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Dave Lindorff
Published: Tuesday 8 January 2013
Make no mistake: the war against Social Security has been launched.

Wall Street Pulls the Strings: Social Security Under Attack in February

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The all-out assault on Social Security has begun.

The set-up for the big battle was the Fiscal Cliff charade. That hyped drama in the last days of December was a moment of truth for the Democratic Party and for President Barack Obama to make it clear whether they were still defenders of the New Deal legacy, or whether they were ready to toss Social Security overboard on behalf of the party’s new constituency: the Wall Street gang.

The president and the Democrats in House and Senate could have said there would be no deal on the artificial Fiscal Cliff that was created by Congress back in August 2011 unless Congressional Republicans agreed not to hold the nation hostage again this February over the issue of raising the national debt ceiling. Republicans were in a weak position, since if the “cliff” deadline were allowed to pass, the Bush tax cuts would have expired. They would have been put in the position of being unable to pass new legislation restoring tax cuts for the wealthy, while Democrats could have forced them to pass tax cuts for those in the middle and lower classes.

Instead of doing that, the president and his vice president, former Senator from the über-corporate headquarters state of Delaware, Joe Biden, offered a “compromise” that give tax breaks to the 1% of Americans who earn between $250,000 and $400,000 a year, protected up to $5 million in estate value from inheritance taxes, and left the GOP free to hold Congress and the Country hostage in February and March when Congress has to pass a new increase in the debt ceiling.

Senate Majority Leader Mitch McConnell (R-KY) has already said that the Republicans in that house will not agree to any tax increases in a debt ceiling deal, and the Republicans who control the House have already made the same thing clear.

The Republicans have also said that they want significant cuts in “entitlements” (the term that has been successfully attached to both Social Security and Medicare, though actually both programs are earned benefits paid for by workers and their employers over a lifetime of employment). And with the government held hostage in February, and unable to borrow further without a rise in the debt ceiling, Democrats will have an excuse to go along with their demands, claiming that they had “no choice.”

The New York Times on Sunday weighed in with its own artillery in this attack on Social Security, with an article in its Sunday Review opinion section by two academics who claim that the program is facing a “huge cliff” and will run out of money two years sooner than the Social Security Administration has been claiming, which would mean 2031. Technically, of course, Social Security is not going to run out of money even in 2033. It is only expected to exhaust the Trust Fund, leaving current workers’ contributions still funding 75% of benefits, indefinitely. But the authors of this Times scare story fail to mention that point.

No surprise there. The same article also suggested that maybe people shouldn’t be encouraged to retire, since retirement, they claim, leads to shorter life expectancy. Easy to say if you are an academic at a private Ivy League school earning a big six-figure salary to write articles, but not so easy to buy into if you’re a working stiff. They also suggest that maybe there should be lower benefits for those retirees earning more than the lordly sum of $43,000 a year in retirement. Unmentioned in the article’s biographies of the two authors is that one, Samir S. Soneji, is a professor with the Dartmouth Institute for Health Policy and Clinical Practice, a conservative industry-funded “institute” that is dedicated to cutting the cost of health care through “market-based” solutions.

The truth about Social Security is that it is not in crisis. After all, 2033, or even 2031, is a long way off from 2013. Two decades off in fact. What other crisis facing the US can you think of that Congress is preparing for two decades in advance? The answer is none. I can, in fact, think of a real crisis that is two decades off that Congress is blithely ignoring, and that is the global climate crisis. In two decades, if there is no major action to reverse the pace of carbon emissions into the atmosphere, it will be too late to do anything to stop runaway heating of the seas and the atmosphere, which will be a much more serious disaster than exhausting the Social Security Trust Fund! Yet Congress and the president are doing nothing about climate change. Why? Because corporate interests, which only care about making profits over the next quarter or at most the next year, don’t want to be burdened by regulations and taxes designed to force them to reduce their carbon emissions. Those same corporations, and especially the financial interests on Wall Street, happen to want to destroy Social Security in order to force workers to invest in the stock and bond markets that they now thoroughly manipulate, instead of relying on a retirement system that has worked well for over three quarters of a century!

How could Social Security be fixed so that the Trust Fund would not run out? Actually the solution is surprisingly easy. All it would take would be to eliminate the cap on income subject to the FICA tax, which is currently set at $113,000, and to levy a small FICA tax either on investment income (not including retirement savings accounts), or on stock and bond trades that are not held in retirement accounts. In other words, if the wealthy and their employers were required to pay the full FICA tax on all their earned income, and to pay FICA taxes on their so-called “unearned” income, there would be no shortfall at all, right through the retirement years of the Baby Boom generation and beyond.

How on earth is that a “crisis”?

Only because raising those taxes is outside the realm of permissible discussion in Congress, and because the media, like the New York Times in its article, do not discuss it. Okay, the Times authors of the article in question did mention raising the income cap subject to the FICA tax, but they only discuss that option in terms of solving what they said was the shortfall that would lead the Trust Fund to run out two years sooner than already expected. They don’t mention that simply eliminating the cap, as opposed to raising it, together with taxing investment income, would solve the problem of a shortfall in funds completely.

So the battle is on.

The next phase of that battle will be an effort by Wall Street’s handmaidens in Congress and the White House to start trying to split the generations by saying that they will “protect” Social Security for those at or nearing retirement age, while weakening the program (they’ll call it “preserving” the program) for younger workers. This is what is known as divide-and-conquer. It is critical for retirees and near-retirees to resist this cynical tactic and to unite with younger workers to protect benefits for all. If the divide-and-conquer strategy were to succeed, younger workers would immediately start to lose interest in Social Security, and pressure would build among them to start cutting benefits for current retirees, since they would see their own FICA taxes as going to subsidize benefits for the retired that they themselves would never receive.

