What is Social Security?

Quite often we hear of some group wanting to eliminate waste in social security, make adjustments to save social security, etc.

Generally speaking, most of us think of social security as that pension for old folks, with the trust funds etc. That is just part of social security. 

Social Security can be found in Title 42, Chapter 7 of the U.S. Code. There are currently, 21 sub chapters, with subchapter 2 being something called "Federal Old Age, Survivors and Disability Insurance. OASDI. That is the part we frequently refer to as social security, with trust funds. Medicare is subchapter 18, with associated trust funds. Supplemental Security Income (SSI) is within subchapter 16.

But in reality, Social Security encompasses dozens of programs, which are in the form of block grants to states, as well as budgeted appropriations for all manner of items, from CHIPS, SNAP, Food Stamps, etc. 

Here is a partial listing of such social security items...

So when someone tries to stir up trouble with the mantra of illegals, migrants, etc. are collecting social security... it's not likely to be OASDI, but could be in the form of various other programs. 

When someone attempts to scare away the seniors with proclamations that a certain group are out to get your social security... just exactly what program within social security, are they referring.

There are a variety of proposals in congress to make adjustments to "social security", but aren't spun as social security.

Recently a proposal to address the claw back issue in Medicaid got some attention. Everyone thought it a good idea. Not a mention of social security, except the bill itself stated... 

A BILL To amend title XIX of the Social Security Act to repeal the requirement that States establish a Medicaid Estate Recovery Program and to limit the circumstances in which a State may place a lien on a Medicaid beneficiary’s property. 

Of course, the term social security was not used in the media, as it would have caused a kerfuffle if the media used the term "amend social security". 

I doubt things will change, as our masters fully understand our ignorance on the matter of "social security", and thus use it... for political purposes. 

Finishing Up Data for September, 2022

The BEA released the Personal Income and Outlays, August 2022 and Annual Update this morning.

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Note the PCE and PCE EX-F&E were revised according to BEA listing, but not revised in the above chart.

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Chained dollars continue with upward growth.

The BEA, also released the GDP yesterday and the headlines were unchanged. However, you had to read down quite a bit to the juicy part.

Real gross domestic income (GDI) increased 0.1 percent in the second quarter, a downward revision of 1.3 percentage points from the previous estimate. The average of real GDP and real GDI, a supplemental measure of U.S. economic activity that equally weights GDP and GDI, decreased 0.3 percent in the second quarter, a downward revision of 0.7 percentage point (table 1).

The GDI (Gross Domestic Income) was +1.8% for the 1st quarter, until this revision down to +0.8% and the 2nd quarter was revised downward from +1.4% to +0.1%. Still positive, but... not by much. 

When averaged with the GDP: 1st quarter from +0.1% to -0.4%; 2nd quarter from +0.4% to -0.3%.

The 3rd quarter advance estimate will be announced on October 27th. Bet on it being positive, until after the election and the 2nd estimate comes out on the 30th of November. Okay, it will likely still be positive, so I guess the "recession" was over in June. My opinion would be, we are not yet in a recession. 

I do wonder why the theory of 2 consecutive negative quarters has such a special meaning in the hearts of so many. I mean I get it, but claiming some historical significance, when faced with something of a 21st century phenomena, doesn't make sense. Especially when so many avoid talking about it, lest they be labeled as being part of some fringe group.

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Shame on me for even pointing it out. We did this to ourselves. It is oft stated that recognizing the problem is halfway to solving it. We are nowhere near recognizing it, in my opinion. 

Now for some good news. The Centers for Medicare and Medicaid Services announced...

The standard monthly premium for Medicare Part B enrollees will be $164.90 for 2023, a decrease of $5.20 from $170.10 in 2022. The annual deductible for all Medicare Part B beneficiaries is $226 in 2023, a decrease of $7 from the annual deductible of $233 in 2022.

It is unusual the announcement could be made so early, as it usually comes in mid November, which always fall just after an election. The announcement is barely visible on all those old people boards I follow. It's still good to be able to keep and additional $62.40 per year, even if it would purchase what was $57.35 last year.

Speaking of inflation, the September numbers from the BLS will come out on the 13th of October. Here is my current projection of C.O.L.A.

