Social Security Hike Reverses Obama Era Problem

The announcement scheduled for later this month that seniors can expect about a 2.8% cost of living (COLA) increase in their social security (following 2018 2% increase) is another indication that the Obama era practice of diverting funds meant for older Americans to other groups is coming to an end.

As America’s national debt rapidly soared to the $20 trillion mark under the prior Administration, key needs such as defense and the fiscal and medical health of seniors took a back seat to other priorities.

Since the regular program of Cost of Living increases began in 1975, (prior to that increases were provided by legislation) there has never been a period when such adjustments were lower than they were under President Obama. Not once had there been a year in which there was no increase at all. Since 2009, two consecutive years, 2009 and 2010, provided no adjustments, and there was also no adjustment in 2015. Before 2009, the average annual increase was 4.4%; during the Obama presidency, it was 1.7%.

But Social Security was only one area in which seniors were detrimentally affected. In 2012, Americans for Tax reform performed an analysis of the 20 new or higher taxes resulting from Obamacare, and pointed out the five that most directly harmed seniors:

Individual Mandate excise tax penalty. Many seniors face a coverage gap between retirement and Medicare eligibility. Obamacare raises taxes on these younger seniors by punishing them if they don’t purchase “qualifying health insurance.” Set to go into effect in 2014, the excise tax penalty for mandate non-compliance will in 2016 rise to 2.5% of adjusted gross income for a senior couple (or $1390 for those making less than $55,600). Why does Obamacare raise taxes on seniors just as they are entering retirement?

“Cadillac Plan” excise tax. Starting in 2018, Obamacare imposes a whopping 40% excise tax on high-cost (“Cadillac plan”) health insurance plans. This is defined for seniors as a plan whose premiums exceed $29,450 for a family plan, or $11,500 for a single senior. Seniors often face higher costs in health insurance premiums due to chronic health conditions and other risk factors. This tax is almost exclusively a tax which will fall on seniors with the greatest health insurance needs.

Dividends tax hike. Starting in 2013, the top tax rate on dividends is scheduled to rise from 15% today to 39.6%. In addition, Obamacare imposes a dividend “surtax” of 3.8% on families making more than $250,000 per year. That would create a top dividend tax rate of 43.4%, nearly triple today’s rate. This will fall very hard on seniors. According to the Tax Foundation’s analysis of IRS data, 70% of households over age 55 receive dividend income. 71% of all dividends paid flow to these households. To raise taxes on dividends is to raise taxes on seniors.

Medical device excise tax. Obamacare imposes a new excise tax on medical device manufacturers in 2013. These companies will surely build the cost of this new tax into the price of what they sell. Who buys medical devices? Who buys pacemakers, wheelchairs, and other costly medical devices? Seniors do.

Reduce allowable medical itemized deductions. Under current law, medical itemized deductions can be claimed on tax returns, but they must be reduced by 7.5% of adjusted gross income. Obamacare increases this “haircut” to 10% of AGI in 2013. This will mean that millions of Americans claiming medical itemized deductions will no longer be able to. The same IRS data as above tells us that 60% of all tax returns claiming this deduction are over age 55.

An Investors study noted that “One of the most important sources of funds that are being used to pay for ObamaCare comes from cuts in future Medicare spending. In 2016 Investors also study npointed out that “A letter issued by the Medicare Office of the Actuaries at the time ObamaCare became law warned that Medicare fees paid to doctors and hospitals will fall increasingly behind what other payers will be paying in future years – threatening access to care. That warning was repeated in the latest Medicare Trustees report, which warns that by 2040 half of all hospitals, 70% of all skilled nursing homes and 90% of home health care services will not be able to survive under Medicare’s increasingly skimpy fees.”

The Galen Organization summarized Obamacare’s impact on Medicare:

“ObamaCare doesn’t modernize the program or improve it for seniors. ObamaCare’s solutions are detrimental to today’s seniors:

The law takes $716 billion out of Medicare over 10 years to help fund a huge expansion of taxpayer subsidies for health coverage.
It creates an unelected, unaccountable board — the Independent Payment Advisory Board — with powers to limit payment and access to health care for seniors and which will become Medicare’s rationing board. ObamaCare drives your doctors and hospitals out of Medicare
The law makes deep cuts in payments to physicians treating Medicare patients.
Cuts to Medicare providers mean it will be harder for seniors to find doctors and hospitals to treat them.
Doctors are already threatening to drop out of the program in large numbers if the payment cuts go into effect.
Medicare actuaries predict that more than 40% of Medicare providers eventually will either go out of business or stop seeing Medicare patients altogether if the law’s cuts take effect.”

