Richard Kirsch

Roosevelt Institute Senior Fellow

Recent Posts by Richard Kirsch

  • Courageous Boeing Workers Say No to Corporate Extortion

    Nov 18, 2013Richard Kirsch

    By rejecting a contract that amounted to corporate extortion, the Machinists Local 751 at Boeing have taken a stand for middle-class workers all over the country.

    In a remarkable act of courage and solidarity with the next generation, last week Boeing workers in Seattle soundly rejected corporate extortion, by voting down a contract which traded job guarantees for concessions that would severely erode the pay and benefits of younger workers. In doing so, the members of the Machinists are risking their jobs to save an America built on the middle class.

    By rejecting a contract that amounted to corporate extortion, the Machinists Local 751 at Boeing have taken a stand for middle-class workers all over the country.

    In a remarkable act of courage and solidarity with the next generation, last week Boeing workers in Seattle soundly rejected corporate extortion, by voting down a contract which traded job guarantees for concessions that would severely erode the pay and benefits of younger workers. In doing so, the members of the Machinists are risking their jobs to save an America built on the middle class.

    The dramatic fight of fast food workers for a minimal living wage, risking their jobs every time they take a day off to demonstrate, is one end of a corporate economy based on low wages, no benefits and no unions. That corporate strategy, aimed at maximizing profits, is destroying America’s middle class, wrecking the engine that powered the U.S. economy.

    On the other end of the middle class are workers like Boeing’s, who have fought together through their union for the good pay, pensions, health benefits and job security that characterized the increased prosperity and lowered income inequality of America in much of the second half of the 20th Century. But despite being a hugely profitable corporation, with dominance in the world aerospace market, Boeing is eager to follow the Wal-Mart/fast-food model of the 21st Century economy.

    Boeing is the aerospace and defense industry’s largest company, with its highest profits. In 2012 just the increase in Boeing revenues alone, $13 billion, would be equivalent to the 15th largest company in the industry. With a $319 billion backlog of orders  - about 3,700 planes – the company is set for years and is outpacing its only competition, Airbus. Last year, Boeing made $6.3 billion in profits and rewarded its CEO $27.5 million in compensation, a 20% hike from the previous year.

    Historically, Boeing’s Seattle workforce has shared in that wealth. With a 100-year history in the Puget Sound region, Boeing is still the area’s largest employer, its 70,000 employees dwarfing the 40,000 who work for Microsoft. Boeing workers are anchors of Seattle communities, both economically and civically.  And with good schools and colleges, transportation, and stable communities, the Seattle area has provided key public structures that have enabled Boeing to prosper. 

    But none of that matters – the high profits, the educated workers, the civic history – to a modern corporation that is driven only to maximize profits for its shareholders and pay for its top executives. Boeing moved its headquarters to Chicago in 2001 and decided to build its new 787 Dreamliner in South Carolina, with the first planes rolling out in 2012, assembled by 6,000 workers who earn $15 per hour, almost 50% less than what Washington assembly line workers earn.

    Early this month, Boeing tried to blackmail both its union members and Washington state. Declaring that it would consider moving assembly of a new line of 777X planes out of state, the corporation asked for mammoth tax incentives and huge concessions on wages and benefits. The Governor and State Legislature caved immediately, passing the largest development tax break for a company in American history, $8.7 billion over 16 years, in a special weekend session. The leadership of Machinists Local 751 also wavered, agreeing to put the contract up for a membership vote, over the objections of most of the union’s management council.

    But then a remarkable thing happened, in an age in which Americans, scared that they will lose what they have left, seem resigned to shrinking pay and disappearing benefits.  A grassroots swell of membership opposition to the contract rose up, leading to 67% of the member rejecting the contract. The members did so with their eyes wide open, understanding that Boeing might not be bluffing and despite the fact that Boeing combined bribery with their extortion; the contract would have provided a $10,000 signing bonus to each worker. So why did they show such resolve?

    In making their case, the members who organized against the contract focused on the fact that they would be giving up “hard fought contract negotiations and strikes by generations of Fighting Machinists that came before us. ” They warned, “Boeing is hoping you will deny the next generation many of the benefits we have today.”

