Why Does The Government Continue to Lie About Social Security?

by Allen W. Smith / October 25th, 2016

Most Americans must be getting accustomed to hearing lie after lie from the two presidential candidates.  According to fact checkers, Clinton lies on average 28 percent of the time and Trump lies 80 percent of the time.  This is a sad commentary on how low our political parties and candidates have sunken.  But lies from government officials and agencies has become commonplace in our treasured American way of life.

All lies are bad, but some lies do more harm to the livelihood of American civilians than others.  Probably, the biggest lie, which most severely hurts millions of Americans, involves the true status of the Social Security system.  The harsh truth is that the government, over a 30-year period, has taken and spent every dollar of the $2.7 trillion in surplus Social Security revenue which was specifically earmarked for paying benefits to the baby boomer generation.  There are no plans to repay the money.  The money was taken without the knowledge, or the permission, of the public.

As the government transferred the Social Security money directly from the trust fund to the general fund, the money was replaced with non-marketable government IOUs.  These IOUs cannot be sold, or in any way converted to cash.  Essentially, they are worthless pieces of paper which serve as an accounting record of how much Social Security money was used for non-Social Security purposes.  They are not real bonds.  Yet the public is often misled to believe they are just like the “good-as–gold” marketable bonds held by China and our other creditors.  The surplus Social Security revenue was supposed to be saved and used to purchase marketable U.S. Treasury bonds, which would be held by the trust fund.  But all of the surplus Social Security revenue was taken by the government and spent for other government programs.  Thus, there are no bonds, or any other real assets in the trust fund.

If the government had not taken and spent the money, or if the government would repay the money, Social Security would be solvent.  Comptroller General of the GAO, David Walker, tried to make this point clear in January 21, 2005 statement.  He said: “There are no stocks or bonds or real estate in the trust fund.  It has nothing of real value to draw down.”

Most people don’t know that the government has spent $2.7 trillion of Social Security money for wars, tax cuts, or anything else that Congress chose to spend it on.  That is because “the great Social Security theft” has been kept secret from the public.

Tim Geithner, President Obama’s first Secretary of the Treasury, signed the Annual Social Security Trustee’s Reports. He played the biggest role in determining what was included in the Trustee’s Reports, and what would be excluded.  If anybody truly understands the true status of Social Security, it must be Geithner. Once he left government service, he was free to tell the truth, and he did in In his book, “Stress Test.”  Geithner said:

In treating Social Security like a slush fund, the federal government has borrowed, spent and vowed to pay back the $2.5 trillion or so “surplus” in payroll tax revenue it has siphoned out of Social Security. The money has been spent but the federal government has promised to pay it back.

The Social Security Administration’s official website also holds back information that the public needs to know but the government does not want known.  On March 16, 2011, Senator Tom Coburn (R-OK) admitted publicly that the government has stolen Social Security money.. Senator Coburn said during a senate speech:

Congresses under both Republican and Democrat control, both Republican and Democrat presidents, have stolen money from social security and spent it. The money’s gone. It’s been used for another purpose….

On April 5, 2005, President George W. Bush, gave a speech at West Virginia University at Parkersburg, that was unusually candid in describing the status of Social Security.  President Bush said:

There is no trust fund, just IOUs that I saw firsthand that future generations will pay—will pay for either in higher taxes, or reduced benefits, or cuts to other critical government programs.

Bush’s words were consistent with the following words, which appeared in the official Summary of the 2009 Social Security Trustees Report:

Neither the redemption of trust fund bonds, nor interest paid on those bonds, provides any new net income to the Treasury, which must finance redemptions and interest payments through some combination of increased taxation, reductions in other government spending, or additional borrowing from the public.

Both Bush’s statement in his West Virginia speech, and the excerpt from the 2009 Social Security Trustees Report were absolutely true, and are still true today.  But very few people know about these statements.  Bush’s West Virginia speech was not widely covered by the national media, and the Trustees Report is read only by a select group of people.

Nobody can refute the accuracy of the above statements, because they are absolutely true. Every member of Congress, and all high-level government officials, know the truth about the empty trust fund.  Why then can’t this crucial truth be known by everyone?  The government does not want the public to know about the Social Security fraud, and most of the media will not touch anything that they know the government does not want the public to know.  All journalists remember that when Dan Rather reported a story that the White House did not want reported, he got fired.  Most journalists try to avoid making the same mistake that Dan Rather made.

There are three living presidents who participated in the looting.  It all started with Reagan and The Social Security Amendments of 1983.  But Presidents George H.W. Bush, Bill Clinton, and George W. Bush are all guilty of raiding the trust fund and using the money for non-Social Security purposes. All of these presidents, and their Treasury secretaries, could spill the beans and tell the public the truth about the raiding of the Social Security trust fund.  President Obama did not have the opportunity to loot Social Security because the annual surpluses ended shortly after he took office.  But Obama is not totally innocent, because he knows the truth about the Social Security trust fund, and he has failed to share that truth with the public.  On July 12, 2011, during a stalemate between President Obama and the Congress over raising the debt ceiling, Obama said:

 I cannot guarantee that those checks go out on August 3rd, if we haven’t resolved this issue, because there may simply not be the money in the coffers to do it.

If the $2.7 trillion, which was supposed to be in the trust fund, had been available, trust fund money would have been used, and the status of the general budget would not have been relevant. But there is no money in the trust fund, and the government IOUs cannot be redeemed if there is no money in the general fund.  So, with his July 12, 2011, statement President Obama made it clear that the trust fund is empty.

Former president Bill Clinton, as one of the four presidents who raided the trust fund, could easily explain Social Security’s deep financial problems and tell us what caused these problems. His 2000 budget proposal included the following warning:”The Social Security Trust Fund does not consist of real economic assets that can be drawn down in the future to fund benefits. Instead, they are claims on the Treasury that, when redeemed, will have to be financed by raising taxes, borrowing from the public, or reducing benefits or other expenditures.”

Former President, George W. Bush, the biggest Social Security looter of all, also knows a lot about what happened to the money in the trust fund.  In his first State of the Union Address on February 27, 2001, he made the following promise:

To make sure the retirement savings of America’s seniors are not diverted in any other program, my budget protects all $2.6 trillion of the Social Security surplus for Social Security and for Social Security alone.

