Public rhetoric obscures important facts about these plans politicians won't discuss in their zeal to end them incrementally.
Medicaid is welfare for low-income beneficiaries, jointly funded by the states and Washington, managed at the state level.
Social Security and Medicare are insurance programs, funded by worker-employer payroll tax deductions. They're contractual federal obligations to eligible recipients who qualify. However, you'd never know it the way both programs are publicly discussed, explaining everything but the truth.
On August 14, 1935, the Social Security Act became law, known as the federal Old-Age, Survivors, and Disability Insurance program (OASDI). It provides retirement, disability, survivorship, and death benefits. It's still America's most effective poverty reduction program that's worked remarkably well since inception. It exists to provide secure inflation-adjusted retirement or disability income, unlike risking personal savings to create private wealth and perhaps lose it.
Despite bogus claims, it's not going bankrupt. When properly administered, it's sound and secure, needing only modest adjustments at times to assure it.
On July 30, 1965, Lyndon Johnson signed the Social Security (Medicare) Act into law, enrolling Harry and Bess Truman as its first recipients.
Medicare.gov calls it "the nation's largest health insurance program," covering 40 million Americans. It's a "Health Insurance program for people age 65 or older, some disabled people under age 65, and people of all ages with End-Stage Renal Disease (permanent kidney failure treated with dialysis or a transplant)."
Bipartisan complicity wants Medicare and Social Security ended, citing the nation's burgeoning debt and enormous unfunded liabilities for both programs. The web site usdebtclock.org lists them as follows:
(1) the US National Debt: over $14 trillion;
(2) Social Security Liability: nearly $15 trillion;
(3) Prescription Drug Liability: nearly $20 trillion; and
(4) Medicare Liability: nearly $79 trillion.
Total: over $113 trillion plus the National Debt.
Most important is that future liabilities mask today's soundness that can stay that way if current programs are properly administered. That's omitted from hyped scare tactics to convince future recipients to make unjustifiable sacrifices. Like them or not, they're coming, major media reports promoting the idea as well as politicians from both parties.
Republicans, in fact, always opposed these programs. Given unsustainable deficits from out-of-control military spending and corporate handouts, they now see a chance to end them by a combination of cuts, shifting cost burdens to states and beneficiaries, plus lots of smoke and mirrors. Key is that Democrats concur, despite softer public rhetoric, appealing to constituencies while betraying them behind closed doors, Obama a duplicitous co-conspirator.
As a candidate, he "remain(ed) committed to making sure Social Security (remain) solvent and viable for the American people now and in the future."
Moreover, he opposed privatizing Medicare, promising "a universal health care bill, allow(ing) people who do not have access to group coverage through their employers or public programs....to buy into a national pool (under) a new public plan....that offer(s) comprehensive (affordable) benefits," including for prescription drugs.
At a February press conference, however, he promised major entitlement program cuts as part of his deficit reduction program. Emphasizing the need for "tough choices," despite inflicting "real pain" on working Americans, he said:
"Medicare and Medicaid are huge problems because health care costs are rising even as the population is getting older. And so what I've said is that I'm prepared to work with Democrats and Republicans to start dealing with that in a serious way. We made a down payment on that with health care reform last year."
Social Security is also targeted, Obama's deficit reduction commission proposing deep cuts in Medicare, increasing Medicaid co-pays, raising the Social Security retirement age to 69, and reducing cost-of-living increases as an initial broadside before ending these programs entirely.
At his press conference, Obama outlined a two-step process:
-- a five year discretionary spending freeze combined with major education, environmental, and other social benefit cuts; and
-- "entitlement reform," on the backs of working Americans least able to afford it.
On April 5, Washington Post writers Lori Montgomery and Philip Rucker headlined, Republicans embrace Rep. Ryan's government budget plan for 2012," saying:
Their vision includes "privatiz(ing) Medicare for future retirees, cut(ting) spending on Medicaid, and other domestic programs, and offer(ing) sharply lower tax rates to corporations and the wealthy."
Drafted by House Budget Chairman Paul Ryan, the proposal aims to cut discretionary spending "to its lowest level since 1949," Ryan claiming it will create jobs and promote growth by slashing "relentless government spending, taxing and borrowing."
