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Legislation Department
April 23, 1999

Good News: Social Security and Medicare Trustees’ Reports

The annual reports recently released from the Social Security and Medicare Trustees contained good news. Low unemployment and low inflation has helped boost the Social Security and Medicare trust funds. The Social Security trust fund solvency date was pushed forward by two years from 2032 to 2034 and the Medicare trust fund got a seven year lift from 2008 to 2015.

It is the second year in a row that stronger than expected economic growth has added new years of fiscal health to the retirement programs. Projections made two years ago predicted that Medicare would run out of cash in 2001. Last year that date was moved to 2008 and this year to 2015.

Under the latest projections, Social Security would have sufficient income and reserves to pay full benefits until 2034 after which the reserves would be depleted and payroll income at current levels would be sufficient to pay only 75 percent of benefits.

The Republican congressional leadership have been promising to release their plan to "save" Social Security for weeks and now it seems that it could indeed be next week. However, even before the plan is announced, key GOP leaders are trying to distance themselves from a plan which internal polls show could be a political loser. If the rumors prove accurate, Ways and Means Chairman Bill Archer (R-TX) and Ways and Means Social Security Subcommittee Chairman Clay Shaw (R-FL) will release their plan to privatize Social Security on April 28th. The Archer-Shaw plan is likely to be a variation on a plan authored by Martin Feldstein, chair of the Council of Economic Advisors in the Reagan Administration. Even missing the details, it is clear that the plan would do nothing to strengthen the existing Social Security program, would widen income inequality by using the projected surplus to create private investment accounts for every worker with higher wage workers getting a larger contribution than middle and lower wage workers, would do nothing to strengthen Medicare and would jeopardize federal funding for domestic programs in the future.

Sen. Ted Kennedy (D-MA), Reps. Pete Stark (D-CA) and John Dingell (D-MI) have introduced a bill which would establish a Medicare prescription drug benefit. The proposal would provide coverage for up to $1,700 in drug costs per year per beneficiary. Each beneficiary would pay a $200 deductible and 20 percent copayment on each prescription.

The Employer/Employee Relations Subcommittee of the House Education and the Workforce Committee held a hearing this week on procedures available to patients for appealing treatment denials by managed care plans. The hearing revealed that the managed care industry and the House Republican leadership oppose a requirement that plans have an appeals procedure which guarantees a decision by an independent third party. Instead, they want plans to be able to control who reviews appeals and the decisions made.

A petition to Congress on the Patients’ Bill of Rights has been posted on AFSCME’s home page at www.afscme.org. By clicking on the petition site, AFSCME members can sign this electronic petition urging Congress to pass a real Patients’ Bill of Rights which includes whistleblower protection for health care workers.

On April 13, 1999, the House voted 412-2 to pass legislation (H.R. 46) that would provide a national Medal of Valor for public safety officers, including corrections and other law enforcement officers, who act with extraordinary bravery above and beyond the call of duty. This legislation would establish a Medal of Valor Review Board, composed of 11 individuals appointed by Congress and the President, who would recommend to the President up to 10 candidates a year for this medal. The Public Safety Medal of Valor would be the highest national award for valor by a public safety officer. This legislation is now pending in the Senate Judiciary Committee.

On Wednesday, April 21, the Senate Committee on Governmental Affairs held a hearing on the Regulatory Improvement Act of 1999 (S. 746). This legislation, introduced by Sens. Fred Thompson (R-TN) and Carl Levin (D-MI), would create new bureaucratic obstacles that would hamper the ability of OSHA and other agencies to issue important worker protections. It would also give affected industries new opportunities to delay or block important protections and would encourage agencies to issue less protective regulations.

The following day, the Senate Committee on Governmental Affairs held a hearing on the Regulatory Right-to-Know Act (S. 59/ H.R. 1074). This legislation would require the Office of Management and Budget to annually estimate the "efficiency" of federal regulation by calculating the overall costs and benefits. By forcing benefits, such as worker safety, to be expressed in dollars, this legislation would underestimate the value of federal regulations and would assist efforts to weaken worker safety protections in the future.

Congress gave the final nod to legislation (H.R. 800) designed to grant states greater flexibility in sidestepping federal education regulations. Supporters of the bill, known as "Ed-Flex," said the legislation would make it easier for local schools and districts to tailor programs to improve student achievement without wading through as much federal red tape.

The measure had broad bipartisan support before the House and Senate each voted to adopt the conference committee report. The House acted first, voting 368-57 to adopt the report. The Senate followed suit, adopting the report 98-1 and clearing the bill for President Clinton.

Once considered a candidate for the House Judiciary Committee’s rubber stamp, H.R. 833, a bill that would overhaul the nation’s bankruptcy laws now faces a crucial battle. Sponsored by Commercial and Administrative Law Subcommittee Chairman George W. Gekas (R-PA), the House bill aims to curb abusive filings for bankruptcy protection by requiring debtors who meet certain income requirements to pay back some of the money they owe. This week during one day of the consideration by the committee, the so-called "means test" was scaled back significantly when the panel adopted a series of amendments offered by Committee Chairman Henry Hyde (R-IL). The Hyde amendments would essentially reaffirm the authority of bankruptcy judges to use their own discretion in determining which debtors are really in a position to pay off some of their debts, instead of requiring the courts to rely solely on mathematical income formulas. The changes also would prevent debtors who file for Chapter 7, and who make less than the median income in their region, from being forced into a Chapter 13 repayment plan. As Democratic foes of the bill and the means test savor their as-yet unsecured victory, Republican proponents of the measure are openly questioning whether they can support the scaled-back legislation.

Meanwhile, the Senate Judiciary Committee is likely to focus on many of the same issues debated by the panel’s House counterpart, including the means test formula. New York Sen. Charles E. Schumer (D) plans to offer three amendments that would impose restrictions on the credit card industry in an effort to provide more protections to consumers.

The House moved to help federal employees speed the process of saving for their retirement, passing by voice vote a bill (H.R. 208) that would allow workers to participate in the Thrift Savings Plan (TSP) as soon as they are hired. Under current law, new federal hires must wait at least six months to begin participating in the TSP, a tax-deferred retirement savings and investment plan. The bill would eliminate the time lag and allow workers to transfer funds they have accumulated in other tax-deferred savings plans to their TSPs. The measure will take place October 1st of this year.