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With the memory of the Great Depression still
fresh, President Franklin Roosevelt in 1944 envisioned a second,
Economic Bill of Rights that included: "the right to a useful
and remunerative job," "the right to adequate medical
care," and "the right to adequate protection from the
economic fears of old age and sickness and accident and unemployment."
In Roosevelt’s view, the political and civil rights granted
by the U. S. Constitution were compromised in the absence of economic
rights.
Today, when national resources make it economically
possible to move far beyond the visions of that earlier time,
Social Security, the government program that has extended modest
security to generations of Americans of all ages, is under attack.
Unable to destroy a successful and popular program directly, conservatives,
who have fought it since its inception in 1935, have shifted to
a false claim that Social Security is financially unsustainable.These
articles aim to show that it is financially sound without any
changes whatsoever, and that it serves a far larger population
than only retirees.
The articles in this SOCIAL SECURITY PACKET can be used by individuals
and organizations to:
- Expose the phony Social Security "crisis" by
showing that Social Security is fiscally sound and able to support
a growing elderly population
- Explain why privatization--putting our Social Security
money into the stock market-- would create social insecurity
or a real Social Security "crisis" for tens of
millions of Americans. Privatization is also a cover for an
attempt to reduce Social Security benefits to irrelevance.
- Show how Social Security benefits the entire U. S. population,
prevents poverty, and is especially important to women, minorities
and other lower-wage workers
- Point out how Social Security can remain fiscally secure
There Is No Social Security "Crisis":
Social Security Is Fiscally Sound
The projections used by the Social Security Trustees are
based on "very conservative" assumptions about economic
growth--in fact rates far slower than those of the past 75 years.
[See Irwin
Kellner's Economic Report, J/F 2005] Under these "intermediate
" assumptions, the Trustees project that the Fund will run
out in 2041. Even then, payroll tax collections would be
sufficient to pay recipients 78% of higher benefits, according
to the Trustees.
If the U.S. economy grows at the Trustees' most
optimistic rate, just under 3 percent a year over the next 75
years, below the historical rate of 3.4 percent of the last 40
years, the Social Security Trust Funds will continue to expand
indefinitely. [See 2008 Annual Report of the Trustees, Tables
V.B2 and VI.F8]
There Is No Demographic "Crisis"
[See Social Security Is Not In Crisis]
The ability of a country to support the population
who are not of working age--the young and the elderly--depends
on its total resources as well as thesize of this dependent population.
In 1960, when the United States was shouldering the responsibility
for both the baby boomers and the elderly, its Gross Domestic
Product (GDP) per capita was only 37% of what it is now [2006;
ERP
2008, Table B–31]. Moreover, the baby boomers and the
elderly combined were larger in proportion to the working-age
population than the comparable group will be later in this century.
At the time when the "crisis" crowd
says we’ll have too many dependents to take care of, this
nation will be much wealthier than we were during that earlier
period of high dependency. We are wealthier because our workers,
made more productive by their education and tools, produce more.
It is not merely numbers of workers per dependent that count.
If it were, countries like Bangladesh would be better able to
afford retirees than the US. It is productivity--the output that
each worker can produce--that determines our prosperity. It is
absurd to think that a nation as rich as the United States cannot
provide security to all.
The Social Security Trust Fund Is Safe
President Bush warns future beneficiaries that
"there is no Trust Fund; just IOU's" [April 5, 2005
photo op at the Public Debt], implying that the government might
renege on its debt. Yet government IOU's, held by the Chinese
and other governments, foreign corporations, and foreign investors
are funding our enormous trade deficit. Would the President wish
to convey to these bond holders that our government is an unreliable
debtor? The government has never defaulted--why should it just
for the Trust Fund bonds, bought with the taxes of many people
too poor to pay income taxes?
Social Security Benefits and Protects the Entire Population
[see Social Security Is Not Just for
Seniors and Quiz:What's
in it for Younger People?