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While the deficient Social Security COLA’s have been addressed, other Obama-era challenges to seniors, particularly those in Obamacare, still remain unresolved.

Illustration: Social Security card (Social Security Administration)

Quick Analysis

Part 3: AMERICA’S STRATEGIC POSTURE

We conclude our summary of the urgent recommendation of the Congressional Committee on the nation’s Strategic Posture NON-NUCLEAR CAPABILITIES The Commission recommends: The United States urgently deploy a more resilient space architecture and adopt a strategy that includes both offensive and defensive elements to ensure U.S. access to and operations in space. The United States and its Allies take steps to ensure they are at the cutting edge of emerging technologies – such as big data analytics, quantum computing, and artificial intelligence (AI) – to avoid strategic surprise and potentially enhance the U.S. strategic posture. The United States prioritize funding and accelerate long-range non-nuclear precision strike programs to meet the operational need and in greater quantities than currently planned. x America’s Strategic Posture The United States develop and field homeland IAMD that can deter and defeat coercive attacks by Russia and China, and determine the capabilities needed to stay ahead of the North Korean threat.4 The Secretary of Defense direct research, development, test and evaluation into advanced IAMD capabilities leveraging all domains, including land, sea, air, and space. These activities should focus on sensor architectures, integrated command and control, interceptors, cruise and hypersonic missile defenses, and area or point defenses. The DOD should urgently pursue deployment of any capabilities that prove feasible. The Secretary of Defense and the Military Departments transfer operations and sustainment responsibility for missile defense to the appropriate Military Departments by 1 October 2024. This will allow the Missile Defense Agency (MDA) to focus on research, development, prototyping and testing. ALLIES AND PARTNERS The Commission believes it is in the U.S. national interest to maintain, strengthen, and when appropriate, expand its network of alliances and partnerships. These relationships strengthen American security by deterring aggression regionally, before it can reach the U.S. homeland, while also enabling U.S. economic prosperity through access to international markets. Withdrawing from U.S. alliances and partnerships would directly benefit adversaries, invite aggression that the United States might later have to reverse, and ultimately decrease American, allied, and partner security and economic prosperity. Further, the Commission believes that our defense and the defense of the current international order is strengthened when Allies can directly contribute to the broader strategic posture, and the United States should seek to incorporate those contributions as much as possible. The Executive branch should recognize that any major change to U.S. strategic posture, policies, or capabilities will have great effect on Allies’ perceptions and their deterrence and assurance requirements. As a result, any changes should be predicated on meaningful consultations. RISK REDUCTION The Commission believes it is of paramount importance for the United States to work to reduce strategic risks. This involves activities and programs across the U.S. government, including in nonproliferation and arms control, as well as maintaining strong, viable, and resilient military forces. The Commission recommends that a strategy to address the two-nuclear-peer threat environment be a prerequisite for developing U.S. nuclear arms control limits for the 2027-2035 timeframe. The Commission recommends that once a strategy and its related force requirements are established, the U.S. government determine whether and how nuclear arms control limits continue to enhance U.S. security. The Commission recommends that the United States continue to explore nuclear arms control opportunities and conduct research into potential verification technologies in order to support or enable future negotiations in the U.S. national interest that seek to limit all nuclear weapon types, should the geopolitical environment change. Where formal nuclear arms control agreements are not possible, the Commission recommends pursuing nuclear risk reduction measures to increase predictability and reduce uncertainty and the chances for misperception and miscalculation. The 2009 Congressional Commission on the Strategic Posture of the United States reported that the United States was at “a moment of opportunity, . . .but also a moment of urgency” – because the security environment had improved and the threat of nuclear proliferation was the principal concern. Since 2009, the security environment has dramatically worsened and new existential threats have emerged. This Commission concludes that the United States now faces a highstakes challenge that requires urgent action. Nevertheless, the Commission has not seen the U.S. government demonstrate the urgency and creativity required to meet the challenge. Nothing other than synchronized steps taken by the Executive and Legislative Branches will craft the strategy and build the posture the nation requires. The challenges are unmistakable; the problems are urgent; the steps are needed now. Photo: An Air Force Global Strike Command unarmed Minuteman III intercontinental ballistic missile launches during a test at Vandenberg Space Force Base (DoD)