The only way to protect Social Security is for all workers to be in it together defending the same system of benefits. And the only way to do that is to demand and insist on raising taxes on the rich to support that system.

And the key point to make in that battle is that the rich are not being asked to pay more. They -- and their employers -- are just being asked to pay the same tax rate that the rest of us pay on their income, and to finally start paying FICA taxes on their investment income, which to date has been exempt from Social Security taxation.

Make no mistake: the war against Social Security has been launched, and a key battle is coming in February. The broad mass of workers in the US who are depending upon Social Security for their old age or in the event of disability and an inability to work need to unite and engage in that battle now or it will be lost.



ABOUT Dave Lindorff

Dave Lindorff is an investigative reporter, a columnist for CounterPunch, and a contributor to Businessweek, The Nation, Extra! and Salon.com. He received a Project Censored award in 2004. Dave is also a founding member of the online newspaper ThisCantBeHappening! at www.thiscantbehappening.net

Social Security issue has no

Social Security issue has no place in any deficit discussion because it is self-funded and does not contribute a dime to the deficit.

That said there is no argument on either side that it is in need of tweaks to extend it's life. Congress needs to deal with SS as it's own issue, not going into it with a mind set of cutting but with the intention of carefully examining all options.

It is safe for the moment. There is no immediate crisis involving Social Security. But there will be down the road if we don't adjust.

Removing the cap on contributions would go a long way. Means Testing that cuts off payments to someone who has a vault full of cash and bonds is a good idea.

We have to preserve COLA just so seniors don't fall into poverty due to inflation. Most have no option to go back to work to survive even if jobs were plentiful for us old folk.

Medicare is a problem, not because of the insurance but because of the cost of health care which is NOT provided by government but by private doctors and hospitals.

There are things Medicare can do but keep in mind that this is an insurance program, not a health care system. We really do not have any national health care system other than the VA.

As long as the price of our care is dictated by private business ( as it is and always has been ) costs will always include profits for share holders.

Other nations ( England, Japan, Canada etc. ) have a system where everyone is covered and most hospitals and doctors are salaried employees. Their costs are much lower as a result because caring for their citizens is not driven by profits.

There is no perfect system for providing for the financial safety of our citizens. There sure is no free ride either. Everyone pays. Everyone benefits either directly or indirectly, by living in a nation where we take measures to keep grandma from begging for scraps on the street.

Tell your representative to stop playing "politics" with your elderly loved ones and with your own future. Tell them to act like adults.

Better yet, insist that they abolish government pensions they get and subject themselves to Social Security just like the rest of us poor schlubs who pay their salary.

I would like to point out a

I would like to point out a factual mistake in the article.

"Senate Majority Leader" Mitch McConnell

McConnell is the MINORITY leader. Harry Reid is the MAJORITY leader.

Obama is clearly someone who

Obama is clearly someone who doesn't know how to negotiate. He'd rather give away the store when all the cards are in his hand.

doing away with cap is a feel

doing away with cap is a feel good proposal will solve nothing no big deal soc sec checks start bouncing in 2036 or medicare 2016 print more money [see germany 1920's-1930's]

I support lifting the tax cap

I support lifting the tax cap on SS earnings and implementing either a financial transaction fee or including unearned income in the FICA base because these measures would make SS funding more fair and secure. However, a sovereign monetary issuer with a free floating currency (the US is one) need NEVER run out of funding to finance its public purposes. The debt ceiling is a congressional made artificial cap designed to give congress cover to appear concerned about deficit spending when appropriating funds for earmarks and corporate donors.
The president has the legal authority and power to issue debt free funding to pay down the "national debt", create a full employment economy, fund SS and medicare, and keep the economy from falling back into recession. That power is called the platinum coin seigniorage (PCS) act of 1996. Read more about it at New Economic Perspectives.

Next time Congress takes a

Next time Congress takes a major break and all the reps leave town I think we should all flood in to the house from across the nation and declare the last election void and have some fun theatrics passing legislation the people actually want...single payer medicare, monetary reforms restoring currency control to the people along with legislation to move to a full reserve banking system and end the Fed, any new wars must have a draft of the eligible rich to share the Battlefield alongside their poorer volunteer enlistees. A "good citizens act" to spell out the responsibilities of corporations and the penalties for their human directors if they are not moving towards the letter of this law, retro active crimes against humanity laws with the court to be set up in Nuremberg etc etc....Revolution begins in the mind.

Right on!!!

Right on!!!

The filthy rich conservatives

The filthy rich conservatives will NEVER have enough money, even if they had every penny. They are morally bankrupt.

Man, an instinctive predator,

Man, an instinctive predator, is one of the few species on Earth that routinely preys on its own kind. A mere handful of individuals have invented the luxuries that we all take for granted today. Without them, the overwhelming majority of us would be wearing grass skirts and hunting and foraging to stay alive.
Avarice is also one of our more common traits. The "wolves in Armani" have smelled blood and are now after the marrow. The "common" American is represented by no one. The installation of Social Darwinist theory number one is fully underway. The prey will eventually stalk the predator whilst the Earth, unable to cope with environmental attacks, will begin to shake us off like a dog does water after a bath. If you've young children...don't tell them what's coming. And don't forget that "God blesses America."

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