The Obama Watch

Obama’s War on America’s Seniors

To him it's payback time -- and worse.

By 9.15.10

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Seniors citizens probably provided less support for President Obama in the 2008 election than any other voter bloc. That reflects the wisdom of age. But for President Obama, apparently it's payback time, because he is conducting a comprehensive economic assault on America's senior citizens.

First He Trashed Medicare

A Democrat campaign theme this fall is that those scary Republicans want to end Medicare as we know it. But that is not possible, because President Obama, Harry Reid, Nancy Pelosi, and the Democrats have already done that, in Obamacare.

The Chief Actuary for Medicare has publicly reported that the Medicare payment rates for the doctors and hospitals serving seniors will be cut by 30% over the next 3 years. By 2019, those Medicare payment rates will be lower than under Medicaid, which leaves the poor often unable to find doctors and hospitals willing to serve them. Medicare's Chief Actuary reports that ultimately under Obamacare Medicare payment rates will be only one-third of what will be paid by private insurance and only half of what is paid by Medicaid. Good luck to Grandma in finding a doctor then.

If you like your doctor, you will be able to keep him, President Obama promised in trying to sell Obamacare to the nation. But the question under Medicare now, after Obamacare, is whether your doctor will be willing to keep you.

Last month's Annual Report of the Medicare Board of Trustees revealed that Obamacare's total cuts to Medicare run to over $1 trillion over the first 10 years of full implementation, and to nearly $5 trillion over the first 20 years. These are cuts for seniors who are already retired!

Ultimately, by the end of the Trustees' Report projection period, Medicare Part A is cut by 60%. Medicare Part B is cut by 43%. Translation: this means the end of Medicare as we know it.

These are all primarily cuts in Medicare payments to the doctors and hospitals for the services, health care, and treatments they provide to the nation's seniors. That includes hip and knee replacements, sophisticated diagnostics through MRIs and CT scans, treatment for cancer and heart disease, and the services and care from the specialists that keep seniors functional and alive. If the government is not going to pay, then seniors are not going to get the health services, treatment and care they expect.

Indeed, the Medicare Chief Actuary reports that even before these cuts two-thirds of hospitals were already losing money on Medicare patients. Health providers will either have to withdraw from serving Medicare patients, or eventually go into bankruptcy.

These draconian Medicare cuts were the basis for the CBO score repeatedly cited by President Obama that Obamacare would actually reduce the deficit while expanding or adopting three entitlement programs. Too bad the President never disclosed that in trying to sell Obamacare to the nation. Indeed, in his weekly radio address to the nation on August 14, it was these draconian Medicare cuts that President Obama was touting in lauding Obamacare for "adding at least a dozen years to the fiscal health of Medicare -- the single longest extension in history." (Only a dozen years because most of the money raided from Medicare is taken to finance Obamacare.) The President thinks he can play seniors for fools.

Obama's Medicare policy is like trying to maintain our national defense by refusing to pay the people who make the tanks, the planes, the ships, the guns, the bullets, and the bombs. How long do you think our national defense would last under that policy? The same goes for Medicare now under Obamacare.

Contrast this policy atrocity with the proposed reforms to Medicare under Rep. Paul Ryan's Roadmap for America. Ryan is the ranking Republican on the House Budget Committee who will become the Committee Chairman after this fall's elections. The Congressional Budget Office has scored Ryan's Roadmap as achieving full and permanent solvency for Social Security, full and permanent solvency for Medicare, and a permanently balanced federal budget, without tax increases.

Ryan's Roadmap, which he fully explains in a website devoted entirely to the Roadmap, includes no cuts in Social Security or Medicare, or changes of any sort, for today's seniors. The reforms apply only to those who are under age 55 today. For those future retirees, he would reform Medicare into Medicare Advantage for everyone. Medicare Advantage is the option already existing under Medicare allowing seniors to choose private insurance coverage for their benefits under the program, which nearly one-fourth of seniors have already chosen because it gives them a better deal.

Just as in Medicare Advantage today, future seniors under Ryan's Roadmap would be able to use Medicare funds to choose from a wide range of private insurance options, including the highly beneficial and empowering Health Savings Accounts. The funding for these options would grow more slowly over time for higher income and healthier seniors, and so they would have to pay some more out of their pockets for the coverage. That is how the long-term Medicare financing gaps are closed and full solvency for Medicare achieved. Additional funding is provided, however, for low and modest income, and less healthy, seniors, so they are fully protected from any higher costs.

But this is too much filthy capitalism for President Obama, and his modern new socialist Democrats, so they wrongly trash it. But unlike Obamacare's wild and irresponsible Medicare cuts, this is a carefully designed and structured reform plan, which is far better for future seniors, taxpayers, and America.

Now He Wants to Cut Your Social Security

But President Obama is already moving on, to cut your Social Security next, as he also revealed in his August 14 Saturday radio address. In that address, he denounces the idea of solving Social Security's problems by allowing young workers the freedom to choose to save and invest some of their taxes in their own personal accounts.

Such accounts would enable these workers to enjoy much higher benefits in the future than Social Security even promises, let alone what it can pay, at just standard, long-term investment returns. By taking some of the long-term burden off of Social Security for financing future benefits, these accounts can also solve the program's long-term financing crisis. That is shown by reports from the Chief Actuary of Social Security still available on his website. Such personal accounts would also do far more to reduce government spending over the long run than any other possible alternative.

