No Social Security in Negotiations

Obama Won’t Include Social Security Reform In Recommendations To Super Committee

Obama Social Security
First Posted: 9/15/11 12:08 PM ET Updated: 9/15/11 12:08 PM ET, Huffington Post

WASHINGTON — Jilted by Republican leadership during the deficit-reduction talks that accompanied the debt ceiling debate, the Obama administration is now pulling back an offer to put Social Security reform on the negotiating table.

The president will not include changes to that program in the series of deficit reduction measures that he will offer to the congressional super committee next Monday, administration officials confirm.

During talks with House Speaker John Boehner (R-Ohio) this past summer, President Barack Obama had discussed changing the way that Social Security benefits were paid so that a lower level of benefits were paid over time. Boehner walked away from that deal, which was part of a much broader package, because of concern over a corresponding tax increase. Now, Obama is putting off support for that idea of changing the inflation formula of Social Security to chained consumer price index (CPI).

“The president’s recommendation for deficit reduction will not include any changes to Social Security because, as the president has consistently said, he does not believe that Social Security is a driver of our near and medium term deficits,” said White House spokeswoman Amy Brundage. “He believes that both parties need to work together on a parallel track to strengthen Social Security for future generations rather than taking a piecemeal approach as part of a deficit reduction plan.”

“There will be no Social Security in the recommendations,” Brundage added.

The White House’s decision to take Social Security reform off the table for the time being, which was first reported by the Wall Street Journal, is largely consistent with the president’s viewpoint that the program is not a contributor to the deficit and should be dealt with in separate discussions. The administration brought it in to the “grand bargain” talks with Boehner, an official relayed, because the president was a party to those talks. With respect to the super committee’s negotiations, he will have no seat at the table and is merely outlining his preferences for reform.

The move also makes obvious political sense. Democrats have long worried that they would upset their base should they be seen as the ones chipping away at retirement benefits, certainly after House Republicans took heat for passing a budget that would convert Medicare into a voucher-based program.

Already suffering from an enthusiasm gap, Obama’s decision to put off Social Security cuts will win him plaudits from his own party. But it still remains to be seen what type of recommendations he will make with respect to Medicare. During the negotiations with Boehner, the White House signed off on a recommendation to increase the eligibility age of Medicare from 65 to 67. Administration officials refused to say whether that recommendation would be part of the president’s proposal to the super committee. On Thursday, the Washington Post reportedthat the White House would call for “at least $340 billion in savings from Medicare and Medicaid” alongside $800 billion in tax increases.

The 12-member committee has no obligation to act on the president’s proposals, though it seems likely that its six Democratic members will hew to the administration’s line. The committee’s recommendations will be unveiled sometime around Thanksgiving, with hopes of a vote in Congress toward the end of December.

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Congress Lacks Diversity – Are We Surprised?

Debt supercommittee lacks diversity

By , Published: August 14, The Washington Post
With House Minority Leader Nancy Pelosi’s (D-Calif.) announcement Thursday of her three appointees to the bipartisan debt “supercommittee,” the panel’s 12-member roster is complete. It represents a broad range of ideological views, from House Republican Conference Chairman Jeb Hensarling (Tex.) on the right to Sen. John F. Kerry (D-Mass.) on the left.

But the group’s membership is marked by a problem that has plagued Congress — a lack of gender and racial diversity.

Congressional leaders have now named all dozen members to a special 'super' committee charged with making more deficit cuts, but it's unclear how they'll bridge the deep partisan divide over taxes and spending. (Aug. 11)
Sen. Patty Murray (D-Wash.) is the only woman on the panel. House Democratic Caucus Vice Chairman Xavier Becerra (Calif.) is the group’s only Hispanic. And House Assistant Democratic Leader James E. Clyburn (S.C.) is the only African American.

Neither Senate Minority Leader Mitch McConnell (R-Ky.) nor House Speaker John A. Boehner (R-Ohio) appointed any women or minorities among their six picks for the panel.

Michael Steel, a spokesman for Boehner, said that when it comes to the task facing the supercommittee, “helping to get our debt and deficit under control to get the economy moving again and create more jobs is important to every American.”

Women make up 51 percent of the U.S. population, according to the most recent Census, but comprise just 17 percent of members of Congress, according to figures from the House and Senate press galleries.

Hispanics made up 16 percent of the country’s population in the 2010 Census and comprise 6 percent of the 112th Congress. And African Americans are 13 percent of the U.S. population and 8 percent of the Congress.

