An Economy Built to Last and Security for Seniors

We now face a make-or-break moment for the middle class and those trying to reach it. After decades of eroding middle-class security as those at the very top saw their incomes rise as never before and after a historic recession that plunged our economy into a crisis from which we are still fighting to recover, it is time to construct an economy that is built to last. The President’s 2013 Budget is built around the idea that our country does best when everyone gets a fair shot, does their fair share, and plays by the same rules. We must transform our economy from one focused on speculating, spending, and borrowing to one constructed on the solid foundation of educating, innovating, and building. That begins with putting the Nation on a path to living within our means – by cutting wasteful spending, asking all Americans to shoulder their fair share, and making tough choices on some things we cannot afford, while keeping the investments we need to grow the economy and create jobs. The Budget targets scarce federal resources to the areas critical to growing the economy and restoring middle-class security: education and skills for American workers, innovation and manufacturing, clean energy, and infrastructure. The Budget is a blueprint for how we can rebuild an economy where hard work pays off and responsibility is rewarded.

To honor our commitments to our nation’s seniors, the 2013 Budget will:

Strengthen Social Security. The President recognizes that Social Security is indispensable to workers, people with disabilities, seniors, and survivors and is probably the most important and most successful program ever established in the U.S. Based on current forecasts, Social Security can pay full benefits until 2036. The President is committed to making sure that Social Security is solvent and viable for the American people, now and in the future. He is strongly opposed to privatizing Social Security and looks forward to working in a bipartisan way to strengthen Social Security for years to come. Guiding the Administration in these talks will be the President’s six principles for reform: any reform should strengthen Social Security for future generations and restore long-term solvency; the Administration will oppose any measures to privatize or weaken the Social Security system; while all measures to strengthen solvency should be on the table, the Administration will not accept an approach that slashes benefits for future generations; no current beneficiaries should see their basic benefits reduced; reform should strengthen retirement security for the most vulnerable, including low-income seniors; reform should maintain robust disability and survivors’ benefits.

Provide a Cost-of-Living-Adjustment. Seniors received a 3.6 percent Social Security cost-of-living-adjustment (COLA) in 2012 after two years without one. The President’s Budget assumes a COLA again for 2013. These adjustments are vital to help seniors maintain their standard of living in retirement.

Improve Medicare. The President recognizes that Medicare is a sacred trust with America’s seniors and supports policies that will strengthen the Medicare program and extend the life of the Medicare trust fund. The Budget includes $535 billion for Medicare spending in 2013, which reflects improvements made to Medicare in the Affordable Care Act (ACA). While the ACA helped extend Medicare’s solvency by encouraging high-quality, efficient health care and addressing wasteful spending, the Medicare Trustees still estimate trust fund exhaustion in 2024.The Budget proposes gradual changes to Medicare that would protect current beneficiaries and strengthen Medicare overall, resulting in $305 billion in savings over 10 years. The vast majority of these savings result from better aligning payments with the costs of care; cutting waste, fraud, and abuse; increasing the availability of generic drugs and biologics; and improving providers’ payment incentives to provide high quality care. The Budget also proposes to make structural changes that include reducing Federal subsidies for high-income beneficiaries and creating financial incentives for newly eligible beneficiaries to seek high-value health care services, which results in about $30 billion in savings. These measures are expected to extend the solvency of the Medicare Hospital Insurance Trust Fund by about two years. The Budget provides $610 million in discretionary program integrity funding to implement activities to reach the President’s goal of reducing improper payments in Medicare and Medicaid and enhance civil and criminal enforcement for Medicare, Medicaid, and CHIP. The Budget prioritizes effective implementation and application of program integrity tools and resources that were provided by the ACA, including enhanced provider screening and participation requirements, improved data analysis capabilities, expanded overpayment recovery activities, and enhanced law enforcement authorities. As a result, the Administration will be better able to minimize inappropriate payments, protect against fraud, and provide greater value for program expenditures to beneficiaries and taxpayers. The Budget reaffirms the Administration’s commitment to work with the Congress to put in place a long-term plan to reform physician payment rates in a fiscally responsible way, and to craft a reformed payment system that would build on improvements made in the ACA to enhance incentives for quality and efficiency while providing physicians with predictable payments for the care they furnish to Medicare beneficiaries.

