Proposed budget cuts could be unpopular.
Grand Rapids, MI -- (SBWIRE) -- 05/08/2013 -- With so much going on in the economy, it can be hard to keep up with everything that is happening in the world today.
Dennis Tubbergen, a financial advisor, author, radio show host and CEO of PLP Advisors, LLC gives a hand.
Whether people enjoy his weekly newsletter at http://wwww.moving-markets.com or his blog at http://wwww.dennistubbergen.com, Tubbergen is dedicated to sharing his viewpoints and opinions. On March 13, 2013 his blog was titled Social Security Cuts Coming?
"The New York Times reported that the President's proposed budget would cut the growth in the Social Security program," began Tubbergen.
Below he quotes from the April 5, 2013 article.
President Obama next week will take the political risk of formally proposing cuts to Social Security and Medicare in his annual budget in an effort to demonstrate his willingness to compromise with Republicans and revive prospects for a long-term deficit-reduction deal, administration officials say.
In a significant shift in fiscal strategy, Mr. Obama on Wednesday will send a budget plan to Capitol Hill that departs from the usual presidential wish list that Republicans typically declare dead on arrival. Instead it will embody the final compromise offer that he made to Speaker John A. Boehner late last year, before Mr. Boehner abandoned negotiations in opposition to the president's demand for higher taxes from wealthy individuals and some corporations.
Congressional Republicans have dug in against any new tax revenues after higher taxes for the affluent were approved at the start of the year. The administration's hope is to create cracks in Republican's antitax resistance, especially in the Senate, as constituents complain about the across-the-board cuts in military and domestic programs that took effect March 1.
Mr. Obama's proposed deficit reduction would replace those cuts. And if Republicans continue to resist the president, the White House believes that most Americans will blame them for the fiscal paralysis.
Besides the tax increases that most Republicans continue to oppose, Mr. Obama's budget will propose a new inflation formula that would have the effect of reducing cost-of-living payments for Social Security benefits, though with financial protections for low-income and very old beneficiaries, administration officials said. The idea, known as chained C.P.I., has infuriated some Democrats and advocacy groups to Mr. Obama's left, and they have already mobilized in opposition.
As Mr. Obama has before, his budget documents will emphasize that he would support the cost-of-living change, as well as other reductions that Republicans have called for in the popular programs for older Americans, only if Republicans agree to additional taxes on the wealthy and infrastructure investments that the president called for in last year's offer to Mr. Boehner.
"As I've repeatedly stated, the fiscal problems that exist in the Social Security and Medicare programs are just that: fiscal problems, not political problems," explained Tubbergen. "The latest statistics I have read had current benefits cut to about 7 percent of their existing levels in order to bring the Social Security program back to a level of solvency."
According to Tubbergen, the simple math of the matter will require a decrease in benefits or an increase in Social Security taxes.
"I've long held that one of the approaches that would likely be taken to attempt to make the Social Security program move viable is to means test the benefits, eliminate the cost-of-living adjustment, or tax Social Security benefits at 100 percent," stated Tubbergen.
Tubbergen goes on to say that Mr. Obama's proposal essentially reduces the cost-of-living adjustment by changing the methodology used to calculate the rate of inflation, resulting in a lower increase for all Social Security recipients except those at the very bottom of the income spectrum.
"While you may disagree with the President on this, the math dictates it is probably a necessary step and one that shouldn't be all that surprising to those who understand the math relating to the Social Security program," concludes Tubbergen.
To read the blog in its entirety go to http://www.dennistubbergen.com and select his April 5, 2013 entry.
Tubbergen’s syndicated radio show can be heard on metro Michigan stations WTKG 1230 AM and WOOD Newsradio1300 AM and 106.9 FM.
About Dennis Tubbergen
Dennis Tubbergen has been in the financial industry for over 25 years and has his corporate offices in Grand Rapids, Michigan. Tubbergen is CEO of PLP Advisors, LLC and has an online blog that can be read at http://wwww.dennistubbergen.com. To view Tubbergen’s latest Moving Markets? newsletter, go to http://wwww.moving-markets.com.
The opinions expressed herein are those of the writer and not necessarily those of USA Wealth Management, LLC. This update may contain forward-looking statements, including, but not limited to, statements as to future events that involve various risks and uncertainties. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual events or results to differ materially from those that were forecasted. Therefore, no forecast should be construed as a guarantee. Prior to making any investment decision, individuals should consult a professional to determine the risks, costs, benefits and fees associated with a particular investment. Information obtained from third party resources is believed to be reliable but the accuracy cannot be guaranteed.