The Senate faces a particular lack of racial diversity: Its membership includes two Hispanics — Sens. Robert Menendez (D-N.J.) and Marco Rubio (R-Fla.) — and two Asian Americans — Sens. Daniel K. Inouye (D-Hawaii) and Daniel K. Akaka (D-Hawaii). No African American senators currently sit in the chamber; the last to serve was Roland Burris (D-Ill.), who retired last year from the seat formerly held by President Obama and was succeeded in November by Sen. Mark Kirk (R).

Some on the committee argue that experience, not gender or race, is the factor that matters most in the calculus of who takes part in the debt discussions.

“I’ve always said that we can be no more or less than what our experiences allow us to be, and if you’re going to put together this kind of effort on behalf of the country, you ought to have as many experiences and as many backgrounds as you possibly can participate in it,” Clyburn said in an interview Friday.

Even so, some lawmakers and outside groups have argued that if Congress has tapped the supercommittee to make decisions that affect the country as a whole, its membership should better reflect the country.

“Half the committee ought to be women, even though women only account for 17 percent of the Congress,” Terry O’Neill, the president of the National Organization for Women, said in an interview Friday. “Women are going to be disproportionately affected by what the committee does. I’m very troubled by the fact that these 11 men and one woman are now going to take the place of 535 legislators.”

With the likelihood that the panel will be examining proposals to cut entitlement programs, O’Neill noted that about 56 percent of Medicare recipients are women and that a large portion of Medicaid funding goes toward supporting nursing homes — facilities where the vast majority of residents and workers are women. On top of that, O’Neill said, women have less savings to fall back on due to “a lifetime of working for unequal pay.”

“The committee has to swallow hard and accept the truth that women are suffering and struggling and need help,” she said.

Rep. Charles A. Gonzalez (D-Tex.) chairman of the Congressional Hispanic Caucus, said that the stakes in the debt talks are particularly high for Hispanics.

“While every American would be impacted by the committee’s plan to reduce the deficit by $1.5 trillion, the Latino community has the most at stake if further cuts are made to programs critical to getting our economy back on track,” Gonzalez said. “Latino families have been greatly impacted by the housing crisis and recession, with unemployment rates for our community consistently higher than average.”

The supercommittee, however, better reflects the diversity of the country than have previous panels that were charged with tackling the nation’s debt.

During the closed-door talks led by Vice President Biden earlier this year, no women or Hispanics were at the table. One of the group’s six members was African American — Clyburn.

Similarly, the discussions led by the White House over the past several months involved another group of six participants — Obama, Biden and the top party leaders in each house of Congress. Among them were one African American, Obama, and one woman, Pelosi.

Neither of those rounds of negotiations was marked by a public outcry over who was, or wasn’t, sitting at the table.

A Word from Warren Buffet

Stop Coddling the Super-Rich

By WARREN E. BUFFETT, Op-Ed The New York Times, August 14, 2011

OUR leaders have asked for “shared sacrifice.” But when they did the asking, they spared me. I checked with my mega-rich friends to learn what pain they were expecting. They, too, were left untouched.

While the poor and middle class fight for us in Afghanistan, and while most Americans struggle to make ends meet, we mega-rich continue to get our extraordinary tax breaks. Some of us are investment managers who earn billions from our daily labors but are allowed to classify our income as “carried interest,” thereby getting a bargain 15 percent tax rate. Others own stock index futures for 10 minutes and have 60 percent of their gain taxed at 15 percent, as if they’d been long-term investors.

These and other blessings are showered upon us by legislators in Washington who feel compelled to protect us, much as if we were spotted owls or some other endangered species. It’s nice to have friends in high places.

Last year my federal tax bill — the income tax I paid, as well as payroll taxes paid by me and on my behalf — was $6,938,744. That sounds like a lot of money. But what I paid was only 17.4 percent of my taxable income — and that’s actually a lower percentage than was paid by any of the other 20 people in our office. Their tax burdens ranged from 33 percent to 41 percent and averaged 36 percent.

If you make money with money, as some of my super-rich friends do, your percentage may be a bit lower than mine. But if you earn money from a job, your percentage will surely exceed mine — most likely by a lot.

To understand why, you need to examine the sources of government revenue. Last year about 80 percent of these revenues came from personal income taxes and payroll taxes. The mega-rich pay income taxes at a rate of 15 percent on most of their earnings but pay practically nothing in payroll taxes. It’s a different story for the middle class: typically, they fall into the 15 percent and 25 percent income tax brackets, and then are hit with heavy payroll taxes to boot.

