Carol Shea-Porter - Don’t Scrap Our Social Security

Editors Note: Due to vacation schedule this OP-ED piece wasn't published when received. NHInsider staff decided it was still relevant so we are publishing it today!

Social Security had its 75th Birthday last year. While Americans celebrated this vital program that has provided economic support and dignity to seniors, disabled people, and children of deceased workers, there were members of Congress and a political party who were laying plans to change and jeopardize the program. The Republican Party leaders, who previously tried to privatize Social Security in 2005, decided to "save" Social Security from the very people who have spent a lifetime paying into the program. Their Chairman of the Budget Committee introduced "The Path to Prosperity," which included raising the qualifying age and, yes, privatizing it. It is particularly grating to read the language from Budget Chairman Paul Ryan's plan—"Further, even if the current system could be sustained, it is no longer a good deal for American workers"—because he, more than most, knows better. His father died young, and Paul Ryan rightfully became eligible for help from the federal government. He collected Social Security benefits as a minor. He saved those federal government checks to pay for college. This shows why we need to protect Social Security from the now educated and financially secure Paul Ryan and his party—because Social Security provides economic support and, for the young, economic and educational opportunity. 

Here are some facts about Social Security. First, more than 90% of Americans 65 and over receive Social Security. More than 6 million children receive benefits due to a parent's death or disability, and a deceased worker's spouse collects if there are children under the age of 18.  Millions rely on it to survive. While almost half of all seniors would be poor without it, women would be hurt even more than men, because women earn lower wages and generally live longer than men. More than half of all elderly women would live in poverty.

This would have an enormous economic impact on middle class families with aging parents. Already struggling adult children would have to care for themselves, their kids, and their parents.  Without Social Security, families would have to make devastating decisions about living arrangements, health care, education, transportation, etc, as they tried to divide resources between the young and the old. Also, reducing future benefits or privatizing Social Security would not be a "shared sacrifice.” As former White House Press Secretary Dee Dee Myers recently wrote in Vanity Fair, "The top 1% of Americans now take home nearly a quarter of all income and control more than 40% of the country's wealth—roughly the same as the bottom 90%." Not exactly shared sacrifice. Therefore, we must stop Paul Ryan and New Hampshire's Republican Representatives from dismantling this program.  

Both of our Republican Representatives have attacked Social Security. One supported the Bush plan. The other said, at a May 2009 rally with Glen Beck's 9/12 group, "…future generations should seek different private sector solutions and have personal responsibility start to lead the way."

Why are Republicans doing this? Is there really a problem with Social Security? Right now, there is actually a surplus. As Jacob Lew, director of the Office of Management and Budget, wrote in USA Today on 22/21/11, "...the problem is not with Social Security, but with the rest of the budget. In 2001 and 2003, Washington cut taxes for the wealthiest Americans and later expanded Medicare without paying for it. Blaming Social Security for our fiscal woes is like blaming you for not saving enough in your checking account because the bank lost all depositors' money."

Social Security will have problems paying at today's rate in 26 years, but it can be fixed if the Congress would do what Reagan did in 1983—fix it. First, raise the cap. Right now, people who earn under $106,800 pay tax on every single dollar they earn. People who earn over that do not pay on every dollar, just the first $106,800. This amounts to a hidden tax cut as their income rises. This is not fair. We also need to stop the Social Security tax “holiday” that was enacted last year, which reduced workers' payments 2%. This denies the fund essential resources.

As President Roosevelt said about Social Security in 1941, “We put those pay roll contributions there so as to give the contributors a legal, moral, and political right to collect their pensions and their unemployment benefits. With those taxes in there, no damn politician can ever scrap my social security program.”  We need to tell our leaders again--don't scrap our social security program!

More Retirement Question and Answers

By NH Senator Jeb Bradley

Many folks have written me, attended forums I have held or called with more questions on retirement reform. In particular people always ask what has caused the New Hampshire Retirement System’s (NHRS) $4.7 billion unfunded liability and how significant is this under-funding.

In a previous column I answered how the NHRS got into the current predicament. But it bears repeating, as some folks maintain the fault is exclusively employers (cities, towns, counties, and the state) for underpaying retirement costs. Here's what I previously wrote:

“In the early 1990s during another difficult recession, an actuarial accounting methodology was put in place to save employer costs. Its intent was temporary. Unfortunately this methodology remained in place until 2006 and when changed, the true picture of a $2.75 billion unfunded liability was revealed. During that period employers significantly underpaid retirement costs, though the rates were set by the NHRS and Legislative policy.” 