Today, Social Security needs to have that money repaid to avoid benefit cuts.  I have devoted the past fifteen years of my life to researching and writing about what I call, “The Great Social Security Theft,” and also trying to publicize the Social Security fraud.  The American public is entitled to be told the truth about the trust fund.  If this story ever becomes common knowledge, I think it will be a scandal so big that it will make Watergate pale by comparison.

Dr. Allen W. Smith is a Professor of Economics, Emeritus, at Eastern Illinois University. He is the author of seven books and has been researching and writing about Social Security financing for the past ten years. His latest book is Raiding the Trust Fund: Using Social Security Money to Fund Tax Cuts for the Rich.Read other articles by Allen, or visit Allen's website.

This article was posted on Tuesday, October 25th, 2016 at 1:56pm and is filed under Social Security.

MAY 11, 2016

The Dangers of Free Trade Agreements: TTIP’s Threat to Europe’s Elderly

by MICHAEL HUDSON

The most obvious approach to look at how European care for the elderly will evolve is to project technological trends and the costs of people living longer as diagnostic equipment, drug treatments and other medical science continues to improve. This kind of projection shows a rising cost to society of pensions and health care, because a rising proportion of the aging population is retiring. How will economies pay for it?

I want to point to some special problems that are looming on the political front. I assume that the reason you have invited me from America is that my country has been doing just about everything wrong in its health care. Its experience may provide an object lesson for what Europe should avoid (and indeed, has avoided up to this point).

For starters, privatization is much more expensive than European-style Single Payer public health care. Monopoly prices also are higher. And of course, fraud is a problem.

America’s Obamacare and health insurance laws have been written by political lobbyists for special interests. So has the TTIP: Transatlantische Handelsabwollen. Since George W. Bush, the U.S. Government has been prohibited from bargaining for low bulk prices from the pharmaceutical companies. Most Americans think that Health Management Organizations (HMOs) are rife with corruption and billing fraud. The insurance sector has made a killing by spending a great deal of money on bureaucratic techniques to reject patients who seem likely to require expensive health care. Doctors need to hire specialists working full time just to fill out the paperwork. Error is constant, and any visit to the doctor, even for a simple annual checkup, requires many hours by most patients on the phone with their insurance company to correct over-billing.

The dream of U.S. “free market” lobbyists to shift the costs of health care onto its users instead of as a public program. According to current plans backed both by the Republicans and by much of the Democratic Party leadership, these user costs ideally would be paid by pre-saving in special “health savings” accounts, to be managed by Wall Street banks as a kind of mutual fund (with all the financial risks this entails – the same kind of risks that are troubling most U.S. pension funds today).

The reason why the U.S. discussion of health care for the elderly is so relevant for Europeans is that the Transatlantic Trade and Investment Partnership (TTIP) that President Barack Obama pushed on German Chancellor Angela Merkel two weeks ago. It poses a far-reaching threat to European policies.

The agreement has been drawn up in secret, and has only been available to Congressmen in a special room as a read-only copy. Not even Congressional staff have been permitted to see the details. The reason is that the terms of the TTIP are so awful that it could never be approved
by voters. That is why the lobbyists for banks, insurance companies, drug companies, oil and gas companies and other special interests that wrote the law are trying to bypass democratic government and going directly to Brussels – and in the United States to the Executive Branch of government.

The aim of the TTIP is to replace the application of national laws with special courts of referees nominated by the special interests. This includes the organization of health care. Last week Britain’s main labor union, Unite, warned that the TTIP would mean that the National Health Service would have to be wound down and privatized.[1] Although “Austria, Germany, Greece and Italy do have explicit reservations in the TTIP text to protect existing rules relating to healthcare,” the privatization lobbyist strategy is to have the treaty “provisionally applied” to force matters, by backing compliant politicians. Objections will be sidestepped as the “provisional’ law becomes a fait accompli.

I think that the best perspective that I can give you is to discuss how the various interest groups are working to shape political decisions regarding the public and private role of health care. This is an area I have been involved with for forty years. In 1976, I contributed the economic section for two reports by The Futures Group in Glastonbury, Connecticut for the National Science Foundation analyzing the economic and financial consequences of life‑extending technology: When We Live Longer: Prospects for America(with Herb Gurjuoy et al., 1977) and A Technology Assessment of Life-Extending Technologies (Vol. 5: Demography, Economics and Aging, 1977). I believe these were the first reports to pinpoint the implications for the Social Security system of an aging population and its inter-generational financial tensions.

American politicians and economic futurists were concerned with the effect on public health budgets of a rising proportion of the population able to live out the maximum present human lifespan of 125 years (called “squaring” the life expectancy curve). What is the best public response to what should be a dream being realized? More to the point, how should governments cope with special interests seeking merely to profiteer from such breakthroughs – and use their promise in an extortionate manner?

Every interest group has its own perspective. Most politicians in the United States are lawyers, and they worried that the Social Security, pension and health care contracts were a legal right that could not be broken or modified. President Eisenhower had called Social Security the “third rail” of American politics – meaning that any politician or party that sought to downgrade its promises would quickly be voted out of office.

It was obvious that a population living longer would receive more Social Security and pension payments, and that a rising proportion of national income would be spent on their health care. Some of the politicians I talked to were so pessimistic about the costs involved that one said that he was sorry that kidney dialysis procedures had been invented, because with so many people having kidney problems, it would cost a fortune to provide this service to everyone who medically needed it.

Some politicians sought ways to not to fund expensive medical technologies – on the ground that if these were developed, the government might have an obligation to supply the most expensive technologies (especially dialysis and organ transplants) to the population at large. The costs of doing this would absorb nearly all the economic growth.

One set of futures envisioned that the more costly medical treatments might become available only on islands – in the Caribbean, for instance. After all, did not Hippocrates practice on the island of Cos?

As forecast decades ago, health care is the most sharply rising cost in the United States. What none of us were cynical enough to forecast was the corrupt role played by special interests in maximizing the costs by treating each element of health care as a profit center – indeed, as an opportunity to extract monopoly rent.