Social Security benefits all age groups--young
workers who have insurance for death and disability during all
of their working years, retired workers, disabled workers and
their dependents, and the survivors of deceased workers. Eleven
and a half million Social Security beneficiaries are not elderly—they
are workers with disabilities, children of retired, disabled,
and deceased workers, and care-taking parents.
- Before Social Security, the groups that are now covered--working
men and women, seniors, widows, orphans, and disabled persons--had
neither insurance nor savings. Those were the days of social
insecurity.
- Social Security protects the elderly at all income levels,
and for all but the wealthiest one-third of seniors, is their
principal income.
- Social Security relieves adult children of much of the financial
strain of supporting their aging parents and gives parents the
dignity of an assured income of their own.
Social Security Prevents Poverty
Without Social Security, over half of all seniors
would be living below the government’s official poverty level.
-
Without Social Security, 60% of African-American
seniors would be in poverty instead of the current 23% [2005]
[ AARP
Fact Sheet, 9/07].
-
In 1959, more than one-third of Americans
65 and over were living below the official poverty level.
Seniors were then the poorest age group in the population.
Thanks largely to Social Security, the elderly are now the
age group with the lowest poverty rate.
Social Security Benefits Women, Minorities
and other Low-Wage Workers
-
Because they face discrimination and often
lack health care and other resources, groups such as African
Americans have lower life expectancies than other groups.
Consequently, they are more likely than less-disadvantaged
groups to need Survivors’ benefits.
-
Women, minorities, and other lower-wage
workers who are less likely to have private pensions or assets,
depend more heavily on Social Security than higher-income
workers. In fact, higher-wage workers, too, are increasingly
likely to be without employer-financed pensions, so Social
Security will become even more important for them as well.
-
Owing to more risky jobs, less access to
health care, discrimination, and poverty, lower-income and
minority workers have higher rates of disability. Consequently,
they are more likely to depend on disability benefits than
more privileged groups.
-
Women are less likely to have pensions
than men, and if they have pensions, to have smaller ones.
So women must rely on Social Security for a larger part of
their retirement income. They also live longer, and thus are
more likely to outlive their savings.
Why Have Some Politicians Created a Social
Security "Crisis" and Proposed Privatization as a Cure?
After all, privatization is not a solution to the "crisis"
they are describing. On the contrary, it creates a new problem--how
to fund current benefits, now paid by payroll taxes, when some
of those taxes are diverted to private accounts.
- Perhaps the worst aspect of the privatization debate is that
it obscures the planned benefit cuts,
which may mean the end of Social Security as a social insurance
program. The intention is to so reduce long-term benefits for
all but the poorest retirees that Social Security will effectively
disappear as a social program.
- The poorest 30% of recipients [those currently earning less
than $20,000 a year] would continue to receive the benefits
of the current law. For those receiving above $90,000 a year,
inflation-adjusted Social Security benefits would be frozen
forever at the level of the year this procedure is begun. For
all other workers, there would be some upward adjustment. However,
the benefits of a worker making $60,000 today would be cut by
more than 40 percent over the next 70 years.
-
The cuts are sufficiently severe that after
the year of the so-called crisis, when the Trust Fund is projected
to be gone, benefits would be higher for all workers earning
$55,000 or more if they consisted only of what payroll taxes
make possible rather than the President's plan.
Info on the President's plan from "What You Might Not
Have Learned About The
President's Social Security Plan"
Privatizing Social Security
When it comes to predicting economic growth they
say the economy will grow much more slowly than it did over the
past century and that this will cause a Social Security "crisis"
or a shortfall in revenues.
Although privatizers take a dim view of future
economic growth, they are very optimistic about the stock market.
They claim the stock market can rescue Social Security, despite
the prolonged, sluggish economic growth that they predict.
But ultimately, the performance of the stock
market depends on the underlying strength of the economy, including
economic growth. How can they be optimistic about the stock market
and pessimistic about the economy?
