What About Social Security?
The Social Security Act became law in 1935 and created a system of “social insurance.” Workers pay into trust funds through deductions from wages, and employers match the workers’ contributions. Benefits are calculated on the thirty-five years of highest earnings. The maximum amount of wages subject to Social Security (FICA) tax for 2023 is $160,200. The system began to pay benefits in 1940.
Originally, the Act called only for retirement benefits, but through the years the system expanded to include payments to spouses, survivors, and the disabled. Thus, Social Security now provides life insurance, as well as retirement, and also protects against lost wages resulting from disability before one reaches retirement age.
Roughly a third of Social Security’s checks go to people younger than retirement age; that is, to survivors of deceased wage earners and to the disabled. The elderly are not the only ones who benefit from Social Security. Virtually the entire population does¾either through receipt of benefits, insurance coverage, or being freed from the necessity of caring for their elderly relatives.
Benefits are indexed to inflation, so that purchasing power remains constant through the years. Moreover, benefits continue through the lives of beneficiaries, however long they may live; one cannot outlive benefits.
As limited as the benefits are (and it would be an excellent idea and easily achievable to expand, not reduce, them), most retired Americans receive a substantial portion of their income from Social Security. For the average retiree, Social Security accounts for nearly a third of the total. More than a third of America’s retired elderly, in fact, count on Social Security for half or more of their total income. Substantial numbers of retired people have no income at all except for their Social Security. For millions of Americans, the benefits they receive from Social Security enable them to escape poverty and live in reasonable comfort.
Despite scare propaganda from groups who would profit from privatization, the system’s finances are sound. The highly publicized times for depletion of the trust funds vary from year to year, and are always based on “intermediate projections” from the annual reports from the system’s Board of Trustees. The trustees, themselves, caution in their reports that depletion years are to be considered only as estimates based on a huge number of assumptions. They are not to be taken literally.
Nevertheless, commentators generally treat them as firm and unquestionable, and mistakenly refer to the trust funds’ impending “bankruptcy.” This is nonsense. The projections are extremely cautious, and likely are quite pessimistic. “Bankruptcy” is not an appropriate term for a federal, tax-funded, program. FICA taxes in would continue to come in, regardless of trust fund balances. Moreover, the trustees always publish a “low-cost,” more optimistic, projection that tends to present the future of the trust funds as secure in the long run. The conditions that the low-cost options project are just as likely as the Intermediate projections to materialize. If conditions were to become less favorable to Social Security, however, it would be a simple matter to adjust tax rates, lift or remove the cap, etc. Dire warnings about “unsustainability,” are scare propaganda designed to frighten the public in hopes that they will accept unwarranted modifications to the system based on conservative ideology, not finances.
Social Security is remarkable, it keeps millions from poverty, provides them with independence, and all the while it operates at far lower expense (less than 1% for administration) than any other income-transfer system. Also, it is off budget. Lowering benefits would not affect the deficit or the national debt; it would merely build up bigger trust funds, while continuing to tax workers, but providing them with nothing for their taxes. It would not provide balance to the budget.
Why, then, is there any opposition to such an efficient and worthwhile system? Why are Republicans such as Senator Ron Johnson urging that the system should require re-authorization every year, or else vanish?
Johnson, of course, will never be considered as among the more able or thoughtful senators. Senator Rick Scott, though, until this November, was chair of the National Republican Senatorial Committee, an official Republican organization. He proposed that Social Security and Medicare be authorized only for five-year periods, ceasing to exist if Republicans gain control and fail to re-authorize them.
Most egregious of all, and openly revealing the obvious betrayal by Republicans of the decades-long consensus regarding the value of Social Security, are the bullying threats from Senator John Thune. Thune currently is number two among the hierarchy of Senate Republicans. It has just been announced that he intends to hold the debt ceiling hostage. That is, he intends to block any elevation of the debt ceiling unless there are cuts to Social Security. This reveals the reckless cruelty of current Republicans. Incidentally, it also reveals that the dangers of the “debt ceiling” that performs no useful function; it saves not one dollar, and creates opportunities to cause chaos. It only permits irresponsible politicians, such as Thune, to create mischief.
Some of the opposition arises from investment bankers and other wealthy groups who might benefit from privatization. Most, however, comes from extreme conservatives who simply do not like government programs, regardless of their many vital functions. Do they not recognize how cruel it would be to slash the incomes of those who count on it, including those of very limited income?
The cruelty is the point. Many conservatives do not ignore the cruelty that they would cause; rather, they welcome it. Ronald Reagan began to redistribute income upward, and his party has since continued to do so with a vengeance. Until recently, they generally kept their intentions hidden. Now, though, they are openly expressing their hostility to the less fortunate of their constituents. Republicans no longer find their motto embarrassing, no longer do they find it necessary to disguise it. It is, “Soak the poor, and reward the rich,” and clearly and overtly is a common theme of their proposals. They recognize few, if any, “deserving poor.” To be poor is to be fair game. Anyone who wants to avoid institutionalized cruelty should just go out and get rich.
As the Herblock cartoon in 1964 put it (portraying the message from Republican presidential candidate, Senator Barry Goldwater), the poor should simply go out and inherit department stores.