    While the proposed contract came with skimpy pay increases and benefit cut-backs for all workers, younger Boeing workers and new hires would have been hit the hardest. Instead of a steady progression to higher wage rates as workers stayed with the company and acquired new skills – which is what Boeing contracts have guaranteed for years – under the proposed contract, recent hires and new hires would be locked into low pay, with glacial increases. The contract would have frozen current pensions and replaced future pensions with a 401K, the defined-contribution accounts that have no guaranteed pay-out and are subject to market risk. Boeing would have been allowed to transfer money from the over-funded workers’ pension fund to the under-funded executive retirement fund.

    Angered at the company’s “corporate threats and intimidation,” the members declared, “The one thing Boeing can’t take away is our solidarity.”

    Unlike Boeing, which has no allegiance to anything but the bottom line, the workers care about their community. As the 751voteno.com website stated, “We must be prepared for a decision they [Boeing] may make and understand that if they take the work elsewhere, they are responsible for that decision. We just could not destroy ourselves in order to keep the company from making a decision that destroys union and non-union workers alike, our communities and the investors.”

    That statement reminds me of a memorable insight I received in the first lecture of a finance class at the University of Chicago School of Business, delivered by Robert Hamada, a future dean of the School. Hamada pointed out that in the class we would be learning how a firm calculates return on investment (ROI), but that there was no reason that the calculations needed to be applied to ROI for shareholders. The same methods could be used to maximize ROI for workers, the community or society at large.

    As a society, we do not have to accept that the mammoth entities that control so much of our economy should operate just to benefit their shareholders. We can require that corporate decision making take into account its impact on its workers, our communities and the broader economy.

    That is what unions have done historically and still do at companies like Boeing, which pay high union wages, and in countries that support high rates of unionization.  To give workers a say in decision making, German corporations are required to have works councils, which have union members sharing in decisions – which the UAW is now trying to win in a Volkswagon plant in Tennessee –  and union representatives have the right to sit on corporate boards of directors. 

    Two years ago there was a huge uproar from conservatives when the National Labor Relations Board accused Boeing of moving to South Carolina in 2009 because of anti-union bias, which is prohibited under the National Labor Relations Act. The Board was roundly attacked for second guessing a corporate decision on where to locate jobs. But the Board’s action was based on a Boeing memo, which admitted “the only consistent advantage attributed to Charleston was the ability to ‘leverage’ the site placement decision toward ‘rebalancing an unbalanced and uncompetitive labor relationship.’” The Board dropped the case after the union and company agreed to a new labor contract, the very one that Boeing now wants to replace with the concessions that the union’s members just rejected.

    Part of the controversy around the Board’s decision was its novelty; cases are rare because it is difficult to prove that a company made relocation decisions based on anti-union bias. If we are going to reign in corporate destruction of wages and communities, we should instead imagine a labor law in which corporations are not able to expand into non-unionized facilities and make long-term investment decisions at the expense of jobs at already unionized facilities. These and other changes aimed at giving workers a powerful role in corporate governance are needed to balance the grip that corporate America now has on our economy and democracy.

    We will find out in the next year whether Boeing is bluffing or serious. Production problems at the South Carolina plant give the union some hope that Boeing might return to the bargaining table, although only after looking to see what they can extort in concessions for anti-union states.

    But regardless of where Boeing builds the 777X, the fight for an America in which hugely profitable corporations – whether it be Wal-Mart, McDonald’s or Boeing – share their wealth with their workers and their communities is just heating up. The bold vote by Boeing workers, like the wave of fast food strikes, are encouraging signs of a new movement of workers, supported by our communities, to build an America that again promises broadly based prosperity. 

    Richard Kirsch is a Senior Fellow at the Roosevelt Institute, a Senior Adviser to USAction, and the author of Fighting for Our Health. He was National Campaign Manager of Health Care for America Now during the legislative battle to pass reform.

     

    Boeing airplane landing image via Shutterstock.com

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  • President's Insurance Announcement Keeps Eyes on the Prize

    Nov 14, 2013Richard Kirsch

    By allowing people to keep their current plans for another year, even if those plans are not compliant with the Affordable Care Act, the President has retained a focus on the most important thing: insuring more Americans.