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I'm struggling on whether it will be 8.7% or 8.8%. Earlier, I had 8.6% in the mix, but I think that has gone bye bye. Likely 8.8%, with a possible 8.9%. 

Frankly, the likelihood of the CPI-U jumping 0.28% and the CPI-W at 0.37% is not unreasonable, although something a bit lower on the CPI-W lands at 8.8%.

In July, the -7.7% drop in gasoline covered up all the other price inflation taking place. In August, the -10% drop in gasoline could NOT cover up all the other price inflation taking place. September is ending with only a -5.5% drop in gasoline. So look out. 

Much of the reason for the national average of gasoline prices rising the past ten days, has to do with California switching from summer blend to winter blend. It happens every year. It should begin slowing next week. 

Most Americans don't grasp that, but politicians do. So a wonderful time to point out the national average is rising, proclaim retailers must halt the exploitation and then take a victory lap next week. We Americans are such suckers.

As for gasoline prices, I am not sure what they will do, when that 1MBPD SPR release ends just before the election. Couple that with the possibility of OPEC cutting a few barrels... who knows. 

Natural Gas is staying ahead of the curve and possibly gaining some...

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All in all, another decent month. It could be the last for awhile, but who knows? Or rather... who cares?

Oh yes... Natural Gas prices.

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Back early in the summer, the anticipated range for U.K. energy at the average household level, was £3,600 ~ £5,400 annual, based on what the market was indicating. Currently the range is £3,000 ~£4,100. If the £2,500 cap was based on the summer forecast, then maybe the new cap should be lower. 

Oh well, smarter people than I, are working on all this. That doesn't mean they don't make mistakes. As I make a lot of mistakes and don't pretend to be smart... no one really pays attention. But when a "pretentious" person errs... it is lights out. 

Still Too Early to Project C.O.L.A Increases... But the Early Bird Gets the Worm. Yuck!

Yes, it is too early, but I cannot help myself. After perusing all the forecasts of inflation, here goes. Of course an explanation is needed as to the rules regarding determining C.O.L.A.

CPI-W (Consumer Price Index for Urban Wage Earners and Clerical Workers) is the gauge used, not the headline CPI, as in CPI-U (Consumer Price index for ALL Urban Consumers). The difference being the salaried and technical folks are in the latter. 

Typically the CPI-W has lagged behind the CPI-U, (hereafter referred to simply CPI). This can be seen in the CPI reading of 292.296 (May-2022), compared to 288.022 for the CPI-W. Both started their indexes at the same time... back in the early 80s.

However, after lagging all that time, the CPI-W is catching up with a vengeance. Why? I don't know, maybe something to do with Covid. (That's intended to be humorous).

Certainly, a lot of things can change between now and then. Even the forecasts are suggesting a peak to inflation in July and then subsiding. It is not unreasonable to view current projections and expect 8.8%~9.1% as the potential range for C.O.L.A. adjustment. Although things appear to be outpacing forecasts to the downside.

• June CPI-W is forecast as 9.3%~9.4%
• July CPI-W is forecast as 9.2%~9.4%
• August CPI-W is forecast as 8.7%~9.0%
• September CPI-W forecast as 8.3%~8.5%.

Whatever the increase might be, it would be important to put that into perspective. Theoretically, the increase which comes in January 2023, puts you back to the purchasing power you had in July, August, and September of 2021. Any lost purchasing power is gone... forever.

The 2nd part of the discussion starts with Medicare Premiums. They jumped a lot this past year, due to the dementia drug and there is a belief that somehow a big drop is forthcoming as the Center for Medicare & Medicaid Services has altered their stance on that drug. 

Fine, but the anticipated hike in 2022 was for a jump from $148.5 to $158, without the dementia drug. The dementia drug's actual cost same in about half of the anticipated, which brings it back to the $158~$160 range. What about the increases in Medicare costs, aside for the dementia drug?

I would not expect any great reductions in Medicare premiums for 2023, although it should not deduct from the C.O.L.A. increase... as it had in years past.

Now to the scams... my wife received a letter from a well known entity, decrying some legislation in Congress that was intended to undermine S.S. Contributions were desperately needed to help stop this legislation.