Please note that the $2.75 billion unfunded liability of several years ago has grown to today’s $4.7 billion.

There is no question that public employers – who after all consist of taxpayers --- underpaid retirement costs for a lengthy period due to an accounting methodology adopted by the Legislature years ago in my first term. No one denies it’s a major cause of today’s problems and that accounting methodology has subsequently been changed by the Legislature.

Many people simply want to blame employers for the current ills of the NHRS --hoping that alone will kill retirement reform. But they ignore two other major factors that produced the $4.7 billion unfunded liability. As Paul Harvey used to say --- And Now The Rest of the Story.

First, according to the most recent Summary Annual Financial Report of 2010, approximately $900 million was transferred from the main pension account to “support extra benefits for members.” The report continues “those transfers totaled approximately $900 million substantially reducing the ability of the NHRS to cushion significant market declines such as those in 2000 and 2009.” www.nhrs.org/documents/summaryreportfinal.pdf (page 8)

The effect of these transfers cannot be underestimated. Given the compounding nature of $900 million, these dollars transferred from the main pension account represent much more than $900 million.  Thankfully Governor Lynch signed legislation several years ago that curtailed further transfers. However, labor officials have sued to allow continued transfer of funds --turning a blind eye to the damage done to the pension system upon which retirees depend. 

Secondly, while money was being diverted to support extra benefits, the investment return assumptions of the NHRS did not match expectations.  Investment assumptions set by the NHRS Board have been 8.5%. However the 20 year actual returns have been 7.8%. More alarmingly, the returns of the last 10 years have been a paltry 2.3%. While the investment assumptions have recently and correctly been lowered, the long term under performance of investments in the NHRS has also had a major impact on NHRS’s current predicament.

These two factors cannot be glossed over or wished away by those who are primarily blaming the cities, towns, counties and the state. Furthermore, blame is not going to solve the reality of the $4.7 billion under-funding confronting the NHRS.

How big are the problems of a $4.7 billion unfunded liability? Some people claim that the unfunded liability is significantly lower than $4.7 billion. This is just not true.

The $4.7 billion figure comes from the most recent 2010 Actuarial Valuation Report of the NHRS actuaries Gabriel Roeder and Smith: www.nhrs.org/documents/2010_actuarial_valuation_final.pdf (Page 1 & 2 of the Executive Summary). The current pension liability is $3.72 billion and the medical subsidy liability is $976 million for the total NHRS unfunded liability of $4.7 billion. The NHRS unfunded liability in the previous year was $4.03 billion, consisting of a pension shortfall of $3.54 billion and medical subsidy shortfall of $496 million.  The pension liability alone is projected to grow next year by $164 million and projected to continue to grow for another 12 years. (page 17)

Most importantly, this unfunded liability is having a profound impact on cities, towns, counties and the state.  How? Just as retirement costs for employers were artificially low for years they are now spiking and will continue to further spike. In two years employers, and that means taxpayers who are primarily property taxpayers, will pay retirement costs that are 13.61% of salary for teachers, 29.2% for police officers, and 33.9% for firefighters. When lower investment assumptions are accounted for, rates will climb another 10% to 16% depending upon employment category.

These spiking rates along with higher health care costs have dramatically driven up the cost of public employment.  Cities and towns have been forced to make painful decisions. In my area, Governor Wentworth Regional School District teachers and administrators agreed to salary reductions of five less paid days to prevent job losses. They should be commended!

Nashua has cut its budget by $1.7 million and sent layoff notices to 20 teachers. Manchester has proposed eliminating 200 paraprofessionals from classrooms, 17 firefighters, and has 20 vacant positions in the police department. While retirement costs are not the only factor driving up budgets, they are a major factor. 

Lastly, how bad are NH’s problems relative to other states? According to an April 29th article titled “10 States Where Pensions Are Running Out of Money” published by 24/7 Wall Street, New Hampshire’s Retirement System ranked third worst in the nation.

This retirement debate is occurring against the backdrop of beleaguered taxpayers and continued economic anxiety. I always ask opponents of retirement reform what is their answer to the steep and long term increases looming for property taxpayers and the impact these higher costs will have on job growth and possibly the state’s bond rating. Thus far I have not heard any answers.

Complaining is easy, but it’s still not a solution. 