Privatization of health insurance under Obamacare has been a bonanza for the financial sector and the insurance industry. Initially a Republican “free market” proposal, it required the Democratic Party in power to disable popular pressure for “Medicare for all” in the form of single payer public health care. No discussion within Congress was even permitted to favor public health care. (I was economic advisor to Presidential candidate Dennis Kucinich, whom the Democratic Party leadership blocked from even discussing a public option in the Congressional debate.)

The enormous power of lobbyists from the pharmaceutical industry bought the loyalty of politicians who blocked anti-trust laws from being applied against the drug companies. As I noted earlier, these lobbyists even succeeded in blocking the government from negotiating directly with the drug companies over prices.

I mention these points because the U.S. solution should serve as an object lesson for what European and other countries should avoid in managing their care for the elderly. This is especially important to Europe, because its neoliberal policies favoring the financial sector imply a slow economic crash squeezing household and employer budgets. Five concerns are paramount.

Triage: restricting the most expensive health care only to the wealthy

Lower incomes lead to shorter lifespans as a result of worse health, and also suicides. Marriage and birth rates also are lower as economies polarize and growth slows. Russia, Ukraine, Latvia and other post-Soviet states show this – and it may be a forecast of European experience. This raises the ratio of elderly to working-age populations. A slowly growing labor force must support more and more retirees.

Studies in almost every country have shown that health standards and lifespans are polarizing between wealthy and poor. A recent U.S. study notes: “The life-expectancy gap between rich and poor in the United States is actually accelerating. Since 2001, American men among the nation’s most affluent 5 percent have seen their lifespans increase by more than two years. American women in that bracket have registered an almost three-year extension to their life expectancy. Meanwhile, the poorest five percent of Americans have seen essentially no gains at all.”[2]

This has important implications regarding recent proposals to raise the retirement age at which people can qualify for Social Security. Only the well to do are living longer, not blue-collar labor. Raising the retirement age would deprive the latter of the retirement years that better-paid individuals enjoy as a result of their healthier lives.

I mentioned above one scenario drawn by futurists: that the best medical care might only be available in “medical islands” or their equivalent in the United States, called “Cadillac health insurance plans.”

Blaming the victims for their unhealthy environment as the problem were their “personal responsibility.”

George W. Bush recommended that the poor simply should go to hospital emergency wards when they get sick. This obviously is the most expensive approach. Prevention is by far more economical. But public moves along this line are being fought tooth and nail by the tobacco and soft-drink industries, and other purveyors of bad health.

Better health and longer lifespans are achieved not only by advanced medical technology, but by better public health standards, and personal diets and exercise. The most serious behaviors impairing health and longevity are smoking cigarettes, drinking alcohol and eating junk foods to the point of obesity. In the United States, childhood diabetes is rising sharply, especially among racial and ethnic minorities, and the poor in general.

An obvious way to keep down health expenditures is to lead a more healthy life. In New York City, Mayor Bloomberg sought to ban the sale of large sugar-drink servings. Lawyers for the junk-food industry, supported by fast food restaurants and movie theaters, blocked his initiative. And an even more powerful legal tool to block public health warnings is contained in the Trans-Pacific Trade Agreement and its European counterpart, the Transatlantic Trade and Investment Partnership. These proposed treaties follow the earlier North American Free Trade Agreement (NAFTA) in levying enormous fines on government who warn populations of the dangers of smoking or other unhealthy behavior that is highly profitable to cigarette companies, soft drink “sugar water” makers, and fast food restaurants selling food-like substances that give little nourishment. Under the proposed neoliberal agreement being put in the hands of Brussels politicians by American lobbyists, government warnings of the health hazards of smoking will require these governments to pay the tobacco companies what they would have earned if cigarette sales had not declined as a result of these warnings! Fines already have been levied against Australia for seeking to improve public health by requiring such warnings on cigarette packages. A recent Australian report concludes:

Tobacco policies implemented in the past have been effective at decreasing overall rates of smoking, but new and innovative interventions will be needed in the future to affect change in all populations.

Six chapters were identified with potential to limit governments’ ability to implement tobacco control policies. The key chapters are: investment, particularly the ISDS mechanism; rules related to trademarks in intellectual property, regulatory coherence, cross-border services and technical barriers to trade. … Multiple chapters may also interact with the potential for amplified effects on tobacco control. Various provisions in these parts of the TPP may provide the tobacco industry with greater influence over policymaking and more avenues to contest tobacco control measures, as well as preventing governments from introducing new policies.[3]

Last week the European Court of Justice upheld the 2014 Tobacco Products Directive against challenges from British-American Tobacco (BAT) and Philip Morris. Like similar laws in other countries, the European law called for public warnings on cigarette packs telling smokers that nicotine kills. But the tobacco companies vowed to fight back, and the TTIP is now their major hope.

Dangers of privatization of health law under the TTIP

A recent British article lays out the problem:

A salient goal of TTIP is to shadow the Investor-State Dispute Settlement system (ISDS), an instrument of public international law granting firms the right to raise an action in a tribunal on the basis that a state’s policies have harmed their commercial interests. … The economist Max Otte has called ISDS ‘a complete disempowerment of politics’. The tribunals are confidential, as is usual in arbitration. Negotiations over ISDS within TTIP are also secret, the aim being to get the ink dry on the agreement before it can provoke opposition by being made public. …

As the Economist put it, ‘if you wanted to convince the public that international trade agreements are a way to let multinational companies get rich at the expense of ordinary people, this is what you would do.’[4]

Dangers of financialization

The most efficient way to finance care for the elderly – and pensions – remains pay-as-you-go planning. This is becoming difficult in a neoliberal political environment with shrinking economic growth and consequent demographic shrinkage. The horror story today is a Ukraine-like situation where the labor force has fled, leaving the elderly to be supported without much of a social budget. That is becoming the post-Soviet model, from East Germany to the Baltics.

The American situation is worse, because Social Security, Medicare and pensions are front-loaded by being financialized – paid for in advance. For decades, savings have been set aside in the form of stock and bond purchases. The problem is that when more workers retire than are contributing to the pension plan or similar plans, their prices will decline. This will leave the retirement plan under-funded.

As interest rates have been reduced to nearly zero since 2008 by Quantitative Easing by the U.S. Federal Reserve and now European Central Bank, pension funds and insurance companies have become desperate to meet their statistically required targets. They have turned to gambling on complex financial derivatives – and have lost heavily, because their managers are no match for Wall Street sharpies.

