again at benefits.

If you want to really educate yourself on the history of the Trust Fund  and how it works, this document from the Social Security Administration is invaluable. I think this is particularly important:

The sustainability of the current structure of benefits and financing of the OASDI program is not an issue directly addressed in the trustees report. This consideration is more political in nature, in that it depends on the wants and desires of the American people, as reflected by the actions of their elected representatives in the Congress. It is clear that modifications of the program benefit and tax levels can be made within the current program structure to restore sound financial status. But it is up to each generation to come to a consensus on the tax levels it is willing to pay and the benefit levels it wants to receive. Even the form of benefits and mode of financing, historically defined as monthly benefits financed generally on a PAYGO basis, are open to consideration by the American people and future Congresses.

The trustees report does, however, provide insight into the sustainability of currently scheduled benefits by providing a comparison of program cost and scheduled tax revenues, expressed as percentages of the total output of goods and services in the United States—our gross domestic product (GDP).
Projected OASDI cost is expected to rise from about 4.5 percent of GDP since 1990, to about 6 percent of GDP over the next 20 years, and to roughly stabilize at that level thereafter (see Chart 5). Although an increase in the cost of the program from 4.5 to 6 percent of GDP is substantial, the fact that the increase is not projected to continue after this “level shift” is important. Chart 5 focuses on the question of whether the level of benefits scheduled in current law should be maintained for future generations, at the price of higher taxes, or whether scheduled benefits should be reduced to levels affordable with the current taxes in the law.

This is a political choice. It’s not some law of God or nature that demands human sacrifice over which we have no power. We can choose to fund this program if we want to. This is a very wealthy country — a military superpower. We have all the resources and capital we need to take care of our elderly and sick population. If we choose to.

David Frum published an interesting letter from one of his readers the other day on the Reinhardt-Rogoff brouhaha. It provides a fascinating rundown of all the cracked economics that have dominated the debate for the past few years:

The Reinhart- Rogoff paper that has been ruthlessly critiqued in the past few days had long been cited as an example of how to make a “not crazy” argument about deficit reduction.

Their arguments made intuitive sense: it was not absurd to think that high debt could slow down growth, especially when you looked at countries like Japan and Italy. But now that Reinhart & Rogoff’s standing in the fiscal debate is in doubt, we may soon discover that are very few “not crazy” deficit reduction advocates left to find.

Reinhart & Rogoff were not gripped by the pseudo-science-economics that has ensnared so many on the right. If we remove Reinhart & Rogoff from the scene, what’s left does not inspire a lot of confidence. Since 2008 we have had economists, pundits, and politicians argue:

1. That America needs to go back to gold.

2. That cutting spending stimulates growth, despite the evidence to the contrary.

3. That tax cuts must always create growth as a law of nature. (The Congressional Research Service disagrees.)

4. But that the Payroll Tax should not be cut because a tax cut that benefits the working class is just a “sugar high.”

5. That inflation is just around the corner, even though it is not.

These are just arguments about how to fix our present crisis. There is also the conservative economic revisionism which claims that FDR made the Great Depression worse (that debate summarized in chart form here) and that all of American economics has been an unmitigated disaster since advent of the Federal Reserve. (Read David Stockman if you want a rambling rant on that topic.)

The longer you look at it, the more you can’t shake the feeling that some economists treat their job like a never-ending #slatepitch with arguments like “income inequality is justified because it gives us better soda cans” (This is the thesis of Edward Conard’s book.)

That’s all true and it presents quite an indictment of the austerity crowd, in my opinion. But lest you think this huge pile of evidence has shaken this person’s belief that deficit reduction is the right policy, think again:

Reinhart & Rogoff’s entry into the debate was substantial (even Paul Krugman still approves of their book, This Time is Different). Since they will now have to exit the debate, the quality of who is left is frankly depressing. Sure there are sane cases for deficit reduction to be made, and there are bloggers and writers who will make them, but I bet they won’t be dominating the debate going forward.

Hey, just because virtually everyone who has been arguing the case for deficit reduction for years has been shown to be a crank, a charlatan or shockingly bad at arithmetic is no reason to question your beliefs. Of course austerity is sane!  It just must be!  Clearly the problem isn’t that austerity is the wrong prescription, it’s that now only bloggers will be making the case and they won’t dominate the debate like the long, long line of discredited analysts and economists who history has proven to be asses. It’s tough times for austerians.

So, according to Brian Beutler, the Republicans are balking at having a conference to iron out the differences between the Senate and House budgets. This is hypocritical in the extreme,obviously, since they’ve been braying about the Democratic senate failing to produce a budget for years and now that they have one, they don’t want one. But there’s a reason for it:

To explain the about-face, consider what happens if conferees begin meeting and negotiating right away. In this phase of regular order, leadership has less control over the course of events, and pretty much everything is majority rule. Democratic negotiators will be able to relitigate the fight they won in the election. They’ll agree to entitlement spending cuts. They might even reluctantly embrace a provision in President Obama’s budget — chained CPI — that would among other things slow the growth of Social Security benefits. But only if Republicans agree to ditch the anti-tax absolutism.

