Saving Social Security and the Poisonous Chalice

Social Security in Danger of being CutReturning from the sunny climes of Hawaii to the nation’s still frigid capital, President Obama will, over the next couple of months, face the greatest challenges of his time in office.

Pushing healthcare reform through – as limited as it turned out to be – was an historic achievement. However, the question now before us is: shall the powers-that-be wreck two of the most important legislative achievements in our country’s history by undermining Social Security and Medicare. Will they succeed in using the current economic crisis as a phony excuse to destroy the retirement security of the present and future elderly? It really is an open question because powerful forces are endeavoring to do precisely that.

Expect the principal target for the moment to be Social Security. Betting in Washington appears to be that Medicare is relatively safe for now because the Republicans don’t want to risk the ire of older voters – including some Tea Party people – who, before the midterm elections, were conned into believing that healthcare reform posed a threat to their access to medical care. Of course, it’s a cynical political conclusion, but so too is the effort to link the proposal to scale back or privatize Social Security to the goal of reducing the federal budget deficit.

Social Security is not to any significant extent a contributing factor in the burgeoning deficit. Defenders of the system, including some leading economists, have been so successful in debunking the myth that, in a fit of intellectual honesty, some conservatives have begun to advance other specious arguments for “entitlement reform.”

Take, for instance, conservative Washington Post columnist Michael Gerson.  He put it rather frankly last week. The reason for going after Social Security is, he says, to convince the “global credit markets” that the Administration is serious about deficit reduction and to persuade Obama that it would be a wise political gambit. Gerson, formerly of the right wing Heritage Foundation, was a speechwriter and senior policy advisor for President George W. Bush and was part of the White House special group that plotted the Iraq war.  While maintaining that Social Security is a “relatively small contributor to future deficits,” he nonetheless argues that “reforming it would be a large symbol and logical place to begin.”

Asserting that Gerson and other conservatives seek to “trap” the President on Social Security, liberal commentator Robert Borosage, of the Campaign for America’s Future, wrote last week,  “Gerson argues that Obama faces a major strategic decision in his coming State of the Union address, which must take the ‘first cut at the reelection message he carries to reelection or defeat.’ Gerson helpfully offers a course virtually guaranteed to increase the chances of the latter.”

Borosage notes that Gerson’s argument is that to gain agreement with Republicans, Obama “will have to offer up more, choosing between tax reform and entitlement reform,” adding that, “The former is dismissed as too hard. (And is dangerous for Republicans since it is hard to do tax reform without insisting that the wealthy no longer pay an effective tax rate that is lower than their secretaries).”  He goes on:

Reforming Social Security by raising the retirement age and cutting benefits – however gaudily packaged to make the system more “progressive”- is unpopular not just with liberals, but with independents, conservatives and Tea Partiers. Embracing it won’t “polish” the president’s image among independents; it will prove to Americans across the political spectrum that the president is out of touch. Americans, mostly those approaching retirement, just lost over $11 trillion in assets from savings and home values. Most don’t have a pension, and those that do fear that they are at risk. Savings were inadequate before the financial collapse. Every survey shows that Americans do not want politicians to mess with Social Security, the one secure leg left to retirement.

“Of course, this is a Republican conservative offering up this advice,” wrote Borosage. “Adopt a course that will not address our pressing problems, do nothing about growth and jobs, torpedo support among seniors and blue collar workers, alienate voters across the political spectrum, tear apart the Democratic Party, and fail to address either short, medium or long term deficits. Great advice from a former George Bush operative. Keep this poisoned chalice from thy lips, Mr. President.”

 This situation is partly of Obama’s own making. As part of the President’s much hyped “bipartisanship” maneuvering last year, he appointed a special group to make recommendations on reducing the deficit. The body, known as the National Commission on Fiscal Responsibility and Reform, was headed by a Republican, former Sen. Alan Simpson and a Democrat, former Clinton Administration Chief of Staff Erskine Bowles. When the body was unable to agree on proposals before its mandate expired last month, the pair issued their own recommendations, chief among them being cutbacks in Medicare and Social Security.

