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Tax Cuts for Wealthy Endanger Social Security and Medicare
American Federation of Labor - Congress of Industrial Organizations
March 18, 2003

Social Security and Medicare remain fundamentally strong, but efforts by President George W. Bush and his allies in Congress to push for a tax cut for the wealthy endanger the programs seniors rely on for health care and retirement security, said AFL-CIO President John Sweeney.

The government trustee panel overseeing Medicare released its annual report March 17 on the program's financial health. The fund covering hospital expenses (Part A) will be solvent until 2026, the trustees said. Medicare runs out of money four years more quickly than had been predicted only one year ago because of rising health costs. A separate trustees' panel on social security said the nation's most trusted family insurance program has enough funding to pay full benefits until 2042 and between 65 percent and 73 percent of benefits after that date.

"The Social Security and Medicare trustees reports...affirm the fundamental health of these important family protection programs and reinforce the need to commit the federal government to strengthening them," Sweeney said. At the same time, "the reports also underscore how the Bush administration's unaffordable proposed tax cuts for the wealthy undermine our nation's ability to guarantee income and health security for our seniors."

Bush is willing to trade in the long-term viability of working families' retirement security for a tax cut benefiting the wealthy, union leaders say. For example, taxpayers in the top 1 percent of the income scale-whose average income exceeds $1 million-would get tax cuts this year of $30,000 each, according to Citizens for Tax Justice, while those at the bottom 60 percent would get $131. The long-term cost of the tax cuts Bush pushed through in 2001 and is proposing this year is as much as one and one-half times the total long-term shortfalls in both Social Security and Medicare Part A, according to the Center on Budget and Policy Priorities. In other words, if Bush didn't cut taxes for the wealthy, he could shore up Medicare and Social Security for the next 75 years and still have $3 trillion left over.

Far from strengthening Medicare, Bush has embarked on a campaign to weaken it. He has offered a prescription drug plan that requires seniors to leave the doctors they know and trust and join private HMOs to get the full drug benefit, while others would get some catastrophic coverage and drug discount cards. He also is looking for ways to limit the services Medicare provides and to curtail the rights of seniors to appeal bureaucrats' decisions denying needed services. The president's proposed tax cuts for the wealthy also use up funds needed for a Medicare prescription drug benefit. Members of the House Budget Committee last week announced plans to provide only $28 billion for such a benefit over 10 years-while setting aside $726 billion for tax cuts for the wealthy.

Even though Social Security is healthier than ever, Bush administration officials reacting to the trustees' reports tried to portray the program as in dire straits-and ignored the Medicare report as a way to advance Bush's long-term goal of privatizing Social Security. Meeting behind closed doors in December 2001, Bush's handpicked panel of privatization advocates, the President's Commission to Strengthen Social Security, drew up plans to privatize Social Security at a cost of up to $2.8 trillion. Even at that price, the privatized plan would cut benefits for disabled workers and the surviving children of workers who die young. In addition, privatizing Social Security would require cuts to guaranteed benefits, raising the retirement age or both.

"The stock market collapse and corporate crimes of the past years set workers and retirees back decades in building retirement security," said Sweeney. "Working families need the guarantees of Social Security and Medicare more than ever."

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