I checked and found the legislation was proposed back in early 2021 and has sat in committee since, and has apparently been forgotten by all... except the folks desperately looking for revenue sources.

Maybe I am becoming too cynical, but when someone asks for money to somehow benefit me... I immediately become suspicious of them. It has served me well.

Ouch! Medicare Part B

Medicare B standard premiums jumped from current $148.50, up to $170.10, starting in January. A whopping 14.5% increase. Previously the forecast had been a 6.7% increase, so it was a bit of a surprise... at least to me. 

On the other hand, the officials had been predicting over the past few years, that some significant rises in Medicare Part B were possible.

Up first is the announcement, which was made late on a Friday evening. Doesn't that always seem to be the case for bad news. 

I should point out my premiums are reimbursed via a company I retired from. There are a multitude of people that are not that fortunate. 

Probably the thing that irritates me most is captured in the following articles. 

AARP

CMS officials stressed that while the 14.5 percent Part B premium increase is a stiff one, the Social Security cost-of-living adjustment (COLA)  — at 5.9 percent, the largest in 30 years - is estimated to average $71.40 per recipient. So even after the increase in the Medicare Part B premium, most Social Security recipients, whose Part B premiums are typically deducted from their Social Security benefits, will still see a net increase in their monthly check. The COLA goes into effect in January.

CNN 

The Centers for Medicare and Medicaid Services played down the spike, pointing out that most beneficiaries also collect Social Security benefits and will see a cost-of-living adjustment of 5.9% in their 2022 monthly payments, the agency said in a statement. That's the largest bump in 30 years.

"This significant COLA increase will more than cover the increase in the Medicare Part B monthly premium," CMS said. "Most people with Medicare will see a significant net increase in Social Security benefits. For example, a retired worker who currently receives $1,565 per month from Social Security can expect to receive a net increase of $70.40 more per month after the Medicare Part B premium is deducted."

CPI-W, which is what C.O.L.A. is based on, is like all the CPI indexes... it looks backward to see what inflation has been. That adjustment simply brings pay, etc. back to current pricing, without any adjustments to past purchasing power losses. Which would be about $750 of lost purchasing power, since start of 2020. That would be a lot of money for someone living on $14K per year of Social Security before Part B. That would be $2 per day, which isn't even coffee money for any of these guys, but might be a meal for a lot of people.

Which makes those comments referenced, as a bit insensitive to say the least. They seemed to have missed the class on reduced purchasing power by way of inflation and decided the purchasing power factor was to be ignored.

Basically, it would seem the powers that be, consider the 5.9% C.O.L.A. as "free" money and that the Medicare B crowd should be happy with paying a big portion of that "free" money for Part B. It should be noted if inflation had been lower, say 1.0%, the "hold harmless" clause would have raised the overall Part B premium to offset that as well. 

In that 1.0% scenario, the hold harmless clause would have amounted to "0" cost of living adjustment for those making $1,000 per month and less, before Part B deduction and possibly limit next year as well, depending on C.O.L.A. Enough with the ranting... almost.

The law is the law and the raises are quite likely necessary... it is the rather flippant remarks being made.

Of course we should think about another item in the press releases, lest we forget (pun intended) ... setting aside money just in case the controversial Aduhelm et al (Alzheimer's drugs) might be approved and are really, really expensive (why am I not shocked). 

Setting aside that money for that purpose would contribute to part of the Medicare B rise, as Congress had stated the fund needed to be made whole starting in 2022.

Now for the political side of all this and yes everything is political. Press coverage of the "Build Back Better" plan has included several mentions of prescription drugs, donut holes and costs to the elderly. Certainly an attempt to appeal to us elderly folks, even though it is a piddling amount within the overall plan. 

Of course that is Part D of Medicare, not the Part B, I have been railing about. Expect those lines to be blurred quite quickly. How quickly? I expect the chatter to begin on the Sunday talk shows and then ramp up from there. One party will be talking it up much more than the other. It's all about a bigger agenda... we are nothing more than a political talking point. 

An example would be the CNN article was big and bold on their website this morning and now it's pushed to smaller font down the page. Not only is the message important, but the timing as well. I'm such a cynic! 

Oh well, another day another dollar, except it is now another $2 a day... lost forever.