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Netroots Nation: Strengthening Social Security
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One attendee of the Netroots Nation panel provocatively titled “Obama’s Social Security ‘Death Panel’” later told me he had gone into the panel dubious that there is any real threat to Social Security. “But I left mad,” he said, questioning how such an important part of America’s social fabric could be threatened. Yet as the panelists detailed, Social Security is most definitely under attack–and it’s an attack that could fundamentally alter how we understand the program.
Panelists agreed the most direct assaults on Social Security takes are likely to be defeated, as the privatization of the program was in 2005. But they pointed to a more nuanced threat. Robert Borosage of Campaign for America’s Future contrasted the “frightened, timid and cautious leadership” of today with the “confident society” that, following World War II, responded to a much larger deficit (as percentage of GDP) by embarking on a series of spending programs that reshaped the economy and built the middle class.
Today, Borosage said, there is an emerging elite consensus that is “focused on Social Security because it will show they’re ‘serious,’ even though it will have no effect on the deficit.” They portray Social Security as being in crisis, then claim that proposed cuts are “saving” the program. Eric Kingson, co-director of Social Security Works, made it clear that Social Security is not in crisis.
Social Security should and can work for the next 75 years.
“But it’s up to all of us” to defend it. Crucially, defending Social Security
is not about dollars and cents and it’s not about balancing the books. It’s about how well the American people do—all of us.
The elite consensus will, unfortunately, drive too much of what happens on a policy level. But what about working people? As a panelist myself, I spoke about what Working America organizers hear in the field every night, on the doorsteps of thousands of working Americans. Working people are deeply worried that their Social Security benefits will be cut, but too much of what they hear is dominated by fear-mongering claims that Social Security is in crisis. If the progressive movement doesn’t reach out to working people with the message that Social Security is not in trouble, we allow its enemies to define the debate. And if the debate begins with the assumption that cuts are needed to “save” the program, we’re stuck fighting against backward movement. Instead, we need to be fighting our way forward by providing working people information that shifts the debate forward.
That fight “is going to be the battle of our lives,” according to the blogger Digby. She referred back to the successful fight against privatization in 2005 and highlighted the importance of repetition: For every time opponents of Social Security say it’s in crisis, its defenders have to say “no, it’s not.” Or “strengthen Social Security—don’t cut it.” (And make no mistake, raising the eligibility age is a cut.) As progressive bloggers and individuals and organizations, she emphasized, we have to use every tool at our disposal to amplify those simple messages.
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6 Comments
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“If the debate begins with the assumption that cuts are needed to “save” the program, we’re stuck fighting against backward movement. Instead, we need to be fighting our way forward by providing working people information that shifts the debate forward.” –That’s great! Dean Baker said on Democracy Now! that the SS crisis is definitely fear-mongering because everyone in DC is so focused on the deficit and also Sen. Simpson is a big ageist (http://www.freespeech.org/video/democracy-now-monday-july-19-2010). Working people will suffer the most, as usual, by unneeded cuts in Social Security.
There are several ways to secure social security’s future–vote democrat,require companies who outscources jobs from this country to contribute a substantial tax towards it,somehow get the businesses to begin hiring workers so revenue for the program can start building again and for the love of God STOP THE PARTISAN BATTLES!!LET’S MOVE FORWARD!!!
I was a participant in a national town hall on the budget and the deficit and 85% of 3500 participants voted to raise the limit on taxable income so it covers 90% of total earnings in America. It’s clear that the people of America have figured this out but our politicians all suck! This was a group that was 33% conservative leaning and 44% Liberal with 23% right in the middle. Our people are alright!
The privatization of the Social Security system and the use of the Social Security trust fund for any purpose other than payment of Social Security benefits must be taken off the table never to be considered again. Social Security shields millions of Americans from the “vicissitudes of life“ to which President Franklin Delano Roosevelt referred when he conceived the original social insurance program which evolved into Social Security as we know it.
Some argue that Roosevelt only intended Social Security to be a “supplement” to private savings and assets. This may have been true in 1936, however time and circumstances have altered matters. Just as the United States itself is, to paraphrase the late Senator Edward M. Kennedy, “ever a work in progress and never a finished product,” so are many of our nation’s bedrock institutions. Social Security is also an ever-evolving, “work in progress.” Social Security requires adjustment and course-correction from time-to-time in order to serve the growing needs of our people. Those needs can only be guaranteed as long as Social Security remains entirely within the public sector.