    By allowing people to keep their current plans for another year, even if those plans are not compliant with the Affordable Care Act, the President has retained a focus on the most important thing: insuring more Americans.

    President Obama’s move today to allow people to keep their current insurance plans for a year, as long as they are told that they may be able to get better coverage at a lower cost from the new exchanges, is smart politics with little likely policy damage. It keeps the eye on the prize: getting people enrolled. That is exactly why Republicans are likely to balk.

    For years the GOP has been throwing bombs at the Affordable Care Act (ACA) based on groundless talking points (a government takeover) or pure lies (death panels). I have always had confidence that as the law was actually implemented, and those charges demonstrated to be just hot air, that they would lose any punch beyond the hard-right base. My worries have always been about those who would see themselves as being hurt  (mostly by having to pay more than they can afford for coverage) when the law began to be implemented. Those are real people with real stories. The “if you like it you can keep it” firestorm is the first explosion of that fear.

    While the fact is that most people in the individual market will do better under the ACA’s new exchanges – once they are able to get into the enrollment system and apply for subsidies – there will be some people, mostly young, healthy, with good incomes, who would prefer to keep the coverage they have. And, as I wrote last week, since bad news is both more prevalent and more powerful than good news, their stories could threaten to define the law. By discrediting the ACA, it could also suppress enrollment, particularly given the botched rollout of Healthcare.gov.

    Democrats on the Hill are a panicky lot, driven to over-react to many issues that Americans outside of the Beltway ignore. But in this case, they were right to be concerned about not responding to what people most fear about health reform, that change will threaten what they now have. It was the power of that fear which led to the “if you like it you can keep it” promise in the first place.

    While the President’s credibility has sunk, he will not be on the ballot in 2014, but Democrats in Congress will. One of those Democrats, Senator Mary Landrieu of Louisiana, hit on a solution quickly. Landrieu has always been a consistent supporter of health reform and, despite representing a Red state, was never someone we were very concerned about losing in the legislative fight over the ACA. She deeply believes that people in her state should have health coverage. She stepped up last week with a bill that would allow people who are already covered to keep their insurance, but requires their insurance companies to tell them what ACA guaranteed benefits they won’t get with their current coverage and how to apply for coverage in the exchanges. Her proposal will make up for the misleading cancellation announcements sent out by insurance companies, which often have not told their policy holders that better, subsidized coverage might be available.

    Today Obama implemented Sen. Landrieu’s proposal with one major change: his rule would only extend the coverage until the end of 2014, consistent with other delays in implementation, such as the employer mandate. His goal is to get over this current hurdle and then continue to move as many people into the exchanges as possible.

    The President’s new rule is likely to be where the policy settles, but it is not likely to end the Congressional debate. The Republicans will seek to keep the issue alive by voting to approve a bill sponsored by House Energy and Commerce Chair Fred Upton, which would not just grandfather existing policies – the President’s promise – but open them up to more people. And that bill would leave out the information about the better, more affordable exchange policies in the Landrieu legislation and Obama rule.

    Democrats may decide they need to offer a legislative alternative to the Upton bill, which could be the Landrieu proposal. The policy concern with the Landrieu proposal is that premiums will rise and the exchanges will be harmed, if the healthiest people stay out, which is why Obama wants to limit the extension to one year. While that is certainly better policy, if Democrats go the Landrieu route it won’t be cataclysmic. Fairly quickly, the number of people left with their original policies will shrink as they get older and sicker and their insurance premiums rise. And as the exchanges grow and policies outside the exchanges dwindle, more insurers will drop coverage outside the exchanges all together.

    Will Republicans accept this compromise? Of course not. Everything they’ve done for the last five years demonstrates that they would rather try to keep the issue alive politically than address people’s problems.

