The CEO Plan to Steal Your Social Security and Medicare

By Dean Baker for

Many people are following the presidential election closely with the idea that the outcome will have a major impact on national policy. However, according to Steven Pearlstein, a veteran Washington Post columnist and reporter, it may not matter who wins the election. In a column last week, Pearlstein told readers that the top executives of some of the country’s largest companies are getting together to craft a budget package that they will try to push through Congress and get the president to sign.

While Pearlstein clearly sees these backroom meetings of corporate chieftains in positive terms (he refers to them as “grown-ups” who have been noticeably absent from the conversation about the budget), the rest of us might view this plotting a bit differently. As Pearlstein openly acknowledges, this corporate coup is an end-run around the electorate. As corrupt as the political process may have become, at least we will get a vote in the election. Pearlstein’s plotters are not inviting the rest of us into the conversation.

Many of the same folks who brought the economy to ruin just a few years ago are now going to come up with a plan that is supposed to set the budget and the economy on a forward path. At the center of their proposal are big cuts in Social Security and Medicare.

The most popular Social Security cut among this gang is a reduction in the annual cost of living adjustment (COLA) by 0.3 percentage points. They are betting that are ordinary people are too dumb to notice this cut since it is a relatively small amount each year.

However, the effect of this cut accumulates into a much bigger deal over time. After ten years, it is roughly 3 percent; after 20 years, it would be close to 6 percent; and after 30 years, it would be close to 9 percent.

If we assume that an average retiree collects benefits for 20 years, this implies an average cut in their benefits of 3 percent. Is that a big deal? Well, there are a lot of would-be Social Security cutters who are screaming bloody murder because President Obama wants to increase the tax rate on a portion of their income by a bit more than 3 percentage points. This means that if President Obama’s proposal to increase taxes on the richest 2 percent is a big deal, then the plan to cut the Social Security COLA is also a big deal.

The corporate CEO crew is also considering a plan to raise the normal retirement age for Social Security to 69. And, they want to reduce the benefit formula for high-income workers, which, incredibly, they define as people who earn more than $40,000 a year.

Their main trick for Medicare is to raise the age of eligibility from 65 to 67. Apparently, our CEO gang has not discovered that the health insurance market for older people is a disaster. They also continue to promote the misconception that the problem is Medicare and Medicaid.

These programs are actually much more efficient than private insurers. The real problem is our private-sector health care system which already costs more than twice as much per person as the average in other wealthy countries, with few obvious benefits in outcomes.

The scary budget projections that our CEOs like to tout assume that health care costs will exceed 20 percent of gross domestic product in a decade. That would imply costs of more than $34,000 for a family of four in today’s economy. And these costs are projected to keep growing through time.

The normal response to this situation would be to focus on the need to fix the health care system. But many of Pearlstein’s CEOs profit from the waste in the health care system, so they would rather cut our Medicare benefits.

So there you have it, the richest people in the country – the big gainers from economic growth over the last three decades – have plans to cut Social Security and Medicare benefits for current and future retirees.

To get some perspective on this story, the typical near retiree has about $180,000 in wealth, including everything, such as the equity in their home, their 401(k) and any other savings. That is what our CEO gang makes in a week. The average Social Security check of $1,200 a month is more than half of the income for two-thirds of seniors and more than 90 percent for one third. Yet, the CEOs think seniors are living too well.

But wait, there’s more. We’re all paying for their campaign to take away our Social Security and Medicare. We do this through several different channels.

First, many of these CEO and honcho types come from Wall Street. For example, Erskine Bowles, the co-chair of President Obama’s deficit commission, is a director of Morgan Stanley in one of his day jobs. Had it not been for the taxpayers’ generosity, the bank that Mr. Bowles directs would have died in the fall of 2008, so it would not be around to pay him his six-figure stipend.

The other way we are paying for this corporate effort to cut our Social Security and Medicare is by virtue of the fact that we allow the CEOs to pay for their campaign with pre-tax dollars. If most of want to give $100 to a political candidate or political cause, we have to first pay taxes on our income and then make the campaign contribution out of what we have left.

However, if you are a CEO who wants to cut Social Security and Medicare, the Supreme Court says you can make your contributions with pre-tax dollars, in effect deducting this contribution as if you were giving money to charity. According to Pearlstein, the CEOs’ “charitable” contribution for cutting Social Security and Medicare will be on the order of $278 million.

For most of us, that sum would be real money, but not for CEOs who control trillions of dollars. And with the rest of us subsidizing through our tax dollars this effort to cut our Social Security and Medicare, how can the CEOs not take up Pearlstein’s call?


  1. RD Worley on August 27, 2012 at 3:48 pm

    Great, really clear summary of the present danger to our pathetic social safety net. The 1% clearly intends to push their plans to impoverish the wage earning class regardless of who wins the presidential election.

  2. Bruce on August 27, 2012 at 4:35 pm

    Buck (the ‘Ranklin’ DeMan0 Rusevelt COMPROMISE) Farry! : You will not seek, and We Will NOT ACCEPT CUT$ to Social Security, Medicare and/or Medicaid if you expect another term as DESPOTUS, you PU$ILLANIMOU$ PU$$YFOODER!

  3. Daniel Murphy on August 27, 2012 at 5:02 pm

    This is obscene. I’m getting to the point where I find it pointless to rebut this type of sociopathic behavior with a reasonable fact based rebuke. Facts are like ‘kryptonite’ to those devoted to organized hatred. These parasites have obviously lost all sense of humanity, apparently wealth based group think is founded within the sewer system like labyrinths of the narcicstic personality. They’re rich so, ‘that must mean it is incumbent upon them to inflict pain into the lives of people that are not’. Committee actions, based upon conceitedness and deceit, mean pain and hardship to the common citizen, and this apparently brings them great pleasure. These lifeforms are other than human.