Back in the 1980s and 1990s, tax rates for the rich were far higher, and my percentage rate was in the middle of the pack. According to a theory I sometimes hear, I should have thrown a fit and refused to invest because of the elevated tax rates on capital gains and dividends.

I didn’t refuse, nor did others. I have worked with investors for 60 years and I have yet to see anyone — not even when capital gains rates were 39.9 percent in 1976-77 — shy away from a sensible investment because of the tax rate on the potential gain. People invest to make money, and potential taxes have never scared them off. And to those who argue that higher rates hurt job creation, I would note that a net of nearly 40 million jobs were added between 1980 and 2000. You know what’s happened since then: lower tax rates and far lower job creation.

Since 1992, the I.R.S. has compiled data from the returns of the 400 Americans reporting the largest income. In 1992, the top 400 had aggregate taxable income of $16.9 billion and paid federal taxes of 29.2 percent on that sum. In 2008, the aggregate income of the highest 400 had soared to $90.9 billion — a staggering $227.4 million on average — but the rate paid had fallen to 21.5 percent.

The taxes I refer to here include only federal income tax, but you can be sure that any payroll tax for the 400 was inconsequential compared to income. In fact, 88 of the 400 in 2008 reported no wages at all, though every one of them reported capital gains. Some of my brethren may shun work but they all like to invest. (I can relate to that.)

I know well many of the mega-rich and, by and large, they are very decent people. They love America and appreciate the opportunity this country has given them. Many have joined the Giving Pledge, promising to give most of their wealth to philanthropy. Most wouldn’t mind being told to pay more in taxes as well, particularly when so many of their fellow citizens are truly suffering.

Twelve members of Congress will soon take on the crucial job of rearranging our country’s finances. They’ve been instructed to devise a plan that reduces the 10-year deficit by at least $1.5 trillion. It’s vital, however, that they achieve far more than that. Americans are rapidly losing faith in the ability of Congress to deal with our country’s fiscal problems. Only action that is immediate, real and very substantial will prevent that doubt from morphing into hopelessness. That feeling can create its own reality.

Job one for the 12 is to pare down some future promises that even a rich America can’t fulfill. Big money must be saved here. The 12 should then turn to the issue of revenues. I would leave rates for 99.7 percent of taxpayers unchanged and continue the current 2-percentage-point reduction in the employee contribution to the payroll tax. This cut helps the poor and the middle class, who need every break they can get.

But for those making more than $1 million — there were 236,883 such households in 2009 — I would raise rates immediately on taxable income in excess of $1 million, including, of course, dividends and capital gains. And for those who make $10 million or more — there were 8,274 in 2009 — I would suggest an additional increase in rate.

My friends and I have been coddled long enough by a billionaire-friendly Congress. It’s time for our government to get serious about shared sacrifice.

Warren E. Buffett is the chairman and chief executive of Berkshire Hathaway.

The Starting Lineup

What the Super Committee Will Look Like

August 1st, 2011
by Boo ManThe Booman Tribune

Assuming this debt ceiling bill actually passes, the next freak-out is going to be over the composition of the 12-member SuperCommittee that will be making recommendations for an additional $1.5 trillion in budget cuts over the next decade. Now, the obvious choices on the Democratic side are the chairmen and ranking members of the Budget Committees, the House Ways & Means Committee and the Senate Finance Committee, plus someone from the leadership of both houses. That’s basically what went down with the Bowles-Simpson commission, although it had 18 members instead of twelve. In any case, here’s a likely lineup for the Super Committee:

Democrats
Rep. Sandy Levin (D-MI)- ranking member of Way & Means
Rep. Chris Van Hollen (D-MD)- ranking member of the Budget Committee
Rep. Jim Clyburn (D-SC)- Minority Whip [or Rep. Xavier Becerra (D-CA)- Vice-Chair of the House Democratic Caucus]
Sen. Max Baucus (D-MT)- Chairman of the Finance Committee
Sen. Kent Conrad (D-ND)- Chairman of the Budget Committee
Sen. Dick Durbin (D-IL)- Majority Leader Whip of the Senate

Republicans
Rep. Dave Camp (R-MI)- chairman of Ways & Means
Rep. Paul Ryan (R-WI)- chairman of the Budget Committee
Rep. Eric Cantor (R-VA)- Majority Leader of the House
Sen. Jeff Sessions (R-AL)- ranking member of the Budget Committee
Sen. Orrin Hatch (R-UT)- ranking member of the Finance Committee
Sen. Jon Kyl (R-AZ)- Minority Whip

That’s not a very encouraging line-up, is it? That’s why we should start asking for someone from the Progressive Caucus to sit on this committee.