    The President’s move allows him and Democrats to take the high ground. The most important task – to build a solid political foundation for the Affordable Care Act and realize its purpose – is getting people more people enrolled. The experience in Massachusetts demonstrated that low initial enrollment numbers are to be expected. There is every reason to expect a huge acceleration in enrollment as the web problems get fixed and we get closer to the deadlines. Including Medicaid, there are already more than half a million Americans who will be newly-covered next year. There will be millions more by early in 2014.  And as the opponents of Obamacare and government as a positive force in people’s lives know and fear, in the end, those are the people who will count.  

    Richard Kirsch is a Senior Fellow at the Roosevelt Institute, a Senior Adviser to USAction, and the author of Fighting for Our Health. He was National Campaign Manager of Health Care for America Now during the legislative battle to pass reform.

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  • Story Wars: Why Personal Stories Are Shaping the Health Care Battleground

    Nov 8, 2013Richard Kirsch

    It's natural for negative stories about the Affordable Care Act to have the biggest impact, but media bias is obscuring the facts.

    More than any other public policy issue, health care is very personal. So it is not surprising that personal stories are a central battleground for the public perception of the Affordable Care Act. And it is increasingly clear that this battle will be fought through the prisms of class and race.

    It's natural for negative stories about the Affordable Care Act to have the biggest impact, but media bias is obscuring the facts.

    More than any other public policy issue, health care is very personal. So it is not surprising that personal stories are a central battleground for the public perception of the Affordable Care Act. And it is increasingly clear that this battle will be fought through the prisms of class and race.

    The Affordable Care Act (ACA) would not have become law if it were not for the willingness of survivors of the nation’s health care mess – people who had lost loved ones, fought to get care after an insurance company denial, faced crippling medical costs – to tell their stories to members of Congress and the press. Many members of Congress voted for the bill, despite the political risk, because they were moved by personal encounters with constituents with compelling stories. Many of the most effective spokespeople during the legislative battle over the law were people whose lives and livelihoods had been threatened by our defective health coverage system.

    Now that the central part of the Affordable Care Act is finally being implemented, however painfully and slowly, personal stories are again becoming the focus of debate. The stories that the press has focused on recently have been mostly negative, largely because of three press biases. The first is that “if it bleeds, it leads.” Negative news gets people’s attention, raising people’s fears, a phenomenon with strong physiological and psychological roots that extends well beyond the news. Advocates for passage of the law used that to our advantage when we were chronicling insurance company abuses, but in the new terrain of the law’s implementation, it’s a handicap. Coverage of people successfully getting affordable coverage is not as compelling as that of someone who says she is being forced to pay higher premiums after being told she is losing her existing coverage.

    The second press bias is to take people at their word and not actually investigate them, particularly when they make good news. We have seen a lot of this in the coverage of people who have received letters from insurance companies telling them they are being forced into higher-priced plans.

    Take Deborah Cavallaro, a real-estate agent in suburban Los Angeles, who’s been on NBC Nightly News and Fox. Ms. Cavallaro is losing her current plan, which only covers two doctors visits a year and has a $5,000 deductible. She complained, “I’d be paying more for the exchange plans than I am currently paying,” after an insurance broker told her she would have to pay $478 a month compared to the $293 she now pays. But with a little research, Michael Hiltzik of the Los Angeles Times found that after her income-based subsidy, Cavallaro would pay only $33 a month more for a plan which covers all her doctors visits and has a $2,000 deductible.

    Cavallaro is typical of many of the people represented in the negative stories being run, in that she is white, suburban, and has a middle-class job. Reporters like Jonathan Cohn in The New Republic have explored the shoddy media coverage of other stories whose subjects are similar to Cavallaro.

    Which brings us to the third media bias, focusing on the white middle class. This is a general bias when it comes to the press, particularly when not reporting on government services or crime. In this case, it is a bias that will accentuate the problems with the Affordable Care Act and downplay its benefits to millions. As Cohn points out in another piece, there are some people who will pay more for comparable insurance plans under the new law. This is the small minority of people in the individual insurance market who, because they have been in good health and have enough income to buy insurance, have been able to find decent coverage at a price they can afford. Their good health has shielded them from big premium hikes or losing their coverage altogether, which will happen when they have a serious illness.