But the ideologically far left Obama can't stand the idea of workers and retirees supporting themselves more through the private sector. He calls that privatization, which means again too much filthy capitalism for his tastes. Moreover, if seniors are self-supporting through their own personal accounts, they are no longer dependent on Obama's secular socialist political machine. That is not the change for America that Obama has in mind.

If he rejects personal accounts, however, then how is President Obama going to solve Social Security's long-term financial crisis, which even his own Presidential Debt Commission realizes is real? The only alternatives are to raise payroll taxes or cut benefits.

Raising payroll taxes is out because President Obama pledged over and over to get elected that he would not raise taxes on anyone making less than $250,000 a year. If he refuses even to consider personal accounts as inconsistent with his socialist ideology, that leaves only cutting benefits.

And this is exactly what his Presidential Debt Commission is plotting to reveal right after the election. Leaks indicate that among the options being considered are delaying the retirement age, changing the basic benefit formula, and delaying or slashing COLAs. Personal accounts for younger workers are once again a far better idea, for the young, for seniors, and for America.

Interest, Dividends, and Capital Gains

But President Obama's economic assault on America's seniors doesn't stop there. Under his economic policies, interest rates have been negligible since he came into office. But interest on a lifetime of accumulated savings is a substantial source of income for many seniors.

Yes, these rock bottom interest rates are maintained as part of President Obama's broader economic policies, to promote economic recovery. But those broader policies are not working, and no consideration is given to the harmful effect on seniors. There is no offset or compensating policy to alleviate the impact on retirees.

Moreover, under President Obama's comprehensive tax rate increases that start to go into effect next year, the top tax rate on corporate dividends will nearly triple, from 15% today, to 43.4%, counting the new 3.8% tax on capital income added by Obamacare. No, this doesn't affect only the rich. Companies will respond to this wild, draconian tax increase mostly by cutting off corporate dividends, as they will no longer be able to attract sufficient capital through such heavily taxed payments.

That will hurt millions of more modest income seniors who have invested some of their lifetime of savings to obtain corporate dividends as a supplement to their income. But President Obama and his New Socialist Democrats can't understand this, just as they can't understand that raising tax rates on the nation's employers and investors, because they are "the rich," harms average working people, who lose their jobs or suffer lower wages as a result. Politicians who make a career of decrying and raiding "the rich" are crass pirates who would have no role in public life in a responsible society.

President Obama's capital gains tax increases also hurt seniors the most, because they have been around the longest to accumulate most of the capital gains.

The Disgrace of AARP

And where has AARP been during this comprehensive economic assault on America's seniors? That self-styled spokesman for the nation's seniors began as an insurance marketing scam. Today it is a big bucks Washington bureaucracy that looks out for itself, and just another phony liberal/left front group providing cover for the expanding socialist takeover of America.

It too thinks it can play seniors for fools. Instead of warning seniors about the draconian Medicare cuts in Obamacare, it sought to provide cover for its Washington Democrat buddies with a slick, big bucks marketing campaign in favor of Obamacare. The truth is that AARP is all about partisan politics. Republicans can try to just slightly slow the growth of Medicare to balance the budget, and AARP is out screaming that the Republicans are destroying the program. But the Democrats can mercilessly trash it with trillions in draconian cuts, and AARP doesn't even notice. Instead, AARP spends seniors' money to try to delude them into supporting it.

Ya'll are too polite at these meetings AARP holds to gull you into the socialist political machine. Check out instead the Alliance for Prosperity, a newly emerging, fully equipped, alternative to AARP.

Seniors' Payback Time

During the 2008 campaign, then candidate Obama told Joe the Plumber that he wanted to spread the wealth. Apparently, President Obama's concept of spreading the wealth includes sacking both the Medicare and Social Security systems on which America's seniors have come to rely, in favor of others the President's progressive vision deems more worthy.

But this fall, America's seniors will have the opportunity for their own payback time. President Obama, however, thinks he doesn't need them. He thinks he can whip up what he imagines is his mindless political base into a frenzy. That is what the ludicrous, groundless attacks on the Tea Party as racist are all about. And it is what the federal lawsuit against the Arizona immigration enforcement law is all about. That Arizona law explicitly prohibits racial profiling, and only seeks to enforce current federal law.

But the President himself is overlooking the brutal fact that Hispanics have suffered double-digit unemployment throughout his presidency. And African Americans have suffered a long-term depression, with unemployment among them persistently over 15%. Last week came the report that the poverty rate has rocketed upwards to record shattering levels. Who does President Obama think he is fooling now?

Not America's seniors, who this fall won't be caught like chickens voting for Colonel Sanders.

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About the Author
Peter Ferrara is Director of Entitlement and Budget Policy at the Heartland Institute, General Counsel of the American Civil Rights Union, Senior Fellow at the National Center for Policy Analysis, and Senior Policy Advisor on Entitlements and Budget Policy at the National Tax Limitation Foundation. He served in the White House Office of Policy Development under President Reagan, and as Associate Deputy Attorney General of the United States under President George H.W. Bush.