Longtime financial analyst Bob Chapman disagrees, saying in his latest International Forecaster commentary:
"Virtually no change in out of control spending" is planned. "The deficit is accelerating not decelerating. It is obvious that (lawmakers) know exactly what they are doing and that is destroying the financial system and the American economy. By the end of the year and perhaps sooner, the deficit will be more than 100% of GDP, a role reserved for Banana Republics, and there is no end in sight."
"No reality check, no control, no attempt to stop the deficit hemorrhage. War spending rages out of control," Obama's latest foray exacerbating it. "The nation is being ripped apart internally and there is no respite in sight. (No one) understand(s) that things cannot go on this way. Austerity is going to be thrust upon us and there is going to be economic chaos" because military spending and corporate handouts are prioritized over public need.
Moreover, "(t)he Fed is destroying the monetary system. The president and Congress are burying the economy in debt, and our transnational conglomerates along with this gang of criminals have" destroyed America's industrial base...."There is no question that the US government will have ongoing deficits of $1.3 to $2.2 trillion annually for some time to come." As a result, "there is no chance of the debt of government ever being paid."
Instead, limits will be raised. "The Republicans are playing politics and remember the same group of thieves overwhelmingly control both parties." The amount of government-sanctioned fraud is incomprehensible. "The question is do we save America and civilization as we have known it, or do we allow it to collapse around us," making our futures "irreversible."
Yet congressional Republicans call this "The Path to Prosperity," the title of Paul Ryan's budget plan, slashing entitlements while continuing out-of-control spending on militarism and corporate handouts, Washington's version of equity, favoring the rich at the expense of working households.
Ryan's proposal will cut trillions from Medicare and Medicaid over the next decade. Medicare will be gradually privatized, incrementally phasing it out for enrollees under 55, raising the eligibility age to 67, and replacing it with fixed amount vouchers for private plans, instituting major cost-sharing increases. As a result, lower income individuals and those needing expensive treatments may be priced out of getting it entirely.
Medicaid funding will become block grants to states, Ryan saying they'll be able to "customize" health care for the poor, or perhaps eliminate it entirely if budget constraints demand.
His plan reportedly follows recommendations from two deficit cutting commissions - Obama's and another chaired by former Senator Pete Dominici and Alice Rivlin, former director of the Office of Management and Budget and the Congressional Budget Office called "Restoring America's Future," by destroying it. Specifically, it calls for huge discretionary spending cuts, including:
-- indexing Social Security benefits to life expectancy to reduce them as longevity increases;
-- eliminating annual cost of living adjustments (COLAs), despite sharply increasing healthcare and other expenses, especially impacting seniors;
-- cutting Medicare benefits, including by large Part B premium increases, co-pays, and fees for outpatient services, as well as establishing privately owned, lower-cost, health insurance exchanges to be given competitive cost advantages over traditional Medicare; the idea, of course, is to replace it, leaving beneficiaries at the mercy of predatory insurers that profit by charging exorbitant premiums (too costly for many) and denying expensive care; and
-- cutting Medicaid by the amount it grows faster than GDP, providing less care for the poor, eventually perhaps none.
Both commissions also propose other social benefit reductions, as well as major corporate and personal tax cuts, favoring the rich - customary financial reforms hitting working households hardest.
A Final Comment
Despite a severe Main Street depression, Democrats and Republicans plan austerity instead of essential stimulus, including for entitlement programs, vital to strengthen, not undermine when they're most needed and will be as well in good times.
Instead, they're on the chopping block for elimination because Republicans are Hooverites, Democrats aren't New Dealers, and Obama's no FDR. Combined, they let Wall Street loot the treasury, reward other corporate favorites generously, ignore vital people needs, do little to create jobs or help homeowners facing foreclosure, spurn budget-strapped states, and spend around $1.5 trillion annually on unbridled militarism and imperial wars at a time Washington has no enemies. No wonder America's on a fast track to tyranny and ruin, no longer a fit place to live in.
Stephen Lendman lives in Chicago and can be reached at email@example.com. Also visit his blog site at sjlendman.blogspot.com and listen to cutting-edge discussions with distinguished guests on the Progressive Radio News Hour on the Progressive Radio Network Thursdays at 10AM US Central time and Saturdays and Sundays at noon. All programs are archived for easy listening.