Republicans would thus be forced to choose between agreeing to new taxes and triggering a huge conservative revolt; or exacerbating the public’s sense that their party is pathologically unable to compromise.

Democrats are privately pleased to find Republicans back in a box. But in public they’re pressing and taunting Republicans to back up words with action.

It’s nice to know they’re already planning on agreeing to entitlement cuts and “reluctantly” accepting the Chained-CPI. Particularly since they weren’t even included in the Senate bill or the progressive plan. But hey, it will be so worth it if only we can show that the Democrats are the adults in the room which is really all that matters:

The GOP could avoid that headache by pulling the plug on the budget debate altogether. But that will reinforce a growing sense among elite opinion makers that Republicans the obstacle to a budget deal that puts the era of fiscal brinksmanship behind us.

If that’s what they’re after, I have to wonder why they just don’t pass the Ryan budget. The elite opinion makers would hail it as a bipartisan breakthrough of epic proportions. Of course, a few more wily “negotiations” like these and we’ll be there anyway, so maybe it’s just another part of their cunning plan.

Update: And about that “fix” the Democrats insist will keep this harmless accounting adjustment that better reflects the real cost of living from devastating people who don’t have a lot of money:

Some details are emerging about the so-called “softening” of the Chained-CPI for the most vulnerable. Here’s one analysis of what we know so far from Shawn Fremsted at CEPR:

And a just-released White House fact sheet claims that the proposal is coupled with “measures to protect the vulnerable and avoid increasing poverty and hardship.”

Does this mean people who rely on means-tested benefits and low-income income people generally should breathe a sigh of relief? Hardly. Here are some reasons why (setting aside for the moment the impact of the chained CPI on Social Security for low-income retirees, which I’m sure my colleague Dean Baker will have more to say about):

1) Although Disability Insurance is not a means-tested benefit, the benefits it provides and the typical incomes of the workers receiving benefits are already quite modest. On average, female workers receiving Disability Insurance receive a benefit of only $993 a month and male workers receive a benefit of $1,256 a month. As a result, a woman with a disability living on her own and relying solely on an average Disability Insurance benefit has an income that is barely equal to the extremely austere poverty line (HHS’s monthly poverty guideline for 2013 is $958). Thus, for typical disabled workers receiving Disability Insurance, even seemingly modest benefits cuts over the short run can be a big deal. The White House fact sheet says that their plan includes a “benefit enhancement” for people who receive Disability Insurance benefits for more than 15 years, one that is phased in over a subsequent 10-year period. But that means 15 years of cuts first. And many disabled workers will not live long enough to see any of the subsequent phased-in “enhancement.”

2) The exemption of means-tested programs (including Medicaid, ObamaCare premium assistance, Supplemental Security Income, Pell Grants, and certain nutrition assistance programs) and the poverty guidelines detailed in the White House fact sheet will almost certainly be only a very temporary exemption. Once the chained CPI is adopted for the tax code and Social Security—an immensely popular program, in large part because it is tied to workers’ contributions—it will only be a matter of time until it is applied to the less-popular, non-contributory means-tested ones. And, until the chained CPI is applied to means-tested programs, conservative opponents of those programs will have a field day decrying what I imagine they’ll label along the lines of “liberals’ special treatment for welfare recipients” and perverse preference for “welfare over work.” It’s worth remembering here that some means-tested programs have no automatic inflation adjustments. Funding for Temporary Assistance, for example, has been frozen in nominal dollars for nearly two decades. So, advocates for low-income people shouldn’t be optimistic about holding the line against the chained CPI in the means-tested programs that lucky enough to have COLAs.

Once applied to means-tested programs, the chained CPI would produce substantial cuts over time as Alison Shelton of the AARP Public Policy Institute shows in an excellent brief detailing the impact of the chained CPI on benefit programs.

3) Applying the chained CPI to the tax code will reduce the value of refundable tax credits, particularly the Earned Income Tax Credit, and increase tax rates on low-income, working class people. CBO had previously estimated that the cuts to refundable tax credits would add up to $17.9 billion over the next ten years. The Urban-Brookings Tax Policy Center has estimated that 45 percent of tax units in the lowest income quintile (below $26,000) and 84 percent of tax units in the second quintile (roughly $26,000 to $47,000) will pay about $175 more on average in taxes in 2020. Now, this may not seem like a lot, but if you’re a poorly compensated worker trying to raise two children on $10 an hour, every dollar counts.

And again, if the Chained-CPI is just a “re-calculation” that more accurately reflects the cost of living, why should this be necessary? It should be no harm, no foul, right?

Unless the truth is that these programs are already inadequate and this will make things worse, there should be no need to mitigate its effects in the first place. And if this is any indication, even that mitigation isn’t going to help much.