This week, President Barack Obama released his long-awaited fiscal 2014 budget proposal, a plan that includes major adjustments to Social Security and Medicare. In addition, The Senior Citizens League (TSCL) saw three key bills gain critical support.
White House Budget Plan Unveiled at Last
President Obama released his fiscal 2014 budget proposal on Wednesday, more than two months past the deadline that was set by law. His budget would turn off the $1.2 trillion sequester, and over ten years it would raise $580 billion in new tax revenue, cut $270 billion in Medicare spending, and “save” $230 billion by adopting the “chained” consumer price index (CPI). Despite these efforts, his plan would still leave the nation with a $744 billion budget deficit next year.
TSCL has serious concerns about the changes that the President’s proposal would make to Medicare and Social Security. His plan includes increased Medicare means testing for Part B and D premiums – a move that we feel could result in some negative unforeseen consequences. New means testing measures were recently introduced with the passage of the Affordable Care Act, and we fear that if costs rise too quickly for high earners, some may abandon Medicare, driving up costs for those who cannot afford to purchase private insurance.
Additionally, the adoption of the “chained” CPI, which would result in more slowly growing Social Security cost-of-living adjustments (COLAs), would hit seniors hard. Proponents call it a minor technical change that would only result in a few tenths of a percentage point change each year. However, COLAs compound over time and adopting the “chained” CPI would significantly erode the buying power of benefits over the course of a retirement. According to Sen. Bernie Sanders (VT), who spoke out against the President’s plan this week, “sixty-five-year-old retirees would lose more than $650 a year by their 75th birthday, and more than $1,000 a year would be cut from their benefits once they reach eighty-five.” The “chained” CPI is not a minor tweak, its adoption could be devastating for many of the oldest and lowest income seniors.
President Obama’s plan has drawn early criticism from both sides of the aisle, and because the House and Senate have already adopted their own fiscal 2014 resolutions, it will not have much impact on the budgeting that is already underway. However, there are hopes that leaders will settle on a grand bargain this summer, when Congress will be required to once again increase the debt ceiling, and the President’s plan could come into play then. In the meantime, TSCL will continue to monitor the budget negotiations, and we will provide updates here in the Legislative News section of our website.
Key Bills Gain New Cosponsors
This week, Rep. Peter DeFazio’s (OR-4) Consumer Price Index for Elderly Consumers (CPI-E) Act (H.R. 1030) gained two new cosponsors, bringing the total up to nine. The new cosponsors are Reps. Betty McCollum (MN-4) and James McGovern (MA-2). If signed into law, Rep. DeFazio’s bill would base the Social Security COLA upon the spending patterns of seniors. Currently, it is based upon the way young, urban workers spend their money – a method that underestimates the spending inflation that seniors experience. A study conducted by TSCL in 2012 found that seniors have lost 34 percent of their purchasing power since 2000 – a clear sign that the current COLA is growing too slowly.
In addition, two new cosponsors signed on to Rep. DeFazio’s No Loopholes in Social Security Taxes Act (H.R. 1029), bringing the total up to seventeen. The new cosponsors are Reps. Betty McCollum (MN-4) and David Cicilline (RI-1). If signed into law, H.R. 1029 would extend the solvency of the Trust Fund by subjecting all income over $250,000 to the Social Security payroll tax. Currently, the payroll tax is capped at $113,700 and no income over that amount is taxed. Rep. DeFazio’s bill would reportedly add at least fifty years to the solvency of the Trust Fund responsibly, without reducing benefits for seniors.
Finally, four new cosponsors – Reps. Doris Matsui (CA-6), Debbie Wasserman Schultz (FL-23), Judy Chu (CA-28), and Mike Quigley (IL-5) – signed on to Rep. Allyson Schwartz’s (PA-13) Medicare Physician Payment Innovation Act (H.R. 574) this week, bringing the cosponsor total up to twenty-six. Rep. Schwartz’s bill, if signed into law, would repeal and replace the faulty formula that is used to determine reimbursements for doctors who treat Medicare patients. The current formula breeds uncertainty within the Medicare program, and Rep. Schwartz’s bill would bring much-needed stability to the program.
TSCL strongly supports H.R. 1030, H.R. 1029, and H.R. 574, and we look forward to working with Reps. DeFazio and Schwartz in the coming months to help build support for their bills.