Probably the most important single legacy of what happened in the period of the Great Depression and the New Deal was the establishment of Social Security, the federal program that today pays benefits to 63 million U.S. elderly, disabled adults and dependent children left by a deceased bread-winner. That’s one-in-six of all people in this country.
President Franklin D. Roosevelt and his Democratic majority in Congress, pressured by socialists and by a militant labor movement, created a program that guaranteed at least enough income for most Americans, once they were too old to work anymore, that they wouldn’t be forced to beg in the streets or become such a burden on their children that they would be bankrupted caring for their parents. More importantly, but perhaps less obvious, they for the first time institutionalized the concept that government has a responsibility for the broad welfare of the nation’s people.
That program happened because of a mass movement on the left for action to assist a desperate population. We need a movement again now because the Social Security program is under threat, but also because we need more than just the existing program. And fighting for Social Security can be the focus of a mass movement that, by bringing a majority of Americans together on that one issue, it can pave the way for bring them together on a range of issues.
For decades – indeed since its creation – Social Security has been under ceaseless threat by the right and by corporate America, which have correctly perceived Social Security as a wedge introducing a very dangerous (to them) socialist idea into a polity that has assiduously banished that ideology from acceptable public discourse. If the public ever realized that Social Security, upon which some 43 percent of the elderly depend entirely for all of their retirement income, while another 19 percent rely on it for half or more of their retirement income, could be a model for a much more civilized society, they might go further. They might start imagining a society that should be more fully protecting the elderly and disabled, one that should be providing health care as a right to all its citizens, one that should provide a first-class education the nation’s children, regardless or race or economic status, and one that should protect the whole population from environmental risks to health and from corporate exploitation. And who knows else what Americans might start demanding!
Well, those very threats to privatize Social Security, or to turn it into just a needs-based form of welfare, instead of a tax-funded retirement program for all, those periodic attacks by Republicans and even some conservative and corporate Democrats in Congress that seek to cut benefits to “reduce the deficit,” and the “stealth” assault on the program that has Republicans simply refusing to approve any measure offered to bolster funding to cover a temporary shortfall as a wave of Baby Boomers moves into retirement age, putting a strain on the system’s resources, could be an opportunity if progressives grab it.
First a little history. Back in the late 1970s, it became apparent that increased longevity of Americans thanks to improved health care, scientific advances in that care (not insignificantly including the 1965 passage of Medicare and Medicaid that provided health care to millions of people who before couldn’t afford it), and a dramatic reduction in smoking, were making it hard for Social Security to come up with the funding for all those benefits it was paying out. This is because, contrary to popular belief, Social Security is not a annuity, where you pay in your money, it earns interest, and then you get it back in retirement like a pension. Rather, from day one, Social Security has always paid out all benefits from the receipts coming in simultaneously from a dedicated payroll tax being paid into the system in a 50/50% split by current workers and their employers. The size of that payroll tax for years was enough to pay the benefits of retirees but then suddenly it began falling short.
By the late ‘70s with people living longer and families having fewer children, it was clear something had to be done quickly or there wouldn’t be funds coming in from the taxes of current workers to pay current retirees their benefits in full from the payroll tax. It was also clear to Social Security Administration actuaries that there was a longer term problem too. Things would get much worse in 2011 they said, when the first post-war babies born after the end of WWII, the so called Baby Boom generation of 1946-64, started reaching 62 and began filing for their retirement benefits.
So President Reagan and the Democrat-led Congress in 1983 passed a bipartisan reform that, by making a number of adjustments, sought to fix the problem. They voted to raise the payroll tax immediately and then to continue to do so in stages to its present 6.2% level on workers and on employers both. They also raised the full retirement age incrementally from 65 to its current 66 and eventually to 67, and they added public employees to the program. They also decided to tax up to 50 percent of Social Security benefits for higher income recipients – a percentage that was raised by President Clinton in the ‘90s to 85 percent of benefits. This all worked well for decades, but a continued rise in life expectancy and a decline in the birth rate as more families moved into cities and suburbs and entered the middle class conspired to worsen the funding crisis again. The initial 1983 reform helped the system to build up a huge Trust Fund of money, with working Baby Boomers “pre-funding” the benefits they would later start claiming. These funds were held in government interest-paying bonds. But it’s now predicted that this reserve fund will be exhausted in 2034, when the last Baby Boomers will still only be 70, with a lot more years to go collecting their benefits. At that point, without some action by Congress to come up with more revenue, the FICA payroll taxes paid into the system by working population and their employers will only be enough to fund 79 percent of promised benefits going forward,
This looming “crisis,” completely predictable, has been known for years – three decades really – and could have been addressed easily and cheaply with a slight rise in the payroll tax had Congress acted on it in promptly, for example in 2000. But Republicans refused. In fact, President George W. Bush, elected that year, and Republicans in control of Congress, actually pushed the idea of privatizing Social Security, putting people’s money in the hands of Wall Street investment banks, which heavily lobbied for the plan, seeing it as a potential goldmine in fees.