It may be appropriate here to note the monetary madness of the eurozone not having a central bank to monetize budget deficits to spend into the economy to help it grow. That is the proper function of a real central bank, from the Bank of England to the U.S. Federal Reserve System. European voters are being frightened by junk economics claiming that only commercial banks should create money and credit, not central banks. The reality is that central banks can create the money to fund health programs without inflating the economy. What would inflate health care costs, especially proper care for the elderly, would be privatization and a relinquishing of health policy to the large corporations best in a position to profiteer.

Danger of trade agreements raising the cost of drugs and medical technology

The technological medical revolution involves high rent-extracting opportunities, especially in treating the elderly. The Australian study cited above notes the dangers posed by the TPP (and hence also by its European version) to public health expenditure, especially health costs for the elderly. Designed largely to protect “intellectual property rights,” the proposed treaty aims to increase monopolyrent extraction by the pharmaceutical sector.

Provisions proposed for the TPP that have the potential to limit implementation of new food labelling requirements in Australia include the ISDS mechanism; the regulatory coherence chapter and technical barriers to trade chapter. Provisions in these parts of the TPP have the potential to restrict policymakers to regulate using the most effective public health nutrition instruments. For example, the food industry could argue that introduction of mandatory front-of-pack nutrition labelling would be a technical barrier to trade. Without strong compensatory intervention to improve consumer awareness of the relative healthfulness of foods, it is likely that there will be no change to current high rates of obesity, metabolic syndrome and non-communicable diseases. This would have a negative impact on health, particularly for vulnerable populations.

For starters, the trade agreement limits the ability of public or community pharmacies to bargain for lower drug prices. Also, any attempt at anti-monopoly legislation would require governments to pay the foreign producers or investors as much money as they would have earned if no “interference with markets” (that is, regulation of monopoly prices) had existed. This would sharply increase the cost of healthcare, and “many TPP provisions proposed during the negotiations are likely to be harmful to health.”

There is sufficient evidence which show that increases in the cost of medicines lead to greater patient copayments through the PBS, and that increases in patient copayments lead to lower rates of prescription use. Changes to prescription costs impact particularly on vulnerable populations who have less capacity to accommodate increased out-of-pocket expenses such as women, elderly adults, cultural and linguistic minorities, and low-income populations; people with chronic disease; geographically remote communities; and Aboriginal and Torres Strait Islander populations.

Many provisions proposed for the TPP had the potential to increase the cost of medicines. These were identified in leaked drafts of the intellectual property chapter; the healthcare transparency annex; and the investment chapter, which includes an investor-state dispute settlement (ISDS) mechanism. These provisions, if adopted, could be expected to lead to an increase in the costs of managing the PBS by delaying the availability of generic medicines, and constraining the ability of the PBS to contain costs. An increase in the cost of the PBS to government would be likely to lead to higher copayments for patients.

Summary

European sponsors of U.S.-style neoliberalism pose a threat of transforming European politics, and with it the structure of economies and society. Enormous sums of money are being spent on public relations, and to support politicians willing to shepherd corporate monopoly power against that of democratic government and voters. The most serious threat to European health care and care for the aging population in general is pressure from U.S. firms and diplomats to ram through the TTIP.

It is much more than a free trade agreement. Its “investor dispute” mechanism threatens to disenfranchise governments. The intent is to block them from protecting Europe’s economy, population and basic social philosophy that has developed over the past century of social democracy.

That is why so many of us in the United States also are fighting against this agreement. It has been a major issue in this year’s presidential campaign. Republican nominee Donald Trump has affirmed that the public option is by far the most economic. And Democratic contender Bernie Sanders has opposed Hillary Clinton’s support for her patrons on Wall Street and in the pharmaceutical monopolies. I hope that a similar fight will be waged in Europe.

This is the text of Michael Hudson’s speech to SANICADEMIA, May 9, 2016 in Villach, Austria for the 5th International Congress on Geriatrics and Gerontology = 59th Austrian Convention for Hospital Management, “We’re Living Longer: The healthcare challenges for today and tomorrow.”

Notes.

[1] Hazel Sheffield, “TTIP could cause an NHS sell-off and UK Parliament would be powerless to stop it, says leading union,” The Independent, April 29 2016. http://www.independent.co.uk/news/business/news/ttip-could-cause-an-nhs-sell-off-and-parliament-would-be-powerless-to-stop-it-says-leading-union-a7006471.html

[2] Sam Pizzigati, “Inequality Kills: Top 1% Lives 15 Years Longer Than the Poorest,” Naked Capitalism, May 3, 2016, originally published at Other Words. http://www.nakedcapitalism.com/2016/05/inequality-kills-top-1-lives-15-years-longer-than-the-poorest.html

[3] Katherine Hirono, Fiona Haigh, Deborah Gleeson, Patrick Harris, Anne Marie Thow and Sharon Frie, “Is health impact assessment useful in the context of trade negotiations? A case study of the Trans Pacific Partnership Agreement,” April 4, 2016.http://bmjopen.bmj.com/content/6/4/e010339.full. The report notes: “The final agreement also included an optional tobacco carve-out from ISDS, allowing TPP countries to prevent the use of ISDS to challenge tobacco control measures. Yet even these apparent ‘wins’ have some limitations. Unlike tobacco, the health system, food and alcohol were not carved out from ISDS, leaving these policy areas vulnerable to claims by foreign investors. While various safeguards have been included to try and protect public health, experts have raised doubts about whether they will be sufficient.”

[4] Glen Newey, “Investors v. States,” London Review of Books blog, April 29, 2016. http://www.lrb.co.uk/blog/2016/04/29/glen-newey/investors-v-states/

ECONOMY

Four Reasons Why Raising Social Security's Retirement Age Cuts Everyone's Benefits

If you thought postponing retirement boosts benefits, think again.

By Kathleen Romig / Center on Budget and Policy Priorities

January 21, 2016

Photo Credit: Image by Shutterstock, Copyright (c) Rayjunk

Some policymakers, including prominent presidential candidates, have endorsed raising Social Security’s full retirement age to improve the program’s long-term solvency. 

Raising the retirement age cuts benefits for all retirees, the cuts could be deep, and they would fall hardest on lower- and middle-income Americans — who rely heavily on their hard-earned Social Security and have not shared equally in recent life expectancy gains.