    One of the few good news stories I found that focused on someone who will benefit from losing her coverage was about Gail Roach, an African-American woman from Pittsburgh. Ms. Roach is a retired school district employee who will save $500 a month after receiving her subsidy. A diabetes sufferer, she’s been forced to pay a big premium because of her health condition.

    The ACA’s biggest beneficiaries are low- and moderate-income people, including poor people who have been denied Medicaid and people who work at low-wage jobs that don’t provide health coverage, who will now get big enough subsidies in the exchanges to afford coverage.  

    In fact, the biggest group benefiting from enrolling in coverage under the Affordable Care Act are people who are eligible for Medicaid. In Washington State, for example, where the exchanges are working well, there have been 42,605 Medicaid enrollees, compared to 6,390 who have signed up for the exchanges.  A New York Times article on how navigators are helping people to enroll in Kentucky tells the story of several people thrilled to be enrolled in Medicaid.

    The Times article also reveals the bias against people who are on public programs like Medicaid by recounting the story of one "well-dressed woman" in Kentucky:

    She had learned that she would be eligible for Medicaid under the new law, but she was unwilling to enroll because of what she saw as a stigma attached to the program. A substitute teacher, she wanted to know whether she could afford full-priced private exchange plans. “I don’t want to be a freeloader,” said the woman, who asked to be identified only by her middle name, Kay, because she said she was embarrassed about qualifying for Medicaid. “I believe in paying our way in life.”

    There may be a promising ending to Kay’s story. Kay did sign up for Medicaid, saying that she would pay for routine doctor visits herself but have Medicaid as a fall-back if she really got sick. Will the experience of finally getting health coverage change Kay’s views? Will she now be more secure, freed finally from the worries of huge medical debt if she gets seriously ill?

    This gets us back to the personal politics of health care and how they will impact the political debate. Kay’s U.S. senator, Mitch McConnell, who is up for re-election, has already dismissed the success of Kentucky’s launch of the ACA by saying, “Well, 85 percent of the people who’ve signed up in Kentucky have signed up for Medicaid. That’s free health care.” Will Kay want to vote for a guy who will take away her newly found health security?

    The next big political test for Obamacare will be whether it is a defining issue in the 2014 elections. That will depend both on the reality of people’s experiences and what people learn about the law from the media, which will largely be shaped by personal stories. Since the law will have no noticeable impact on the coverage of 85 percent of Americans, Obamacare should not be a big election issue. But we know that opponents will use every negative story to keep the issue alive.

    The most important task for supporters of the law will be to make sure that it does realize its promise of better coverage for millions of people. The more people who get enrolled and find, like Kay, Gail Roach, and even Deborah Cavallaro, that it is good for their health and their pocketbook, the better. Then supporters must forcefully fight to tell the personal stories of their success, even if it is boring, good news, often about struggling working families. 

    Richard Kirsch is a Senior Fellow at the Roosevelt Institute, a Senior Adviser to USAction, and the author of Fighting for Our Health. He was National Campaign Manager of Health Care for America Now during the legislative battle to pass reform.

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  • The Origins of "If You Like Your Health Insurance, You Can Keep It"

    Nov 1, 2013Richard Kirsch

    President Obama used a slight exaggeration to counteract Republican fear-mongering and provide more and better health coverage to all Americans.

    There are good reasons why President Obama’s leading message on health care during the 2008 campaign, often repeated since, was “if you like your health insurance, you can keep it.” That message was created to overcome the fear-mongering that had blocked legislative efforts to make health care a government-guaranteed right in the United States for a century.

    President Obama used a slight exaggeration to counteract Republican fear-mongering and provide more and better health coverage to all Americans.

    There are good reasons why President Obama’s leading message on health care during the 2008 campaign, often repeated since, was “if you like your health insurance, you can keep it.” That message was created to overcome the fear-mongering that had blocked legislative efforts to make health care a government-guaranteed right in the United States for a century.

    Our health is of central importance to our lives, deeply personal to our well-being and those of our loved ones. That concern has translated politically; for decades, people have told pollsters that health care is a top concern. It is why every 15 to 20 years – from 1912 to 2008 – the nation has returned to a discussion about whether and how the government should guarantee health coverage, the debate rising phoenix-like from one spectacular defeat after another. A big reason for those defeats has been that opponents have exploited those deep feelings to scare the public about proposed reforms.