Somewhere along the way, people began to be skeptical about the future of Social Security. This unhealthy skepticism is no accident. It is the result of a sustained decades long campaign of misinformation funded by Wall Street and right wing groups who do not believe government should play a positive role in the lives of its citizens. Almost since its inception, these forces have dedicated significant resources to undermining public confidence in Social Security. The perpetrators of this insidious smear campaign have developed a series of myths to convince people that Social Security is disappearing and will fast become insolvent. These myths include the following:
“Social Security won’t be there when you retire.’1 This twisted logic says that, “If you are under the age of 50, there is a 100 percent chance the Social Security system will leave you high and dry during your golden years.” 2 This is more than a myth, it is an unforgivable lie designed to frighten people. Social Security, with no changes can pay full benefits for decades to come and with minor changes will have the ability to continue paying full benefits ad infinitum. 3
Another myth Wall Street and their GOP puppets continuously perpetuate is the idea that, people, “would do better putting”, their money, “in stocks than paying into Social Security.’ 3 The radical right-wing Cato Institute issued a report not long ago in which they argued that one of the great “advantages” a private, for-profit system could offer would be, “greater retirement income…from investing in markets.” 4 Not only is this yet another huge lie, it completely misrepresents the very nature and purpose of Social Security. Social Security is not just for retirees, and it is not an investment portfolio. Social Security is social insurance. In addition to retirement benefits, Social Security also functions as public insurance against loss of household income due to disability or death of a spouse or parent. Social Security covers life insurance, disability insurance, and secures quality of life for retirees. No 401K could do that. No investment portfolio could guarantee specific benefits in the way Social Security does.
“They want [us] to believe that The Baby Boomers’ retirement will bankrupt Social Security and Medicare. (see footnote number 3)” 5
“They want people to believe” that “The Social Security trust funds will run out of money around 2034.” 6 Another blatant lie. In response to this charge from fringe-group economists from the right-wing Heritage Foundation, several other experts released far more credible opinions. Roger Hickey , Co-director of the Institute for America’s Future and director of the Institute’s Social Security Information Project stated that, “…the Heritage report “is typical of the kind of misleading analysis that opponents of Social Security have been getting away with for the past two years. But they’re not going to get away with it anymore. They are playing with numbers and they are misleading the American public, downplaying the risk that privatization would wipe out people’s retirement savings. And I’m talking about the baby boomers and younger workers who would be affected, not today’s retirees.”
Edie Rasell, an economist with the Economic Policy Institute, said: “The Heritage report is inaccurate and misleading. The Social Security system is fully sound for the next 34 years, until 2032; then revenue from payroll taxes (at their current level) will enable the system to pay 65-75 percent of benefits indefinitely into the future. Minor changes in the program would ensure full benefit payments for the next 75 years. Social Security is much more than a retirement savings plan. It also provides income support for disabled workers and their families and survivors of deceased workers who jointly make up about one-third of all beneficiaries. Standard private investment accounts do not provide these benefits. Social Security is crucially important to most retirees, providing about three-quarters of the typical senior’s income. The program can and must be preserved as a reliable and risk-free source of retirement income.” Hans Riemer, director of the 2030 Center, which works to ensure that Social Security will still be around for Gen Xers, said: “Why single out Social Security for its ‘unfunded liability’? The long-term unfunded liability of the Pentagon is many trillions of dollars. Nothing Heritage is proposing would really reduce the economic costs associated with aging. More importantly, the Heritage approach to handling the economy will push working families’ incomes right into the ground.” Christian Weller, a staff economist with the Center for Popular Economics, said the Heritage report “is littered with inaccuracies, half-truths and outright omissions, and certainly does not add anything to the debate.” Weller continued: “Once a cash deficit occurs, Social Security will have plenty of interest income to more than cover its obligations, and fund holdings will subsequently continue to grow. However, while Heritage views bond interest income earned by Wall Street as income, it discounts the same interest income earned by Social Security trust funds as ‘meaningless.’ Social Security has always been a good deal and the bedrock of economic security in retirement, and it remains so.” Diana Zuckerman, director of research for the Institute for Women’s Policy Research, said: “Proposals to privatize Social Security ignore the ways that the current system protects many Americans from poverty, including widows and women who spend many of their adult years caring for their children as homemakers or part-time employees. Changes to the Social Security system are essential, but these changes can’t ignore the fact that women tend to earn substantially less than men. The report is based on a false premise. The Social Security trust fund is not bankrupt, and the system can be strengthened without the kind of radical changes that would have tragic repercussions for many women.” 7
Thus we see that Wall Street and their Republican puppets are nothing more than a pack of predatory liars who want to get their hands on the trillions of dollars which would accompany privatization. And even in the face of truth they will tell vicious lies to accomplish their goal.