The full retirement age is the age at which retirees can receive full Social Security benefits.  If you claim benefits before full retirement age, you receive permanently reduced monthly benefits; if you claim them after, you get a permanent increase.  The full retirement age was 65 for most of Social Security’s history.  The last major Social Security overhaul, in 1983, gradually raised it to 66 (where it stands now) and will eventually raise it to 67, a change that effectively cuts benefits by 13 percent.  

There’s talk of moving the age further to 68, 69, or 70.  Such a change would have significant effects.

1. Raising the retirement age means cutting benefits — no matter when you file. A higher retirement age means that an early retiree gets a deeper reduction and a delayed retiree gets a smaller bonus.  If the age rose from 67 to 68, monthly benefits would fall by about 7 percent, for all new retirees.  If it rose to 70, the cuts would be nearly 20 percent. (See graph.  For more information, see the box, “Why Does Raising the Retirement Age Reduce Benefits?” here.)
2. Most people claim early, which means they could receive as little as half their full benefit.  Nearly half of retirement beneficiaries claim benefits at age 62.  Some of these beneficiaries — especially those with lower earnings — are in poor health but don’t meet the stringent criteria for disability benefits.  If the retirement age were 70, a retiree at age 62 would receive only 57 percent of his or her full monthly benefit.
3. Low-income people don’t live as long as high-income people — and the gap is widening.  Supporters of retirement age increases often point to increasing longevity.  And that’s true — for some people.  Average life expectancies are rising, but the gains are mostly among higher-incomeAmericans.  Life expectancy for the bottom half of earners has barely changed over the past 30 years.
4. Retirement age increases hit the pocketbooks of workers with low and moderate incomes hardest.  Though raising the retirement age cuts everyone’s benefits roughly equally, it affects incomes unequally.  That’s because Social Security benefits make up a greater share of income for low- to middle-income retirees, as well as for minorities.

Kathleen Romig is a Senior Policy Analyst at the Center on Budget and Policy Priorities.  She works on Social Security, Supplemental Security Income, and other budget issues.

HUD-Sponsored Senior Housing Programs

Senior Living

HUD-Sponsored Senior Housing Programs

Written by Chris Hawkins SeniorLiving.Org Expert on Senior Care & Assisted Living

The first wave of baby boomers—those born between 1946 and 1964—made it to age 65 in 2011. Now a person turns 65 every 10 seconds. By 2030, the number of persons 65 and older will reach 71.5 million.

Many in this enormous human wave will need affordable living options once they stop working and there are several HUD programs to help seniors. Because let’s be honest: many folks are not as prepared for retirement as they would like to be.

A survey by the Insured Retirement Institute found that “70 percent of middle-income Boomers are not confident in having enough money to live comfortably in retirement.” In an Associated Press poll, among families with incomes below $50,000, only 35% said they felt financially ready for retirement; 66% of those in higher income households felt ready. With the recent economic collapse, many older adults find themselves in an unexpected position entirely.

A recent AARP Public Policy Institute Study found that:

Another daunting issue facing retirees is the cost of senior living options. Senior living is a general term that includes all kinds of senior-centered housing: independent living, assisted living, nursing homes, home care, and others.

Here’s a sample of what you can expect in senior living costs. The median U.S. cost for a private room in a nursing home is $81,030 a year; in 2007, the median annual cost was $65,700. The average yearly cost in an assisted living facility is $39,600.

Now let’s look into the future.

If you are currently living in Virginia, for example, and needed assisted living care the median amount you would pay is $41,775 a year, according to a Genworth Financial long-term care survey. In 10 years, you would pay $68,047. A private room in a Virginia nursing home would now cost $82,125 a year; in 10 years, the price tag goes up to $133,773.

Even if you never need senior living care, you may find yourself in a position where you have to make a lifestyle change. Asking yourself the important questions is a great place to start.

Retirement Living Considerations 

It may be years after you retiree that you need to make a major living change. But it’s better to plan now and initiate changes on your own rather than being forced by circumstances in the future.

Here are some questions to think about as you prepare for your retirement:

• Where do I want to live when retired?
• Where can I afford to live after I stop working?
• Should I downsize and move into an apartment or condominium?
• Do I want to live in a senior community with people my age?
• Should I rent?
• Do I still feel safe in my current neighborhood?
• Do I want to be closer to family?
• Does my health (or my spouse’s) require special living arrangements such as assisted living or a nursing home?
• Could I afford the cost of assisted care?
• Can friends and family provide assistance with daily living if I need it?

If your current or future financial circumstances call for a drastic reduction in cost of living, HUD may have a program that can help.

Introduction to HUD Programs

The U.S. Department of Housing and Urban Development (HUD) creates affordable housing for citizens across the country by funding programs for rent assistance, home ownership, and assistive services for seniors and the disabled.
HUD helps more than 900,000 seniors with affordable housing through its programs. There are three types of affordable rent programs: public housing, multifamily subsidized housing, and voucher housing programs.

• Public Housing is owned and run by local Public Housing Agencies (PHAs).
• Multifamily Subsidized Housing is privately owned housing that is subsidized by HUD and provides tenants with affordable housing.
• Housing Vouchers provide rental assistance to individuals and families for housing in the private market.

*Several important things to keep in mind with HUD programs:

1. The waiting lists are often long (from two to five years), especially in metro areas.
2. For those in need of assisted care, HUD options are limited. HUD programs are designed primarily for independent seniors.
3. Because one Public Housing Agency (PHA) doesn’t have the housing you’re looking for, doesn’t mean another one won’t.

We’ll look at HUD housing options, especially as they pertain to seniors. And we’ll look at how to qualify, and how to search for HUD-sponsored housing in your area.

Housing Vouchers

Housing Choice Voucher Program (formerly Section 8)

The Housing Choice Voucher Program (HCVP) provides rent vouchers for housing in the private market to low income individuals, families, the elderly and the disabled. It is the largest assisted housing program administered by HUD.
These vouchers are linked to specific properties run by local Public Housing Agencies (PHAs). There are two kinds of vouchers: tenant-based and project-based. Tenant based vouchers (TBVs) move with the renter. Project based vouchers (PBVs) are assigned to particular units and buildings and are not transferable.

