AARP, a nonprofit organization representing people who are 50 and over, released an ad asking Congress not to reduce Social Security and Medicare benefits to reduce budget deficits. Concord Coalition, a nonprofit organization concerned about the national debt, called the ad “misleading, divisive and an abdication of responsible leadership.”
The ad, called “50 Million Seniors are Watching,” features a male senior saying, “I'm not a number, I'm not a line-item on a budget, and I'm definitely not a push-over. But I am a voter. So Washington, before you even think about cutting my Medicare and Social Security benefits, here's a number you should remember – 50 million. We are 50 million seniors who earned our benefits, and you will be hearing from us today, and on election day.”
The Joint Select Committee on Deficit Reduction, also known as the “supercommittee,” is currently working to reduce current budget deficits by at least $1.2 trillion over the next 10 years. The supercommittee is expected to use some combination of spending cuts (including the military), revenue increases (through tax reform) and entitlement reform. Entitlements include Social Security, Medicare and Medicaid.
AARP is asking the supercommittee to come up with ways to reduce those deficits that would not impact the current levels of growth in current and future senior's Medicare and Social Security benefits. In the website post that announces the new ad, AARP urges the supercommittee to seek cuts by eliminating “waste and tax loopholes.”
“This is the kind of tactic and rhetoric AARP has condemned in the past,” said former U.S. Senator Bob Kerrey (D-Neb.), co-chairman of The Concord Coalition’s Board of Directors. “Since hollowing out the rest of the budget to pay for expanding entitlements would result in more uninsured, undereducated and unemployed Americans, AARP has taken an approach which can only and honestly be described as generational warfare. By its actions AARP has put at risk the strong inter-generational support for Social Security and Medicare.”
Due to the retirements of the Baby Boomer generation and longer life spans, fewer workers are paying into Social Security and Medicare for current and near-future retirees. This puts the programs on a fiscally unsustainable course without additional revenues or reductions in the growth of the programs.
Both programs are currently funded through payroll taxes, but those revenues do not cover the full costs of the programs, so they must be partially funded through general government revenues. According to Concord Coalition, about $560 billion will need to come from general revenues to cover the programs shortfalls in 2020 if no changes are made.
AARP responded to Concord Coalition's criticism in a press release sent to The Christian Post. AARP's Senior Vice President for Campaigns, John Hishta, said, "Our new television ad was designed to inform seniors and future retirees that behind closed doors, a congressional 'super committee' is considering proposals that could cut the Medicare and Social Security benefits they've earned through a lifetime of hard work. This includes proposals that would shift health care costs onto seniors, threaten seniors‟ access to their doctors, or reduce the lifetime Social Security benefits they rely on."
To reduce Medicare costs, Hishta suggested “reducing the exclusivity period for biologic drugs, allowing for the safe and legal importation of prescription drugs, and enabling the Secretary of [Health and Human Services] to negotiate for lower prescription drug prices,” as well as eliminating waste and fraud in the program.
For Social Security, Hishta said that no changes need to be made because the program has a $2.6 trillion “trust fund.” “Social Security didn't contribute to the national deficit and shouldn't be cut to balance the budget.”
Until 2010, Social Security had been running a surplus. That surplus was used to buy government debt, or treasury bills. Those treasury bonds make up the Social Security “trust fund” to which Hishta is referring. Now that the Social Security program is running deficits, it can cash in those treasury bills to pay for the shortfall. The federal government must pay those treasury bills, however, from general government revenues, or by selling more treasury bills, which would transfer the debt from the government (or Social Security) to the public.
Concord Coalition Executive Director Bob Bixby believes that a reliance on the trust fund is disingenuous. In an interview with The Christian Post, he said, “The trust fund is a bookkeeping device. It is a ledger entry. It has nothing to do with the cost of benefits or who's going to pay for that cost. … The trust fund says that one arm of the government has to pay another arm of the government money.”
Bixby said that he doesn't see a problem with AARP's proposals for reducing the cost of Medicare but that Concord Coalition was more responding to the attitude implied in the ad. “The ad has a sense of combativeness to it, belligerency almost.”
“It takes a category of the budget and says 'you can't touch this,'” Bixby said. “You can't take such a large part of the budget and wall it off. We're going to have to make hard choices about everything. I think it's unrealistic to say that there can't be any, any, changes in benefits.
“AARP is a big and powerful constituency, so it sends a very bad message for them to say, 'we're not contributing, find your sacrifices someplace else.' It just encourages bad behavior. It encourages everyone to say, 'OK, I see what's going on here, we'll protect our piece of the pie.'”
The AARP ad is voicing the beliefs of its members, according to Hishta. “Simply, our ad reflects what our members believe: Congress should find ways to solve our nation's budget problems without making damaging cuts to Medicare and Social Security for today's seniors or future generations.”