Since that time, advocates of Social Security “reform” have mounted a multi-million dollar campaign to get the Commission co-chair’s recommendations enacted. The editors of the Financial Times immediately endorsed the Simpson-Bowles proposal and have repeatedly called on the President to “prepare the country for the necessary changes,” it outlines. As recently as last Sunday, the New York Times was insisting that “entitlement” cuts have to be “on the table.”

The danger now is that Social Security could fall victim to another Washington backroom deal, which is what some are openly promoting. On December 20, the Washington Post revealed that “a new, informal gathering of senators” have been meeting since the summer to discuss ways to curb the deficit. The group “includes more than 20 senators, with a roughly even partisan split.” Reportedly it is lead by Senators Saxby Chambliss, a Georgia Republican, and Mark Warner, a Virginia Democrat, who have said they will introduce legislation encompassing the Deficit Commission co-chairs’ plan.

Congress recently passed a temporary extension of the federal budget limit. A showdown could come in March when Republicans are threatening to shutdown the government if they don’t get the $100bn in spending cuts they are insisting upon. “It could add pressure on the Obama administration to come up with its own deficit reduction plan ahead of the state of the union address and the 2012 budget proposal, expected in February,” said the Financial Times.

Thus, the trap is laid.

“I do not want to cut benefits or raise the retirement age,” Obama said back in 2007 when he was a Presidential candidate. “I believe there are a number of ways we can make Social Security solvent that do not involve placing these added burdens on our seniors.”

“Currently, the Social Security payroll tax applies to only the first $102,000 a worker makes…If we kept the payroll tax exactly the same but applied it to all earnings and not just the first $97,500, we could virtually eliminate the entire Social Security shortfall,” he wrote in an op-ed piece in the Quad City Times, a daily in strategic Iowa in September 2007.

It is important to note here that when Obama made these statements he was immediately attacked, not just from the right but also by the campaign of his Primary opponent, Senator Hilary Clinton. At the same time liberal and labor groups trumpeted his pledge on Social Security to prospective voters, arguments that undoubtedly were critical in their ballot box decisions.

Strengthening Social Security by extending the tax contribution to all of income has been advocated by senior and labor groups for months now but the major mass media doesn’t pay any attention to them.

I have written before about the “enthusiasm gap” that was evident in the slumping voter turnout in the midterm election, especially amongst younger voters.  It is not hard to fathom why. These politicians are playing cynical games with human lives.  Millions of people are dependent upon Social Security for all or most of what they need to live when their working lives end. This is particularly true in the African American and Latino communities.  And, a period of widespread economic distress is hardly the time to talk about undermining retirement security.

“The supposed crisis of Social Security is a phony,” wrote American Prospect Co-editor Robert Kuttner December 12 on the Huffington Post. “Social Security is financed by payroll taxes. Reduce unemployment, increase wages, and the crisis disappears. Even with only modestly better unemployment rates and wage growth, the modest projected shortfall could be eliminated by eliminating the cap on income subject to tax.

“A Democratic president with strong progressive principles and political nerve would have taken his party into the mid-term election pledging never to cut Social Security and daring Republicans to take a similar pledge. Instead, Obama appointed a deficit commission with a majority of appointees wanting to cut the Democrats’ signature program — thus blurring party differences on the Democrats’ biggest political winner.

“Obama also signaled Democrats in Congress that he might well include Social Security cuts as part of a grand deficit-reduction deal. If that occurs, the civil war in the Democratic Party will only deepen.”

The President will be well advised to listen to that advice rather than swallowing a drop of Gerson’s political hemlock.

Carl Boice

Republished with permission from the Black Commentator.

Watch the video below and then click here to join the coalition united to Strengthen Social Security


Published by the LA Progressive on January 6, 2011
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About Carl Bloice

Carl Bloice was a writer in San Francisco, a member of the National Coordinating Committee of the Committees of Correspondence for Democracy and Socialism and formerly worked for a healthcare union. Carl Bloice died on April 12, 2014 in San Francisco, after a long battle with cancer. He was 75. Carl leaves behind a world enriched by his contributions, with friends throughout the world.