Who is Eligible? 

There is no age requirement. Families or individuals who meet the extremely low-income requirements (30% of the area’s median), and very low income (50% of area median) based on total gross income. In some cases, those with low income (80% of area median) are eligible.

Income such as pensions, retirement accounts, IRAs, insurance annuities, and assets such as real estate, cars, etc. ARE counted when assessing eligibility.

Housing

Depending on your location, housing options can include single-family homes, townhouses and apartments. Individuals can pick anywhere they want to live as long as the owner agrees to rent using the program’s guidelines.

Rent Amounts

Rental amount is calculated by using the greatest of:

1. 30% of monthly adjusted income
2. 10% of monthly income
3. The welfare rent in as-paid states
4. Or the PHA minimum rent ($25 or up to $50).

PHAs pay the property owner directly and the residents pay the difference to the property owner.

How Do I Apply?

Apply at your local PHA. They will collect information on family income (tax returns, bank statements, Social Security, etc.) assets, and family composition. Medical expenses, health insurance payments, prescriptions and future medical expenses are taken into consideration.

Once you apply, you are placed on a waiting list. Because of the demand, waiting lists are often several years long. Ask your application to be pre-qualified for income—that way you know ahead of time if you qualify. And ask about local preferences (e.g. you are involuntarily displaced, paying more than 50% rent, etc.).

Find a PHA at http://portal.hud.gov/hudportal/HUD?src=/program_offices/public_indian_housing/pha/contacts

Homeownership Vouchers

This HUD program assists first time homebuyers who need help meeting their monthly mortgage payment and other expenses. These expenses include mortgage principal and interest, mortgage insurance, real estate taxes, and homeowner’s insurance among others.

Who is Eligible?

• First-time homeowner
• No family member has owned or had ownership interest in their residence for at least three years
• No family member has any ownership interest in any residential property

Employment not required for elderly or disabled families or individuals but must meet certain income requirements

• Must complete the PHA’s homeownership counseling
• Any other PHA requirements

Finding Housing 

Assistance by the PHA is not given in finding a home. The applicant must find an approved financing source to purchase the home. The home must pass an inspection by the PHA and an independent inspector before the family can purchase.

Payment Amount 

The monthly tenant payment is generally 30% of the family's adjusted monthly income. The PHA will make the voucher payment to either the lender or the family. There is no time limit to receive assistance under this program for the elderly and disabled.

How Do I Apply?

Contact your local PHA for assistance. Not all PHAs offer this program.
You can find a list of participating PHAs at:
http://portal.hud.gov/hudportal/HUD?src=/program_offices/public_indian_housing/programs/hcv/homeownership

Programs for Current Homeowners who Need Help

If you own your home and need help with your mortgage, HUD and the Department of Treasury have a handful of programs to help. These include:

• Lowering your payments
• Lowering your interest rate
• Help paying a second mortgage
• Help with fallen home value
• Leaving your home and avoiding foreclosure
• Mortgage modification for those in the military

See MakingHomeaffordable.gov for more details.

Multifamily Subsidized Housing Programs

Section 202 Supportive Housing for the Elderly

The rent-assisted housing in this program is designed specifically for seniors and the disabled to live as independently as possible but who may need some assistance with activities of daily living (ADLs) such as dressing and bathing. Common features of these communities include housekeeping, transportation, referral services, and counseling.

The types of services and amenities will vary by housing community.
Established by HUD in 1959, the Section 202 program is the only program within HUD to provide housing exclusively to seniors. HUD provides loans to private, nonprofit organizations to finance the construction of supportive housing for very low-income seniors and provides rent subsidies.

Who is Eligible? 

Those 62 and older with very low household income (50% of area median). The average resident age is 79. The average yearly income is $10,018.

Type of Housing

Typically, one-bedroom apartments with kitchen and bath, plus special features such as grab bars, ramps, nonskid flooring, etc. Other features include housekeeping, transportation to health care, home-delivered meals.
Rent Amount

Rental amount is calculated by using the greatest of:

1. 30% of monthly adjusted income
2. 10% of monthly income
3. The welfare rent in as-paid states
4. Or the PHA minimum rent ($25 or up to $50).

How Do I Apply? 

Contact the individual housing community you are interested in. You can find housing by state here: http://www.hud.gov/apps/section8/
Wait lists are usually at least a year. Preferences for admission include those currently paying 50% of their income in rent; the involuntarily displaced; and those living in substandard housing.

Congregate Housing Services Program (CHSP)

This program, started in 1978, provides funds to Section 202 housing communities to “help frail and persons with disabilities avoid premature or unnecessary institutionalization.” This limited but valuable program provides funding to 51 public housing agencies and private assisted housing owners.
These communities provide residents at least one hot meal per day in a group setting, 7 days per week. Other non-medical services provided include housekeeping, personal assistance, transportation and social services.
Contact your local PHA to see if the program is available at area elderly housing locations.

Multifamily Rental Housing for Moderate-Income Families (Section 221 (d) (3))

This program funds “multifamily housing for moderate-income households, including projects designated for the elderly.” Some of the housing is designed specifically for the elderly and handicapped.

Who is eligible?

Anyone can occupy a home that is insured under this program and are “subject to normal tenant selection.” There are no income limits.

Type of Housing

These are multifamily housing units: apartments, condominiums, duplexes, etc.

Rent 

Rent is based on a flat approved HUD amount, not on a tenant’s percentage of income.

How Do I Apply?

Contact your local PHA. For a list by state, go to
http://portal.hud.gov/hudportal/HUD?src=/program_offices/public_indian_housing/programs/hcv/homeownership

Supportive Housing for Persons with Disabilities Program (Section 811)

This purpose of this program is to enable those with disabilities to live as independently as possible in a housing environment that provides supportive services. Services may include personal assistance; meals; housekeeping; counseling; training in independent living skills; recreation and transportation.
HUD awards funds to private non-profit organizations to be used to finance the construction or rehabilitation of supportive housing for persons with disabilities. There are two types of funding programs: 1) projects funded by capital advances and 2) those funded by Project Rental Assistance.

Who is Eligible?

Those who are 18 and older who are physically, mentally, emotionally and/or developmentally disabled. Households must be very low-income (50% of median income) with at least one adult member with a disability.