    • Jeff Joseph on August 27, 2012 at 5:27 pm

      Im so Sick of this BS I nominate DR FLOWERS for Pres.

  4. Lesa OMARA on August 27, 2012 at 5:09 pm

    I am on SSDI from numerous injuries working at a understaffed privately owned hospital conglomerate hiding. Under the robes of the Catholic Church “Sister’s of mercy and Daughter’s of Charity ” Trust me, to the many worker’s injured during their downsizing, they have been neither merciful or charitable. I was talked into signing a Medicare Set Aside Agreement. By my attorney, I have a TBI which caused me to loose my job because I was unable to perform the essential functions of my job. I was a disability rights advocate. I was unable to concentrate and focus on reading client’s case files and match the issuess to the correct regulations and form an argument that made sense. I had held the possion for ten years and my appeals. Briefs had won 16 out of 18 Hearings.
    Before I totally forget the reason for this post, what would these changes mean for people on SSDI and also do to the MEDICARE SET ASIDE AGREEMENT – a program so convoluted that many doctor’s have never heard of it, let alone understand it but if you do it wrong, they cut loft the that Medicare says your worker’s compensati on carrier owes them and Medicare will not cover any of you injured body parts, in my casfor 31: years or $238 thousand dollars, I am 51. Even the administrator s of the. Mean Program hate it.

    of my paying
    out of my own pocket.
    My attorney lied a.d told

  5. Lesa OMARA on August 27, 2012 at 5:24 pm

    I meant to say the proram Administrators hate the MSA agreement. too because it is so difficult to coordinate. So what happens to people. with programs like mine? Have you heard of an MSA Arrangement?
    Lesa Omara

  6. eva on August 27, 2012 at 5:53 pm

    We need a “French Revolution” in America right now! History has proven that little good comes from quietly addressing injustices. “Town Hall” type meetings let the oppressed blow off steam while the power lords are laughing over drinks and dinner afterwards. OFF WITH THEIR HEADS!!!!!!!!!!!!!!!!!!!

  7. Alice Ann Stern on August 27, 2012 at 6:20 pm

    If everyone refused to utilize any credit cards and instead used cash, it would put a huge dent in the banking industry. If everyone decided to stop using all credit cards and to limit business with banks to one day per week, what do you think would happen? As for the private healthcare insurers, if a Super Friday Night ER gathering at every major hospital occurred, it would put a dent in the private for-profit healthcare insurance industry. There can be Super Thursday or Super Tuesday Night ER gatherings. That’s the one thing these for-profit healthcare insurance corporations fear — massive visits to the ER. Put aside eight to ten hours each week to stage a protest against these corporate entities by attending one of your local ER facilities. If everyone did this once per week, the insurance industry would quickly dance to a different tune. Basically, you want to tighten the rope around your victim’s throat until they are suffocating, the victim being the private for-profit healthcare insurance industry. Another way, is to have a wealthy person create a not-for-profit coverage, where the premiums are very cheap, forcing the cost of coverage to go down very rapidly.

  8. Alice Ann Stern on August 27, 2012 at 6:24 pm

    ER Super Thursday Night! How about ER Month of October? After all, October is a very popular month for AIDS and Lupus patients. Bring some books, mini DVD player, knitting, etc. You will be surprised how fast eight hours can go by sitting and knitting and watching what’s going on. And the arguments about one’s insurance are really fun, especially when you moan and groan and threaten….. If the corporations can do it, so can we.

  9. Alice Ann Stern on August 27, 2012 at 6:32 pm

    PS: As a lupus patient, I actually frustrated my insurance providers so much that they sent a representative to my residence to threaten me in an attempt to coerce me into not seeking treatment. Didn’t work. This is war, my friends — nothing less, nothing more. Instead of shooting each other, I would strongly suggest identifying the enemy and taking it out once and for all. In north Jersey, one sees new estate homes popping up with each day. These homes are owned by the insurance and banking executives. These homes are extremely garish. Another giveaway to these low class new money types, who are stealing from you to get rich quick, is their homes look like a series of four-bedroom colonial homes taped together without any architectural continuity. These estate homes are now taking over the blue-collar middle class neighborhoods of northern New Jersey. The rich folk (new money) are literally knocking down the affordable houses of the middle-class to not-so-middle-class to build their estates. No more Pinies in New Jersey, because the new money wealth is knocking these working class neighborhoods down to build their estate homes just like these people bought up the farms on which to build their estates, while claiming to be building a new form of a farm to preclude having to pay property taxes like everyone else does. The wealthy new money doesn’t pay taxes, including property taxes.

  10. ILONA ANDERSON on August 28, 2012 at 2:14 am

    I am voting for Independent Presidential Candidate Charles Harvey.

  11. Pat on September 29, 2012 at 11:03 am

    Americans are patriotic to fight against illegitimate government designed to empower corporations to be dictators indirectly for what Congress could not do directly – as dictators of illegitimate government.

    Founders protected against dictators with representative government, and against military dictatorship by not having standing armies as the coercion arm of Presidents who would use them in that manner. The founders never contemplated organizational (church, nonprofit, foundation, corporate lobbyists) dictatorships to be imposed by indirect means. While it might have been obvious by their intent to deter dictatorship altogether, lawyers have undermined the spirit of the Constitution to provide a means for illegimate government to take effect, even while the rhetoric of representative democracy has been sustained. Americans have an unfinished Revolution and an unfirnished Civil War in this regard, and they are losing out to Corporate and organizational self interests. Not even the Supreme Court is on their side – as viewed from the Citizens United decision which was allowed to stand, the abuse being instinctual and obvious.