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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, tried unsuccessfully
to privatize it during the Bush Administration. Now they make
the false claim that it is financially unsustainable. This argument,
which began during the Clinton era, has accelerated as the government
deficit, driven by serious recession, threatened
financial collapse, a thriving military budget, and the Bush-era
tax cuts, NOT Social Security, has blossomed. [Our recession
has cut tax revenues and of necessity increased expenditures,
like unemployment insurance.] Surprisingly, many liberals, perhaps
misinformed of the actual condition of Social Security, now believe
that a crisis is inevitable unless changes are made that will
one way or another reduce benefits and living standards.
These articles show that Social Security is financially
sound without any changes whatsoever, that it serves a far larger
population than only retirees, including many disabled and the
families of deceased and disabled workers. And any changes made
should expand its protections, especially as private pensions
wither.
The articles in this SOCIAL SECURITY PACKET:
- Expose the phony Social Security "crisis" by
showing that Social Security is fiscally sound, able to support
a growing elderly population and is not a source of the deficit
problem, and that the Trust Fund is safe.
- Show how Social Security benefits the entire U.
S. population, prevents poverty, and is especially important
not only to the elderly but to women, minorities and other lower-wage
workers.
- Explain why reducing Social Security for future retirees
is not only unjust and unwise, but is unnecessary.
- Point out how Social Security can remain fiscally secure
and be strengthened.
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 not run out until 2033.
Even then, payroll tax collections would
be sufficient to pay recipients 75% of the higher benefits due
then, according to the Trustees [See
2012 Annual Report of the Trustees, p.11] .
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 3.2 percent of the last 80 years, the Social Security
Trust Funds will expand, reaching an estimated
$4.6 trillion in 2090. [See
ibid, Tables
V.B2 and VI.F8]
There Is No Demographic "Crisis"
[See Social Security Is Not In Crisis]
There is absolutely no demographic problem with
Social Security. Those who insist there is one make what is to
them an obvious connection between the falling number of workers
to retirees and "inevitable" Social Security shortfalls.
However, compared to times when there were many more workers per
retiree, say 1960, it takes fewer farmers to grow a bushel of
wheat; fewer bakers to bake our bread; fewer mechanics to make
a car, and fewer technicians to build a computer. Result? Fewer
workers needed to support a retiree. Were this not true, a poor
country like Bangladesh, with many workers and few retirees would
be far better able to support its retirees than a rich country
like the US.
The ability of a country to support the population who are not
of working age--the young and the elderly--depends on its productive
capacity as well as the size 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 [2011;
ERP
2012, Table
B–31]. At the time
when the "crisis" crowd says
we'll have too many dependents to take care of, this nation
should 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 It is productivity--the output
that each worker can produce--that determines our prosperity.
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. It is absurd to think that
a nation as rich as the United States cannot provide security
to all.
It is not sheer numbers of workers, but their ability to produce--their
productivity [output per worker] which is important to our livelihood.
This is true both for producing the goods and services we need
and rising productivity permitting higher wages on which taxes
are levied to fund SS benefits. The policies of the last
few decades do put SS at risk--the lag in productive investments
at home that improve our means of production; the political failure
to insist on policies that aid in ensuring that higher wages follow
productivity improvements; and rising inequality, which limits
the wages subject to SS taxes.
The Social Security Trust Fund Is
Safe
Many conservatives, including
former President Bush warn 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 we 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 Facts about
Social Security 2012, 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.
Twenty
million Social Security beneficiaries [2012] are not retired
workers —they
are workers with disabilities, children of retired, disabled,
and deceased workers, spouses, and care-taking parents. Children
get more benefits from Social Security than from any other
federal program.
- 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 roughly the
wealthiest one-third of seniors,
is their principal income. Unlike
most pensions, it is inflation-adjusted, and unlike 401k's,
it lasts for the retiree's lifetime.
- 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, bout
44% of all seniors [2010]
would be living below the government’s official poverty level.
-
In 1959, when poverty measures began,
35% 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 [about
9% in 2010].
Social Security Benefits Women, Minorities
and other Low-Wage Workers [See "Women
and Social Security", and "Social
Security and Minorities"]
-
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.
The Current Threat to Social Security
The Chairs of the National Commission on Fiscal Responsibility
and Reform [the Deficit Commission] have proposed remedies to
the Federal deficit that include raising the retirement age and
cutting benefits for all but the poor. Obama's
Transition team Social Security advisers called the Commission
“a
Social Security death panel.”** The recommendations
are again being proposed
as a basis for cutting the deficit.
Strengthening Social Security
Increasing public investment to maintain and
increase productive capabilties, ensuring that all who want a
job can have one, and ensuring that wages regain and surpass earlier
peaks will provide a strong economic foundation for financing
Social Security and other social programs. In short, this is the
proprosal of the National Jobs for All Coalition--to bring
together workers needing good jobs with our unmet social needs.
This is the basis for a strong, productive economy which would
serve our needs and permit more generous Social Security benefits
in response to the diminishing provision of private pensions.
[See The
case for improving Social Security.] Rising inequality, which
has put more income above the FICA limit and enlarged the
fraction of income received as non-taxable interest, profits and
capital gains, has also restricted Trust Fund revenues.
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. This is the basis for tapping the financial resources
of the productive economy described above.
In addition to the economic foundation for Social
Security, we need the political will to use our abundant resources
for the national social and economic welfare.
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
Revision and update September 2012 by June Zaccone. Thanks to
Helen Ginsburg for her comments.
Appendix A: 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 ($106,800
in 2010) 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 2011, over
$700 billion dollars
in benefits were paid to 55 million people.
*"The risk of disability or early death is much greater
than most people realize. About 39 percent of young men and 31
percent of young women will die or become disabled before they
reach retirement age, according to the Social Security actuaries.
Social Security’s life and disability insurance helps prevent
poverty among families that suffer these losses. For example,
a 30-year-old worker earning about $27,000 to $33,000 in 2008
with a spouse and two young children had Social Security disability
and life insurance protection valued at over $450,000 each. "
Social
Security Is an Anti-Poverty Program, By Ben Veghte &Virginia
P. Reno, National Academy of Social Insurance (NASI), 5/10
**As mentioned before, the deficit results from continuing joblessness,
a military budget approximating those of the rest of the world
combined, and the Bush tax cuts. These, however, are unlikely
to be on the table. The Administration appointed the two co-chairs:
former Wyoming Republican Senator Alan Simpson, and Erskine Bowles.
Simpson described seniors writing to him about Social Security
as “These old cats 70 and 80 years old ....who live in gated
communities and drive their Lexus to the Perkins restaurant to
get the AARP discount." Bowles, who is a director of Morgan
Stanley, a Wall Street bank saved by the taxpayer bailout, says,
"We’re
going to mess with Medicare, Medicaid and Social Security
because if you take those off the table, you can’t get there."
As Clinton's Chief of Staff, he "cut
a deal with Newt Gingrich that would have partially privatized
Social Security in the 1990's if the Monica Lewinsky scandal hadn't
derailed their plans." Eleven of the 18 Deficit Commission
members are known supporters of privatization.
©The National Jobs for All Coalition
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