The Project Rental Assistance Program residents must be extremely low-income (30% of median income) with at least one adult member with a disability
Median household income for residents is $9,204.

Housing

Group homes of eight or fewer units are single family structures that combine multiple bedrooms with a kitchen and shared living area. There is at least one bathroom for every four residents.

Condominium or cooperative units are independent living facilities that can be cooperatively owned by the residents.

Independent living complexes consist of 16 or fewer units where each dwelling contains a kitchen and bathroom. This housing may also contain congregate dining, laundry, and community areas.

Rent Amount

Rent is determined at 30% of adjusted monthly income.

How Do I Apply?

You can find out more on this program and the available properties by contacting your local HUD office. For a listing of regional HUD offices, visit http://portal.hud.gov/hudportal/HUD?src=/localoffices

Public Housing

Public housing is rental housing for low-income families, the elderly and those with disabilities. HUD administers funding to local PHAs that manage the housing. Over 1 million families live in public housing.

Who is Eligible?

Low-income families (80% of median) and individuals including the elderly and those with a disability. Income limits will vary based on area. Your local PHA can provide those limits.

Once you are accepted in public housing, you must live in the community where you are accepted.

Type of Housing

Public housing can include everything from single-family homes, to duplexes to high-rise apartments.

Rent Amount

Rent is referred to as Total Tenant Payment (TTP) and calculated using the greatest of:

1. 30% of monthly adjusted income
2. 10% of monthly income
3. The welfare rent in as-paid states
4. Or the PHA minimum rent ($25 or up to $50)

You may stay in the property as long as you comply with the lease.


How Do I Apply? 

Contact your local public housing agency to apply. You will need to provide proof of income such as tax returns, bank statements, Social Security award letters, etc. Preferences are usually given to the elderly and disabled.

Key Definitions, Eligibility And Additional Resources

Activities of Daily Living (ADLs): Activities necessary for one to maintain independence. These typically include eating, dressing, bathing, toileting, and transferring.

Fair Market Rents (FMRs) are gross rent (rent plus utilities) estimates used to determine payment amounts for the Housing Choice Voucher program. These rent estimates are used as a guide for determining initial rental payments based on unit size.

Public Housing Agencies (PHAs): Over 2,600 state, regional, and local
HUD-funded agencies that serve the housing needs of its low-income and very low-income residents.

Adjusted Income: Annual income - deductions = adjusted income. Deductions include dependents; status as elderly or disable family; unreimbursed expenses for childcare, medical expenses (elderly and disabled only); and disability assistance.

• Extremely Low Income: income does not exceed 30% of an area’s median family income.
• Very Low-Income: their incomes do not exceed 50% of an area’s median family income.
• Low Income: their incomes do not exceed 80% of an area’s median family income.
• Moderate Income: incomes that are no more than 115% of an area’s median family income.

Note: Income limits are adjusted for family size and for areas with unusually high or low family income housing-cost-to-income relationships.

Determining Income and Eligibility

When applying for any of HUD’s housing programs, you will be asked to provide proof of income and assets to determine eligibility. Qualifying income and assets are combined when determining income eligibility.

Income and assets include all amounts that are derived in a 12-month period to which any member of the family has access to.

Income Sources

HUD counts the following main sources when considering income for its programs:

• Full amount of income (before deductions) from salaries, wages, tips
• Business net income
• Interest, dividends, and other net income of any kind from real or personal property
• The full amount of periodic amounts received from Social Security, annuities, insurance policies, retirement funds, pensions, disability or death benefits
• Unemployment, worker’s comp, and disability
• Alimony and child support
• Armed forces income
• Welfare assistance

For a detailed listing of income sources, go to http://www.gpo.gov/fdsys/pkg/CFR-2012-title24-vol1/xml/CFR-2012-title24-vol1-sec5-609.xml

Assets and Income from Assets*

• Stocks, bonds, Treasury bills, certificates of deposit,
• Individual retirement and Keogh accounts
• Retirement and pension funds
• Cash held in savings and checking accounts, safe deposit boxes, homes, etc.
• Cash value of whole life insurance policies available to the individual before death
• Equity in rental property
• Personal property held as an investment

*If the total value of assets is less than $5,000, then that number is used in the calculation. If the total value of assets is worth $5,000 or more, the amount of the assets is determined by using the greater of:

1. The actual income from the assets
2. A percentage of the value of net family assets based on the passbook savings rate. Each HUD field office determines their own passbook savings rate based on average savings account rates. Most PHAs use 2%.

Example 1: You have assets totaling $20,000 and annual income totaling $40,000.

$20,000 x 2% = $400

$400 assets + $40,000 annual income = $40,400 total income

Example 2: Upon retirement, you receive a lump-sum payment of $10,000 from your pension plan. You then receive periodic pension payments of $500 a month. The $10,000 is treated as an asset as are the monthly $500 pension payments.

$10,000 + $500 x 12 (months) = $16,000

Income Deductions

• An elderly household is entitled to an automatic $400 household deduction.
• Medical deductions including services of a physician, health care professional, hospital or health care facility; medical insurance premiums; prescription and non-prescription medicines; dental expenses; eye glasses and examinations; periodic payments of medical bills; et al.
• Disability assistance expenses
• Dependent deductions
• Child care deductions

HUD Income Limits: An Example

HUD has established Median Family Income (MFI) limits for metropolitan and non-metropolitan areas across the U.S. These MFIs are used to calculate eligibility in the various HUD programs.

Here’s an example of an income limit calculation for the Washington DC Metro Area that includes nearby counties in Maryland and Virginia.

Area’s Median Income= $107,500

2012 Income Limit Category	1 Person	2 Person	3 Person	4 Person
Very Low (50%)	$37,650	$43,000	$48,400	$53,750
Extremely Low (30%)	$22,600	$25,800	$29,050	$32,250
Low (80%)	$49,200	$56,200	$63,250	$70,250

You’ll notice that the percentages don’t always equal the income limit amounts. For example, 80% of $107,500 is $86,000, not $70,250.

In their calculations, HUD compares an area’s 4-person family incomes to that of the US median family income. They also look at the Fair Market Rent (FMR) costs for the area.