Keeping Promises

By Jeb Bradley March 30, 2011

Over the past three months members of the New Hampshire Senate have focused on passing legislation that will bring expenditures into line with revenues, reform antiquated programs, enhance public safety, protect both the environment and property rights, and improve the business climate.

Noteworthy legislation includes:

Senate Bill (SB)-183 introduced by Senator Jim Rausch and Senator Nancy Stiles reforms the current education funding formula that pits town against town and has growing unsustainable costs. Senators Rausch and Stiles devised a new formula that assures that every community receives the same level of education funding next year, prevents funding decreases to nearly 125 towns, and blocks the return of donor towns. It will also reduce state expenditures by $140 million by level funding the formula. This critical legislation passed the Senate on a bi-partisan voice vote and enjoys the support of Governor Lynch.

I sponsored SB-3 which addresses the New Hampshire Retirement System’s dangerous unfunded liability of $4.7 billion. It will ensure that the pension system is viable for current and future retirees, while lowering skyrocketing rates that cities and towns (taxpayers) must pay for employees, teachers, police and firefighters. Current retirees will not be affected. Employees close to retirement will in most circumstances only experience increased contribution rates. Some younger employees may have to work one to four years longer and be unable to add items such as unused sick and vacation time to pension calculations. While most employees affected by these changes have concerns and many have expressed those concerns to me personally, everyone realizes the current unfunded liability and corresponding increase in property taxes is unsustainable. No one understands this reality better than struggling taxpayers. SB-3 passed the Senate 19-5.

Senator Chuck Morse sponsored CACR-5 (a Constitutional Amendment) to give New Hampshire governors line-item veto power. New Hampshire is one of a handful of states whose governor does not have the ability to veto extraneous spending. The proposal would include a 2/3rd override provision by the Legislature and could only be used to eliminate spending items – not language in legislation. Given that spending increased 24% over the previous four years, the line-item veto would have proven a useful tool. CACR-5 passed the Senate 19-5, must still be adopted by the House and then approved by 67% of voters in November 2012.

Senator Bob Odell sponsored SB-1 which restores parity between public employees and employers in contract negotiations by repealing the so called “evergreen” law. “Evergreen” allowed step pay increases to continue even after the expiration of a contract. This provided a powerful disincentive against employees negotiating new contracts. Cities and towns can still agree on an “evergreen clause” if local voters approve it. SB-1 passed 19-5 in the Senate, 282-70 in the House, and Governor Lynch allowed it to become law without his signature. It should be noted, amidst all the recent controversy about collective bargaining, the focus of SB-1 is very limited and does not undermine public employee’s rights to organize collectively in a union.

Senate President Peter Bragdon sponsored SB-52 which corrects the ill-fated provisions of SB-500 which allowed early release of violent offenders and took away discretion of the Parole Board by limiting parole violations to no more than a 90 day return to prison.  Bragdon’s legislation gives the Parole Board the ability to block early release and allows the board far greater latitude to return repeat offenders to prison for more than a 90 day “slap on the wrist.” This legislation ends the minimal administrative supervision for high risk sexual predators that have completed their prison terms and replaces it with active supervision. SB-52 passed the Senate on a bi-partisan voice vote.

I sponsored SB-154 to clarify the Shore Land Protection Act. SB-154 maintains important environmental and water quality protections while also respecting the rights of property owners. It is supported by the NH Lakes Association, the Department of Environmental Services, home builders and property rights advocates. It passed the Senate on a bi-partisan voice vote. If enacted into law SB-154 will simplify the permitting process and give a boost to the depressed construction industry in the Lakes Region.

I also sponsored SB-147 which will implement managed care for Medicaid eligible residents. Managed care has been utilized by many states to lower the cost of Medicaid (the largest cost center in NH government) while maintaining quality services. A private entity such as an insurance company competitively bids to serve the Medicaid population and assumes the financial risk. By creating a medical home for patients and better management of chronic conditions, quality care is maintained while costs are curtailed. Governor Lynch has embraced managed care and estimated $33 million in savings in his budget. Savings over time could be far more significant. SB-147 has passed the Senate on a bi-partisan voice vote.

Lastly, I have sponsored SB-125 which would give business owners protection from intrusive Department of Revenue Administration (DRA) audits which often result in assessing the 8.5% Business Profits Tax on much of the compensation a business owner pays him or herself. These audits have increased in scope and frequency, have become an income tax on business owners, and are undermining the ability of NH to attract and retain successful and job producing small business owners. An amendment was added to delay implementation pending resolution of the budget. SB-125 passed the Senate with a bi-partisan 24-0 vote and will, I expect, be supported vigorously in the House.

