An open letter sent to Senator Alan Simpson and Erskine Bowles

Gentlemen:

I had the opportunity last week to listen to both of you as featured luncheon speakers at a large conference.   Your remarks were concerning the Simpson/Bowles plan that you initially put together at the request of President Obama.  That plan has since been updated; and you both have continued to comment about it (as recently as the first of this week).  While there are parts of your plan that RetireSafe doesn’t agree with, I do applaud your general approach. You highlighted that approach at the luncheon as a commonsense approach to our fiscal problems, bolstered by an unencumbered recognition of the facts.  I was especially intrigued as you explained your plan for tax reform.

As you described your tax reform plan, the first step was to remove all the exemptions that were available to those who itemize deductions on their tax return. (Yes, even the historically untouchable mortgage interest and charitable contributions deductions would be removed.)  Then, given the calculated tax income after the elimination of these deductions, you would calculate the level of taxation required at each of the income tiers to hit your targeted tax level as a percentage of GDP.  With this base line established, then the cost of any deduction that is being considered to be added back in will be calculated, and taxes will be increased to cover the loss of tax income due to the added deduction.  Everyone can see the cost of the deduction and see who benefits and who loses, with nothing hidden. It’s a clean, simple, uncluttered, commonsense approach to governance and we applaud you for it.  There were two things, however, that were discussed last week that especially troubled me on which I wish to comment.

First, a letter written by Senator Simpson was read which included the phrase “greedy geezers”, an oft reported quote.  While you, Senator Simpson, are often admired for your straight forward talk I was extremely disappointed that you seemed to relish the reading of the quote and continue to condone the use of that phrase.  Your characterization of these “greedy geezers” at the conference was inaccurate and demeaning and has no place in a sensible discussion.  The term geezer brings to my mind a self-centered, uninformed, and uneducated person.  I think it’s off the mark to describe older Americans with that word.  I also think the word greedy certainly doesn’t apply either.  These “greedy” seniors are the people who didn’t ask for handouts and worked their whole lives without spending more than they made.  They are the people who welcomed their children and grandchildren back into their homes during this last recession in spite of watching their 401Ks and IRAs lose value day after day as the stock market dropped.  I think you may have mistaken a loss of confidence and trust in their government as being greedy.  Expecting the government to take care of the money that was taken out of their paycheck each and every month for forty or fifty years is not greedy.  Expecting the government to keep its promise of health care and Social Security benefits is not greedy.  Expecting the government to not spend more than they take in, like seniors have done their whole lives, is not greedy.  I think you do a disservice to your efforts and demean the very people that will be most affected by your plan, both positively and negatively, by using the term “greedy geezers”.

The second item in that luncheon discussion that concerned me was your acceptance of the chained CPI as a positive move to help reduce the debt and preserve Social Security.  Using the chained CPI to reduce debt goes against the basic approach you embrace of unencumbered facts and common sense solutions.  Using a different, chained CPI as a method of calculating the Cost Of Living Adjustment (COLA) for Social Security to reduce the debt and control costs is confusing, misleading and is just a way to try to hide a decrease in benefits from seniors.  This approach is just the opposite of the open method you used for tax reform.

The COLA was instigated to ensure that the purchasing power of everyone’s Social Security was not impacted by inflation.  To ensure that the check they got this year bought the same amount of goods and services that it bought last year.  That is the only reason for a COLA and its only job.  It’s not a method to reduce the debt or to preserve Social Security, but just to preserve purchasing power.  Trying to use it for anything else is disingenuous and a trick to hide benefit reduction.

I have written numerous times about how and why the CPI that is used today to calculate the COLA is flawed, it uses data for urban wage earners and clerical workers and doesn’t reflect the spending patterns or expense requirements of seniors.  We have vigorously supported a bill that calculates an accurate CPI, the CPI for Seniors Act, which will mandate a fair and correct CPI for seniors, and thus a fair annual Social Security COLA. The chained CPI just adds to the errors in the present CPI. It assumes a spending and substitution flexibility that does not exist with seniors.  It would have reduced the current COLA by .02%, and while you touted this as a small amount, it is not small at all when you figure the compounding affect year after year.  Your focus on the supposed small size of the reduction is again an indication of a lack of full disclosure. In looking at the web site you founded to promote your plan, www.fixthedebt.org, I detect that you realize the chained CPI is flawed.  Number four in your six reasons that we should use the chained CPI reads, “Chained CPI does not disproportionally affect the most disadvantaged, and proposals which included a switch to Chained CPI, such as the Simpson-Bowles Commission, have also included protections for the oldest and least advantaged.”  If you really believed the chained CPI was accurate there would be no need to help the oldest and least advantaged.  An accurate CPI would maintain everyone’s purchasing power equally which should be its only job.  If there is a need to protect the older and least advantage then propose a change that will do that, calculate its cost and identify those who benefit and those who lose and what its cost will be.  That’s what you did with tax reform, that’s what we should do with Social Security and the CPI.

You stated at the luncheon that you heard many seniors protest the changes to the entitlement programs when the changes wouldn’t even affect those that were already retired.  The instigation of the chained CPI would affect all seniors.  No one has really talked much about that fact.  Maybe older Americans do have a right to weigh in on this issue.

Here’s what RetireSafe is asking you to do.  Don’t cloud the issues with inflammatory and demeaning language.  Support the creation of an accurate CPI for seniors to ensure it does its simple and singular job so we can separate the CPI from the debt reduction and the Social Security preservation discussion.  I think doing these two things will reduce some of the emotion while simplifying and focusing the discussion on the other important issues.

Sincerely,

Thair Phillips

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