One thing opponents of Social Security say is very true. When they say there is a very serious threat to Social Security they are quite truthful. They, Wall Street, the Republican Establishment, they are a very serious threat to the Social Security system. These forces in concert with other right-wing groups such as The Cato Institute and the aforementioned Heritage Foundation (to name only two of many), are lethal to Social Security.
The sustained attacks on Social Security by these forces have, regrettably taken their toll. It is not at all uncommon to hear otherwise reasonable, people quote distorted and misleading information about Social Security. And what do the vultures circling Social Security have to offer? In place of the guaranteed benefit Social Security offers, the privatizers can offer nothing more than a glorified lottery. The stock market may go up, or it may bottom out. If the latter occurs under a privatized system with no safeguards , retirees and the disabled are financially wiped out. Not many workers can afford to save significant amounts of money nor are they able to invest sufficiently in IRAs and 401K plans in anticipation of retirement, or disability. Even those who had managed to invest significantly in IRAs and/or 401Ks have been forced to sit back and watch as their next eggs lost more and more equity or simply vanished altogether as the Bush/Cheney financial collapse devoured a significant portion of their livelihood. And we’re now expected to believe that the same “free market” which plunged the nation into the worst financial crisis since the Great Depression would be the perfect place to put our public monies? I may have been born on a Sunday but it wasn’t this Sunday past.
Consider these points as well. Two out of Three elderly Americans rely upon Social Security for as much as 90 percent of their income. 8 For some, Social Security constitutes their entire income. 9 Realistically, none of the options bandied about by the privatizers would be helpful in any way. Every proposal put forth by the ultra-right would lead either to painful, untenable, benefit cuts, or an outrageously high retirement age.
This does not mean that changes cannot be made. It simply means that we need better options. The good news is, there are better options out there. On their own, or done as a whole, they would serve not just to protect Social Security beneficiaries from any future drop in benefits, they could enable us to consider raising the benefit amounts. But, first things first. Let’s examine the possibilities.
Right now, earned income up to $106,000 is subject to the Social Security payroll tax. 10 According to a report commissioned by the National Academy of Social Insurance there are a number of painless ways which could be employed to cover the future shortfall. I will not include all of them, only the most promising of them.
One proposal which holds great promise in my view would be to, “Eliminate the cap on earnings subject to the Social Security tax and count the earnings toward benefits.” According to the report, “If all wages above $106,800 in 2009 were taxed and counted toward benefits, the change would almost make Social Security solvent through the long-range period, eliminating about 95 percent of the 75-year shortfall.” 11 The only objection to this would be the following: “high earners and their employers would pay considerably more, these top earners would also receive much higher benefits. For example, one who had paid taxes on lifetime annual earnings of $400,000 would get a benefit of about $6,000 per month, or $72,000 per year, which would replace about 18 percent of the worker’s average earnings. One who had average lifetime earnings of $1.0 million per year would get a monthly Social Security benefit of about $13,500, or $162,000 per year, which would replace about 16 percent of that worker’s average earnings. These estimates assume that the existing benefit formula would apply to all earnings above $106,800.”12 (The next item addresses this inequity).
This proposal is very similar to the proposal above. This would involve eliminating the cap and “Count Earnings toward Benefits with a Flatter Formula. If all earnings above the cap were taxed and counted toward benefits, policymakers could decide to change the benefit formula to replace a smaller portion of earnings above the old cap as a way to avoid paying very high Social Security benefits.” 13 According to the report, “With this change, a worker with average lifetime earnings of $1.0 million a year would receive a benefit of $5,028 a month or $60,342 a year (instead of $162,000). This option, starting in 2010, is estimated to eliminate the 75-year deficit, resulting in savings of 2.17 percent of payroll.” 14 (This is easily further amendable and should be done so to more fully equalize benefit levels for all recipients and dramatically increase the Middle Class.)