While Concord headlines often focus on and highlight legislative controversies, the Senate continues to work diligently on the major challenges facing our state, and often in a bi-partisan manner. That is what New Hampshire voters want and expect. It is our job to keep those promises.

Tom Peters "Insanity on Steroids"

July 29th, 2010

Sample from House Budget Hearing
 
Rep Ann Kirpatrick  (Dem) AZ  Told the house that families in her district are forced to live with less every day and they somehow make do. Its time for congress to do the same. She made a motion to amend the appropriations bill by reducing Congressional pay and discretionary spending by 5%. 

Rep John Olver (Dem) MA and others said it was not possible, undoable. Motion failed.

Rep Jim Jordan (R) OH Told the house with a $1.4 Trillion Deficit, $13 Trillion Debt "we need to take steps now to start the process of reducing spending." Made a motion to revert discretionary spending back to 2008 levels.

Rep John Olver (Dem) MA and others said it was not possible, undoable. Motion failed.

Rep Jeff Flake (R) AZ attempted to reach house members by repeating the debt figures and telling the house how they were "so incredibly out of touch with the American families across this country." He made 4 motions to reduce spending on earmarks by $1 million each. For the renovation of a building in Buffalo, NY, for adding more bike paths in Tacoma, WA, for more bike trails in RI and another similar project. \223With our government buried so deep in debt, how can we possibly ask taxpayers to pay for this?\224

Rep John Olver (Dem) MA and others said this was minuscule amounts of money. Cutting these projects will not amount to anything.

Rep Jeff Flake (R) AZ said, If we can't even cut, what you call small amounts, how will we ever deal with the deficit and debt?

Rep John Olver (Dem) MA and others said it was not possible, undoable. Motion failed.

Don't we send addicts to rehab?

Tom Peters:
Ashland, NH

Shameless Mismanagement Abounds

First the so-called “austerity” budget failed and then had to be fixed in a one-day Special Session.  What was discussed in that spectacle were increased taxes and fees previously rejected and the breaking of promises made to grow business in New Hampshire.  This so-called emergency fix, was the direct result of a failure to lead and manage by the administration.  Instead of making hard, but necessary decisions, the majority party opted for their tried and failed song of increase a tax on (this term, quite literally) everything.

As the TV commercial goes, but wait, there is more.  In their rush to tax and spend your dollars, the Administration of New Hampshire took an unprecedented step of immediately applying certain taxes.  That is correct, immediately, with no notice to the Department of Revenue, no notice to retailers, no notice to wholesalers - just tomorrow start paying a tax – and by the way, this taxes is hidden in a bill thick enough to keep a home warm all winter if burned.

In Ways and Means a so-called equity tax on non-smoke tobacco was proposed and, over the objections of many, passed.  That tax was to take place on July 1, meaning that those who collect the tax would have had a least a month to re-mark their product, re-program their check-out scanners, in short there would have been notice, which is only right.  A long time ago St. Thomas Aquinas, Patron Saint of Law Makers, stated that a law that is not published cannot be enforced.  That is fair, equitable and the reasonable process that should be expected of your legislators.

This administration, with a seemingly lack of sense of fairness, or of the rule of law, implemented, overnight, a tax in Section 45 of Special Session House Bill 1 (the fix a broken budget bill).  While I do not subscribe to chew or snuff, nor do I even like cigarettes, I do know right from wrong.  It was and is wrong for the Democrat controlled legislature to pass a bill that immediately imposes as tax, upon signature of the governor.  It is wrong for the Governor to sign such a bill.

Not only was it wrong on the basis of the edict from St. Thomas; it is wrong from a sense of decency and fair play.  It is wrong from an administrative point of view as well.  How can a tax collector be fair and even handed when the Governor forces the tax collector to immediately collect a tax businesses do not even know exists and have not been notified that they would be responsible for collecting from an unsuspecting public?

Our Democrat lead legislature and the Governor’s office did a disservice to the people of New Hampshire when they rammed through an incomplete, un-vetted and unreasonable tax law to fix yet another unreasonable and unsustainable budget bill.  The people of New Hampshire deserve better than this type of mismanagement.

                                                                           -30-  

Jordan Ulery

Hillsborough-27

Hudson, NH