One out of four of Lewis County’s 76,000 residents collect Social Security benefits, infusing more than $240 million a year into the local economy. One out of five residents receive Medicare benefits. One out of six residents live in poverty and receive Medicaid benefits. Back to this in a moment.
The TV blares at us, saying that if Congress doesn’t reach an agreement on taxes and deficits by the end of the year, we will go over the so-called Fiscal Cliff. This means the Bush tax cuts for the middle class and for the wealthy will expire. It also means that $1.2 trillion in spending cuts, equally divided between military and social service cuts, will be made over the next ten years — about $100 billion a year.
This raises two questions. Does going over the cliff spell disaster? What is at stake with the solutions being offered?
Republicans in Congress would prefer to extend the tax cuts for both the middle class and the wealthy. The problem with this approach is that it blows the deficit sky high. To address this, they are offering to close some unspecified tax expenditures. But they also want cuts in Social Security, Medicare, and Medicaid benefits.
What if we were to follow Senator Mitch McConnell’s plan to slow the cost of living increases for those receiving Social Security; increase the eligibility age for Medicare from 65 to 67; raise Medicare premiums for higher income individuals; and cap Medicaid payments to the States?
In a word, disaster for Lewis County and for our country as a whole.
Changing the cost of living index for Social Security would lower benefits by $672 a year for a retiree reaching the age of 80 and over $1,200 for a retiree reaching the age of 95. My Mom is 89 and my uncle is 95 — they can’t afford these cuts.
Changing the eligibility age for Medicare to 67 would force thousands of seniors into the more expensive private insurance market or leave them uninsured. Some would never receive benefits that they paid for their whole working lives.
Medicare premiums are already income related. More well-off retirees already pay higher Part B and Part D premiums.
Capping Medicaid payment to states means lower health care benefits to the poorest and most vulnerable.
Democrats in Congress and the president have a better idea: they would like to extend the tax cuts for the middle class and allow those for the wealthiest 2 percent to expire. What is not clear is whether they are willing to compromise Social Security, Medicare, and Medicaid.
Organized labor has a more complete plan: we would like to preserve the tax cuts for the middle class, end the tax cuts for the wealthiest 2 percent, and make sure that no benefit cuts are made to our safety net programs. Letting the tax cuts for the wealthy expire will generate $1 trillion in revenue, or enough to cancel most of $1.2 trillion in spending cuts that are supposed to happen if we go over the cliff.
But this is not enough. We would like the new Congress to address the two real problems we face today — health care costs and jobs.
Medicare and Medicaid are 20 percent more cost efficient than private health insurance. But health care costs are soaring. According to the nonpartisan Congressional Budget Office, we could lower health care costs by $500 billion over the decade if Medicare could negotiate the price of prescription drugs. Trillions of dollars could be saved if we changed from a “fee-for-service” health care system to one that paid on the basis of results. This is how we can bring down deficits.
Another way to lower deficits is by creating jobs. We have huge infrastructure needs in Lewis County and all around the state. Passing the American Jobs Act would help support the private sector of our economy and put more folks to work. Going over the cliff does not mean disaster, if we let the wealthy pay their fair share of taxes, tackle health care costs, and create jobs.
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Jeff Johnson is president of the Washington State Labor Council, AFL-CIO.