    As one of the people who engaged early on in building the effort that led to the passage of the Affordable Care Act, I am keenly aware of this history. I wrote in 2003 that debates over health care turn dramatically when they move from the problem to the solution. Almost everyone agrees there’s a problem, but when a solution is proposed, people’s first question will be, “how will it impact me?”

    The extensive public opinion research we conducted from 2006 to 2008 emphasized that same point: people would look closely at how any proposed reforms impacted their lives. Yes, Americans are worried about high health care costs and alarmed at the prospect of losing coverage. Yes, they may be unhappy with the quality and security of the coverage they have. But at the same time, they are desperate to hold on to it, because at least it’s something.   

    We also knew that those who wanted to block health care reform would play on people’s fears, a lesson learned most recently in the 1993-1994 fight over the Clinton health plan, in which opponents made wild claims about government bureaucrats coming between you and your doctor and denying you coverage.

    In that context, it was essential to assure the 85 percent of Americans with health coverage that reform would not be a threat. Hence, “If you like your health care, you can keep it.” That message reassured people and let them be open to the rest of the message: proposed reforms would guarantee quality, affordable coverage to everyone and fix the real problems people were facing. After all, the first part of that sentence, "if you like it," implies that lots of people would love to improve their coverage by making it more affordable and secure and by ending insurance company abuses.

    Hillary Clinton’s campaign understood this early on, and she used the message consistently when she talked about health care reform during the Democratic primaries. Soon after she dropped out, Obama made it a key part of his health care message. But the promise that you could keep your health care was more than just a message; for almost everyone, it was an accurate description of the almost identical reform policies proposed by Clinton and Obama, which became the foundation for the Affordable Care Act.

    The ACA preserves (with small but important improvements) the current system of health care financing for the vast majority of Americans: employer-based coverage, Medicare, and Medicaid. Those are the 94 percent of people with coverage for whom the “if you like it, you can keep it” promise is true.

    For the 6 percent of insured who buy coverage on their own, the more accurate message would have been, “If you have good insurance and you like it, you can keep it.” The ACA reforms a corrupt individual insurance market. No longer can insurers turn people down due to a pre-existing condition or raise rates and drop people because they get sick. The ACA bans the sale of plans with such skimpy benefits and high-out-of-pockets costs that they are worthless if someone gets seriously ill.

    As we predicted, the opponents of reform used fear-mongering – death panels, government takeover of health care, and on and on – to try to kill the Affordable Care Act. They are still at it, including cynically jumping on the website’s enrollment problems and now insurance companies sending letters to customers which hide the fact that companies are being forced for the first time to sell a good, reliable product.

    The opponents of reform have used reckless, baseless charges to try to kill reform. I’m glad that President Obama used a slight exaggeration to finally provide secure health coverage for all Americans.

    Richard Kirsch is a Senior Fellow at the Roosevelt Institute, a Senior Adviser to USAction, and the author of Fighting for Our Health. He was National Campaign Manager of Health Care for America Now during the legislative battle to pass reform.

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  • Block a Grand Bargain with Bold Progressive Solutions to Social Security and Medicare

    Oct 21, 2013Richard Kirsch

    Going into the post-shutdown budget discussions, progressives should take the offensive with proposals that would fix problems with Social Security and Medicare without any cuts.

    Going into the post-shutdown budget discussions, progressives should take the offensive with proposals that would fix problems with Social Security and Medicare without any cuts.

    Republicans may not have succeeded in defunding the nations’ newest social insurance program, ObamaCare, but they now are aiming at the foundational programs, Social Security and Medicare. And this time, they’ll have the President on their side. It would be a mistake for progressives to assume that a grand budget bargain will fall apart once again, even if that remains likely. Instead, we need to turn the debate from cutting social insurance to strengthening both the finances and benefits of both big retiree programs. The best way to do that is by championing simple, bold solutions.