The next recommended possibility is to, “extend coverage.” As it stands, “Almost all workers pay into Social Security. The main exception is the roughly 25 percent of State and local government employees who are covered by alternative pension systems and are not provided Social Security coverage (U.S. Committee on Ways and Means 2004). When Congress last extended coverage in 1983, it brought all newly hired federal employees into Social Security but did not extend that requirement to non-covered State
and local employees.” 15 Extending ,“Social Security Coverage to Newly-Hired Non-covered State and Local Government Employees.” In addition to reducing the 75 year deficit, this plan would, “achieve more nearly universal coverage under Social Security and to provide seamless coverage for workers who change jobs .” (Advisory Council on Social Security 1997; National Commission on Retirement Policy 1998). 16 This proposal also calls for treating, “all salary reduction plans like 401(K)S.” As it stands, workers pay Social Security and Medicare taxes on however much money to retirement accounts such as 401KS, “but they do not pay Social Security and Medicare taxes on their payments into other types of salary reduction plans, or “flexible spending accounts.” These are accounts that employers set up to allow their workers to exclude from taxable income out-of-pocket spending for health care, dependent care, or qualified commuting costs for parking, van pooling, or transit fares.” (Joint Committee on Taxation 2005) 17 The reason this policy was enacted and still exists applicable to 401K contributions was done to make certain that, “such plans are not used to avoid Social Security tax liability and that employees get Social Security protection based on those wages (SSA 2009d).” This might seem punitive until one understands that the intent was to provide for the maximum amount of income any person could draw from Social Security. “Exempting employee payments into flexible spending accounts from Social Security and Medicare taxes means that the respective trust funds are deprived of both the employee contributions and the employers’ matching share of Social Security and Medicare contributions.”18 (Left to my own devices, I would very likely enact the removal of any cap on payroll taxes, flatten the benefit levels, and include all state and local employees. Though I cannot prove it, I believe that both permanent solvency, and higher, more equal benefit levels would exist.)
As I previously stated, Social Security has evolved far past what it was when FDR signed it into law. I think that was his intent and it should be ours as well. If we want a growing and thriving economy and a growing and thriving middle class making it happen, then we may be closer than ever to that “more perfect union” of which our founders wrote and spoke so eloquently.
Sources/Notes:
1. http://www.globalaging.org/health/us/myths.pdf Page 3. Institute For America’s Future. Social Security and Medicare: Myths, Lies, and Realities; A Primer
2. IBID, PAGE 4
3. http://www.earvolution.com/2005/07/social-security-not-going-bankrupt.asp
3. FORMER CONSERVATIVE SYNDICATED COLUMNIST TONY SNOW. Quote: Syndicated Column August 1, 1998.
4. Quote: Cato Institute Privatization Paper # 2
5. IBID, Page 5
6. IBID, Page 6
7. Institute for Public Accuracy Social Security: “Shortfall” Warnings Distort Reality, Critics Charge http://www.accuracy.org/newsrelease.php?articleId=115
8. Dean Baker and David Rosnick, July 2010. The Impact of Social Security
Cuts on Retiree Income. http://www.cepr.net/documents/publications/ss-2010-07.pdf
9. IBID
10. National Academy of Social Insurance; Fixing Social Security, Adequate Benefits, Adequate Financing Virginia P. Reno and Joni Lavery October 2009
http://www.nasi.org/sites/default/files/research/Fixing_Social_Security.pdf
11. IBID Page 13
12. IBID Page 17, Option 8B
13. IBID Page 17, Option 8C
14. IBID Page 17, Option 8C
15. IBID Page 18, Option 9
16. IBID Page 18, Option 9
17. IBID Page 18, Option 9
18. IBID Page 19, TREAT ALL SALARY REDUCTION PLANS LIKE 401(K)S
The one reform that would make the future solvency of social security benefits a moot point is to eliminate the cap (currently at $109,000 per year) at which income is taxed. Currently, the social security tax is a regressive tax, allowing the wealthy to pay a far smaller percentage of their income; after all, social security benefits, unlike for the rest of the working majority, plays no role in their retirement plans. Furthermore, the bipartisan fear campaign being generated today does have something of a basis. The social security revenues are put into the government’s general fund and are skimmed for other purposes, like the Vietnam War and the current conflicts in Afghanistan and Iraq.
if congress would just put social security back into it’s own trust and get it out of the general tax spending policies it would take care of it’s self as it use to do.the reason they put it in the regular tax system is because it is so easy to get it and spend it on what ever program they want.give me a break it will build money faster than any program they got. long live social security