Privatizing Social Security Would Increase Social Insecurity
Privatizing would expose Social Security funds to the inevitable
swings of the stock market
Taking money out of the trust funds and putting it in the
stock market would cut the funds available for current benefits
Privatizing would mean that Social Security is no longer a
lifetime, inflation-adjusted benefit with a guaranteed minimum,
but rather an income which varies with stock prices and the
financial expertise of the wage-earner, as well as with length
of working life. The latter means that benefits for disabled
men and women and the survivors of young workers would be too
small to cover family needs.
Privatizers forget that before the public sector
was enlarged—including Social Security and Medicare--depressions
were a recurring phenomenon in the United States. Instead of a
depression about every 20 years—the record throughout the
entire period from 1800 to 1928—the United States has been
depression-free since 1941. An enlarged public sector is a buffer
against
recessions because it keeps up purchasing power. Yet, the opponents
of Social Security would risk removing or crippling these safeguards.
Everyone, including economic elites, would suffer, not only current
beneficiaries of Social Security.
Keeping Social Security Strong
Increasing public investment, reducing unemployment,
and ensuring that wages regain and surpass earlier peaks will
provide a strong economic foundation for financing Social Security
and other social needs
Jobs for All at living wages
is the best economic insurance for Social Security because it
means more people make higher contributions and fewer people collect
benefits
In addition to the economic foundation for Social
Security, we need the political will to use our abundant resources
to protect all our people against poverty and extreme inequality
Prepared by Social Security Task Force: Robb Burlage,
Eleanor Kremen, Helen Lachs Ginsburg, Laura Piil, June Zaccone,
Editor, Gertrude Schaffner Goldberg, Chair
July 18, 2001 Latest revision April 2008, by June Zaccone
WHAT IS SOCIAL SECURITY?
The program popularly known as Social Security is really Old
Age, Survivors’, Disability, and Health Insurance (OASDHI).
In 1935, during the Great Depression, Congress passed the Social
Security Act which initiated not only Old Age Insurance but Unemployment
Insurance and several public assistance programs as well. When
he signed the bill for which he and other New Dealers had campaigned
vigorously, President Franklin Roosevelt declared that had no
other bill been passed by Congress, "this session would be
regarded as historic for all time." Before Social Security,
much of the population had neither savings, private insurance
nor public provision for old age, unemployment, disability, and
the loss of a family breadwinner
From the beginning Old Age Insurance has been financed by a payroll
tax or a percentage of workers’ wages that is shared equally
by employers and employees (except in the case of the self-employed
who pay the combined tax). Financing the program with the contributions
of workers and their employers has meant that the beneficiaries
of Social Security feel that they or their breadwinners have contributed
to their benefits rather than that they are getting charity or
welfare. However, because the tax is levied on a portion of workers’
wages, individuals with employment income over the maximum ($97,500
in 2007) pay smaller portions of their earnings than those below
the maximum. Whereas the Social Security tax is regressive, the
benefit is progressive; that is, the benefits of lower-wage workers,
though smaller than higher earners, are a larger proportion of
their former earnings. Social Security is a federal program that
is uniform throughout the 50 states.
Social Security began modestly with a retirement benefit for
workers in some industries. Initially, it excluded such occupations
as agriculture and domestic service in which large proportions
of African Americans and women were employed. Within a few years
Social Security began to expand and to cover more of the population.
In 1939, survivors of deceased workers—spouses and orphans—were
included, and in the 60 years of its existence Social Security
has grown to include disability and health insurance (Medicare)
and to provide for additional dependents such as disabled children
and divorced spouses. Whereas many workers and their dependents
were excluded from the limited, initial benefits, nearly all workers
and their dependents are now covered.
Social Security is the largest social program in the United States.
In 2007, nearly $600
billion dollars in benefits were paid to 50 million people.
©The National Jobs for All Coalition,
a project of the Council on International and Public Affairs.
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