To find income limits in your area, go to http://www.huduser.org/portal/datasets/il/il2012/select_Geography.odn

Getting Started

To get an idea of the HUD insured and HUD subsidized multifamily properties that serve the elderly and/or persons with disabilities you can go to
http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/mfh/hto/inventorysurvey

This list does not provide waiting list info, availability, eligibility and tenant selection. But it will provide a listing of properties by state and by HUD program (Section 202, Section 811, etc.) that finances/subsidizes each property. This will give you an idea of the type of services offered and potential eligibility.
You can also go to HUD’s Rental Assistance page for links to the various programs:

http://portal.hud.gov/hudportal/HUD?src=/topics/rental_assistance

HUD Counseling

If you’re not sure where to start in your search, try calling a HUD-sponsored housing counseling agency in your area. These counselors provide advice on buying a home, renting, credit issues, foreclosures and other housing related issues.

For a list of HUD approved counselors by state, go to http://www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm

The Geezers: We won't grow old gracefully

 

The Geezers: We won't grow old gracefully

 

TED JEORY meets a group of East End pensioners who are refusing to fade away. With a positive outlook, these redoubtable Geezers are now reaching out to today’s youth.

By: Ted Jeory

Published: Sun, January 9, 2011

 

The Geezers' inspirational work with local schools and universities has just won a string of awards []
 

In London’s East End a group  of retired butchers, truckers,  builders, undertakers and boxers  are redefining what it is to be men growing old. They have seized life  by the horns and confronted the spectre of loneliness head on.
Meet The Geezers, a club of can-do pensioners whose inspirational work with local schools and universities has just won a string of awards and sparked curiosity about their success nationwide.

Their aim is that sometime, somewhere, an energetic Geezers Club will be opening near you.

When David Cameron set out his idea of Britain’s Big Society last year his words were largely met with a Big Shrug: few knew what he really meant. If the PM is still trying to illustrate the vision he would do well to look the Geezers’ way.
The club was set up five years ago after research from Age Concern in the London borough of Tower Hamlets showed that few men were turning up to their day centres. While women were being catered for with classes in dressmaking, line dancing and how to be a grandmother none of the activities interested men.

Yes, there were worthy talks about men’s health and eating well but they didn’t capture the imagination of retirees. Instead, many widowers were hanging around in pubs and betting shops or, even sadder, some were seen simply leaning against roadside railings watching the traffic go by.

So a few old friends took matters into their own hands and decided to recapture the things that made them laugh.

They formed their own club, asked for £1 a week subscriptions and sought public funding. They play indoor bowls once a week (an activity so popular that many cancel their hospital appointments rather than miss out) and have regular outings and social gatherings.

However, those are the bread-and-butter ingredients. What makes The Geezers extra-special is their other work. They have won £20,000 in awards and grants while their industry and creative energy has attracted the attention of artists and academics.

Their latest accolade was a cheque for £5,000, handed to them last year by Attorney General Dominic Grieve for a project they undertook with the local Bow Boys comprehensive school. The prize was from the Awards for Bridging Cultures organisation for a touching short film called Bow: Now And Then, which chronicles the reflections of the two different generations growing up in the East End.

Nowhere else in Britain has there been such dramatic change in terms of demographics and urban development. Decimated by Hitler’s Luftwaffe, what was once the engine room of London’s river-borne trade and a centre of Cockney life is now a skyline of gleaming skyscrapers and a defining picture of multiculturalism.

A combination of City expansion from the west, Canary Wharf growth from the south and a wave of mass immigration from Bangladesh has contributed heavily to what social researchers have termed the “white flight” of traditional inhabitants to the suburbs of Essex. In short, older, whiter generations feel alienated in what they see as their own manor. The youngsters, meanwhile, look towards their elders as if they are aliens.

The Geezers’ film was an attempt to address that. They teamed up with Andy Porter from media charity Hi8tus and produced a montage of talking heads and sights and sounds from today and yesteryear.

At just over 15 minutes, the film is a collection of themes about growing up. Each scene juxtaposes tales from life then with teenage thoughts from today.

While Geezers talk about playing in bomb craters, kicking footballs made of paper in traffic-free side streets and courting their sweethearts in Epping Forest, today’s youth chat about computer games, hang around housing estates and chat up girls by text message.

With so much concern about violent gang culture in modern Britain and especially inner-city London, the discussion about “territory” was perhaps the most illuminating. Today’s postcode gangs are a modern version of a problem that has always existed.

Johan Campo Marin, 16, recounts in the film how he and his cousin were asked “what end?” or what postcode, they were from as they walked through the Elephant & Castle district in South East London. When they replied Tower Hamlets, they were chased by a gang.

To the older generation that was nothing new. Even venturing on to the other side of a railway bridge in their day risked trouble. However, 81-year-old Ted Lewis, a former Billingsgate fish market porter and amateur featherweight boxer, said there was an honour to their day’s toughness.

“We would have gang fights,” he says. “A neighbourhood would bring their champion and we would have our champion and the two would fight each other. If you kicked someone you were a coward. You had to stand up and fight properly.”

Ted, a former Liberal Democrat councillor, is one of the stars of the film and when The Geezers met the boys again at their school last month, he was still showing off his strength and boxing skills.

“It’s been wonderful getting involved with them,” he said, reflecting on the film. “I found that we can talk to these young children and they can also talk to us.” Johan agrees: “We thought they would be really boring but after talking to them we just thought they were really just the same as us.”

Jim Morris, the head of the pupils’ year group at school, adds: “The great thing is that it broke down the barriers and stereotypes that both groups came with. They couldn’t understand the world in which The Geezers used to live as children when there was so much more space to play and where they were free to roam.”

So what next for The Geezers? They have aready helped form a women’s group called The Bow Belles and five years after their first meeting, the local phenomenon they have created is, they hope, set to spread across Britain. Chief Geezer Ray Gipson, 70, an ex-lorry driver, football referee and another former Lib Dem councillor, says they have already worked with the University of East London on renewable energy projects and they even made a wind turbine that lit a sign over Tower Hamlets boasting “Geezer Power”.

Ray wants more men from around Britain to follow their example. “People just seem to let men grow old and senile,” he says. “We just didn’t want to have a talking club. We wanted to be talking about doing something and then actually doing something.”

Geezer Power is on its way.