    In his post shutdown press conference, President Obama repeated his call for changes in Social Security and Medicare. His 2014 budget included cuts to benefits for both.  That aligns him with House Speaker John Boehner, who called for savings in Social Security and Medicare during the shutdown battle. Senators from both parties have shown their willingness to support benefit cuts as part of a big budget deal.

    Yes, it is likely that the next attempt to reach an overall budget deal will also collapse, as the last ones have, particularly in the beginning of an election year. The biggest barrier to a bad deal up to now has been Democratic insistence, repeated on the same day as the President’s press conference by Senate Majority Leader Harry Reid, that tax hikes – with revenue coming from big corporations and the wealthy –be part of the deal. But if Republicans were willing to close some corporate tax loopholes – which some of their tea party members see correctly as examples of crony capitalism – Democrats would be under tremendous pressure from the President and others in their party to go along.

    Progressives must rely on more than saying “hands off Social Security and Medicare,” although that should remain central to our message. We need a strong offense, to go with that potent defense. By putting forward simple, broadly popular, progressive proposals that actually enhance benefits and add money to Social Security and Medicare, we enable Democratic allies in Congress to set the agenda and counter claims that they are not taking action to address the real solvency problems. And we also help set the agenda for the inevitable future deal to address both programs’ financing.

    Here are two simple, popular, powerful proposals. On Social Security, make the richest 5% people pay into Social Security on all their earnings, just like 95% of workers now do. Use the new revenue to both boost Social Security benefits – which are too low – and extend the solvency of the Social Security Trust fund. On Medicare, slash the cost of prescription drug prices just like the Veterans Administration and all our global competitors do, saving hundreds of billions of dollars in the next decade.

    The Social Security proposal has been introduced in both houses of Congress, with legislation by Senator Tom Harkin of Iowa (S.567) and Rep. Linda Sanchez of California (H.R.3118), which would boost benefits in two ways: changing the way benefits are calculated (designed to particularly help low-and-moderate income seniors) and changing the inflation adjuster Social Security uses to the CPI-E, which more accurately captures what seniors pay. This is exactly the opposite of the chained CPI proposed by President Obama, which undercounts what seniors typically purchase. The legislation raises the money to pay for the benefits and extends the Trust Fund by gradually removing the cap on earnings taxed by Social Security, which is $113,700 in 2013. Doing so would extend the period during which the Trust Fund has enough money to pay all benefits from 2033 to 2049.

    Progressives have long talked about Medicare using its enormous purchasing power to get the same kind of low drug prices paid by the Veterans Administration or every other country on the globe. While estimates of the savings vary, they clearly would be substantial, tens of billions each year, much more than the cuts to Medicare included in the President’s budget. There are two bills in Congress that aim to do this, one sponsored by Vermont Rep. Peter Welch and Minnesota Senator Amy Klobuchar and the other introduced by Illinois Rep. Jan Schakowsky and Senator Dick Durbin. While neither is designed to get the maximum savings – a combination of the approaches taken in each is needed – either would work to make the point that we can strengthen Medicare by stopping the drug companies from ripping off the country.

    But having legislation is really window dressing to the strategy here: offering bold, popular solutions that deal with both sides of the problems facing Social Security and Medicare: benefits that are too small for the retirement security of seniors and the shortfalls in financing of both programs. While elites want to focus on the “entitlement crisis,” the public is well aware of the financial pressures most seniors now face and the looming retirement crisis, and is adamantly opposed to cuts in both programs.

    It is up to progressives, inside and outside of Congress, to seize the moment. It’s a simple message: instead of making painful cuts to Social Security and Medicare we can boost benefits for seniors and make sure that the programs are there for the long term by having millionaires pay into Social Security like everyone else and stopping drug companies from ripping off Americans. 

    Driving this message will turn the grand bargain debate on its head, and will start setting the terms for progressive solutions when Congress does take action on both programs in the next few years. 

    Richard Kirsch is a Senior Fellow at the Roosevelt Institute, a Senior Adviser to USAction, and the author of Fighting for Our Health. He was National Campaign Manager of Health Care for America Now during the legislative battle to pass reform.

     

    Social Security cards banner image via Shutterstock.com

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