Protect Seniors from Abusive Financial Products. The Dodd-Frank Wall Street Reform and Consumer Protection Act established an Office of Financial Protection for Older Americans in the Consumer Financial Protection Bureau (CFPB) to facilitate financial education for seniors; help them make sound financial planning decisions; and avoid unfair, deceptive, and abusive practices. CFPB’s Office of Financial Literacy is authorized to make grants to State securities commissions for enhanced protection of seniors.

Preserve and Expand the Supply of Affordable Housing for Seniors. The Budget provides a total of $475 million for the Housing for the Elderly program to maintain and preserve existing supportive housing projects, support service coordination, and to expand the supply of affordable senior housing. Doing more with less, the Budget proposes reforms to the Housing for the Elderly program to target resources to help those most in need, reduce the up-front cost of new awards, and better connect residents with the supportive services they need to age in place and live independently. With these reforms, the $100 million included in the Budget for new awards will support approximately 3,500 new units of affordable, supportive housing for very low-income seniors. The Budget also includes $34.4 billion for HUD’s three core rental assistance programs (Housing Choice Vouchers, Public Housing and Project-Based Rental Assistance) to preserve assistance to 4.5 million low-income households, of which nearly 30 percent include seniors.

Establish Automatic Workplace Pensions. Currently, 78 million working Americans—roughly half the workforce—lack employer-based retirement plans. The Budget proposes a system of automatic workplace pensions that will expand access to tens of millions of workers who currently lack pensions. Under the proposal, employers who do not currently offer a retirement plan will be required to enroll their employees in a direct-deposit IRA account that is compatible with existing direct-deposit payroll systems. Employees may opt out if they choose. The smallest firms would be exempt.

Provide Funding for Biomedical Research, Including Aging Research. To accelerate progress in biomedical research, the Budget continues to support research both on the campuses of the National Institutes of Health (NIH) and for approximately 325,000 scientists and other research personnel at institutions across the country. The Budget provides more than $2.5 billion to NIH aging research.

Transfer and Improve the Senior Community Service Employment Program. The Budget transfers the Senior Community Services Employment Program (SCSEP) to the Department of Health and Human Services to improve coordination with other senior-serving programs. This change will improve program operations and allow SCSEP to better support not only employment outcomes, but also health, wellness, and independence for seniors.

Support the Medical Needs of Veterans. The Department of Veterans Affairs (VA) estimates an increase in the provision of health care services for veterans aged 65 and older. To meet the needs of this specific group of veterans, the VA Medical Care Budget includes $24.7 billion.

Adjust LIHEAP for Expected Winter Fuel Costs. The President’s Budget provides $3 billion for the Low Income Home Energy Assistance Program (LIHEAP) to help struggling Americans make ends meet by offsetting some of their home heating and cooling costs. While the cost of natural gas -- which is the heating fuel most LIHEAP households use -- has not risen in recent years, the price of heating oil has been on the rise. The additional $450 million over the 2012 request reflects expected home heating costs for winter 2012-2013.

Reduce Social Security Appeals Hearing Backlog. Disability programs are at the forefront of the Social Security Administration’s (SSA’s) operations. The Budget maintains services to the public, which SSA provides through multiple avenues, including the Internet, over the phone, and in person at hundreds of local offices. In addition, the agency will continue to increase efficiency by holding hearings via video conference for areas of the country with the most cases and increasing the use of online services. By completing approximately 960,000 hearings in 2013, the average processing time will be reduced to SSA’s target level of 270 days in September 2013.