Comments

  1. Frank Amon says:

    The arguement for collecting full payroll taxes on incomes above $102,000 should always be accompanied by stating whether benefits would or would not be increased for these people. If benefits were to be increased, the change would have little effect on the whole picture. If benefits were capped, so that the whole of the new income were available to shore up the Social Security fund, it would seem to be a major help to the long term security of a lot a people. But, is it fair to the high income people to increase their taxes but not their benefits?

    • Thomas White says:

      Not paying higher benefits while raising the payroll tax on that sector would fundamentally change the design of social security. It would then be (more) like the other programs; easily manipulated to hide funds, move funds, skim funds, etc. The promise that has stood for all these decades would be broken. It was the first, large permanent social program in the U.S. to my recollection, and many consider it the most useful one.

      Since there has been a long, steadily increasing trend of there being many more single people and fewer people having children, there should be less in the way of survivor’s benefits being paid out of the fund. Used to be a 1% tax, then 2%; that probably covers the first 35-40 years.

      A single, childless woman who’s worked all her life dies at age 50 in a car accident. Nothing gets paid out of the fund, yet she contributed all her adult life. Why the fund would be even close to insolvent is a mystery to some, a scam & crime to others. That it has been almost continually in the news for 25 years, almost always with reports of problems on the horizon coming from lawmakers on both sides, while little has reportedly changed in its administration, doesn’t jive with an honest government doing a proper job of managing funds.

      Would you continually complain to your auto mechanic that the transmission in your vehicle was leaking and must be fixed, if it had never leaked? Social security is a closed system by design. Any leaks should be readily evident, or lack thereof easily proven, even accounting for changes in employment rates & wages.

      The system is stupid not because it is a trust fund, but because so many people die before ever receiving a penny. Pointless for them, and decidedly “unfair”.

      Consider a woman aged 45 in 1995. She has cancer, lost her job, health insurance has run out, and she is about to be evicted. Could it have been worth it to allow her to use her own social security funds in an effort to save her own life?

      If that act consumed all of her social security funds, but she lived another 10 years, tell me what innocent person would have been harmed?

      What if the ill person was the woman’s child, and the social security funds saved the child, who went on to pay a lifetime’s worth of all taxes?

      We give government largesse to, in effect, make responsible decisions for individuals, since individuals sometimes do not make responsible choices. But, falling through the cracks are those who are maliciously harmed by such systems, and seldom reproached is the government responsible for it. Even now after all these decades, the ill can have a hard time getting a penny of social security.

      Were any confused about why the health care debate has been vitriolic at times?
      People that get sick can’t even get their money out of social security to pay for health care costs. Why on earth would they want to pay higher taxes to pay for the health care insurance of someone who is completely healthy, and has never paid a dime into social security?!
      Fair?

  2. Although not egregiously right-wing like the idiotic global-warming-denialist diatribe featured recently, this has to rank as the most clueless article featured on this site in the past few years.

    Social Security is not merely an “insignificant” contributor to the deficit, SOCIAL SECURITY DOES NOT AND CANNOT CONTRIBUTE ONE DIME TO THE DEFICIT! It is a trust fund separate from the budget. Like any insurance company, it must maintain sufficient reserves to meet future obligations, and those amount to something like $2.5 trillion in government bonds paid for by WORKERS. While past SS surpluses were often bundled with budget figures to conceal operating deficits even back in the 1950s, even conservative papers would usually point out that Social Security was actually NOT part of the budget.

    Social Security was also DELIBERATELY set up as insurance paid for by the beneficiaries, so it would not be open to attack as a welfare program. (In fact it is slightly regressive since low income workers have lower life expectancies. Extension to higher incomes with a cap on benefits fixes that.)

    The real threat to SS is the deal to eliminate the payroll tax for one year. That requires either reducing future benefits or paying the difference from the budget, which will include Social Security in the operating deficit. That will give the Citizens United class an opportunity to steal the entire 2.5 trillion dollar trust fund.

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