Ever since, as no action to fix Social Security long-term was taken, the cost of Republican intransigence on this issue has dramatically raised the cost of a fix. Indeed, it’s clear to me and most honest observers that Republicans are creating this crisis intentionally as a way of wrecking the Social Security program. The strategy is simple: keep delaying a fix until it will be so expensive to do it that the program will be changed to a needs-based welfare program. Once that happens it will lose its universal public support and it will easy for the program’s enemies to chip away at the benefits until it is totally killed off, along with the beneficiaries who depend upon it for their survival.
Now, with Trump in the White House and Republicans still in control of the Senate, progressive Democrats are calling for action. A proposal is being introduced by Rep. John Larson (D-CT) in the House and Sen. Bernie Sanders in the Senate called the Social Security 2100 Act , which would accomplish a complete fix, while offering current and future Social Security beneficiaries a one-time boost in benefits of 2%. The fix involves raising the payroll tax by a noticeable but not catastrophic 1.2% each for workers and employers (that would be about $6 dollars more deducted from a typical $500 weekly paycheck, and $6 extra for each $500/week worker by employers). This increase would be only gradually applied over 24 years. It also applies that tax to all income earned over $400,000. (As the initial cutoff level of $132,900 is gradually raised over time to account for inflation, the window of income between the increasing cap and and the $400,000 level where the payroll tax would kick in again would gradually shrink so that eventually in 2043 all wage and salary income would finally be subject to the payroll tax. The other reform would be to change the index that determines how much to adjust benefits for inflation from the current flawed one which is based on the inflation for urban workers to a new CP-E index that specifically measures inflation in goods and services typically purchased by the elderly – for example with a heavier weighting for health care costs. In all, these new measures would assure the funding for Social Security through the end of this century, and well past the death of the last Baby Boomer.
It’s hardly a radical proposal, and barely moves the needle on making Social Security more of a real public retirement system to replace the old employer pensions that corporate America has virtually eliminated as they have destroyed labor unions. Even so, Republicans are again vowing to block this reform bill, saying they will not pass any measure that would raise the payroll tax, or lift the cap on the tax to include the soaring incomes of the rich. In the Senate, Republicans will use the 60-vote filibuster rule for ending debate to prevent the measure from even getting a hearing.
Here’s where the opportunity comes in for building a true progressive movement around fixing Social Security. Follow me here:
Polls show broad trans-partisan support among most Americans – call them the 99 percent or even the 90 percent if you will – for increased taxes on the rich. For example, there is broad support for Rep. Alexandria Ocasio-Cortez’s proposal for raising the tax rate on the rich from a current maximum 37 percent to a 70 percent top rate. I’m certain that the same high level of support would also apply to the call for eliminating the cap on income subject to the payroll tax. Despite years of heavy investment industry and Republican political propaganda targeting younger workers with scare tactics suggesting the program “won’t be there when you need it,” there is still powerful and broad support for Social Security not just among the old and middle-aged people nearing retirement, but also among younger workers in their 20s and 30s. Young people, even if fearful the program could be stolen from them, want it to be healthier now and going forward because they know their parents and/or grandparents rely on it now, or soon will need it.
This is grounds enough to go all out for a movement to rescue the program. But I’m arguing that we should take that movement further, building on its success to introduce other urgent progressive demands. Such demands could range from better, fairer federal funding for public schools, free public colleges, a full-mobilization attack on climate change, and end to corporate funding of elections and of bribing politicians with campaign cash, go other major issues impacting us all.
In most European countries, where these days workers live much better than we do in the US, retirement does not mean a drop in one’s living standard. People who retire in the Nordic countries, or in Germany, France and even Italy, when they retire, end up receiving benefit checks that are close to 60% of their final wages before retirement. That’s enough for them to continue with their current life-style, thanks to virtually free health care, publicly funded college for their kids that allowed them to pay off their mortgages before retirement instead of re-borrowing to pay for tuition, and often state-funded programs to provide needed support services in old age, like visiting nurses and housekeeping assistance and personal attendant assistance when required.
These countries manage to do that while we in the U.S. are stuck with a bare-bones retirement program that on average only replaces 25% of pre-retirement income, and that offers only partially funded medical care for the elderly, no support for needed in-home care, and spotty support for retirement or nursing home care.
How do Europeans manage this while our leaders in the U.S. claim we “can’t afford it”? Firstly, Europeans and their employers both pay significantly more into their countries’ social security retirement systems than do Americans. Second, in many of these countries, there is not a rigid 50-50% split in the payroll taxes paid as in the U.S. Often, in such countries, employers pay
substantially more into the system than do their workers. Republicans and even conservative Democrats will say in the U.S. that businesses cannot afford paying higher payroll taxes. But clearly companies in Europe are paying them and are doing fine. In fact many European companies are competing on the global stage much better than are U.S. firms with their lower tax burdens (and lower wages!).
The real reason European countries are able to finance better retirement, health care and other benefits for their populations is that they spend very little on their militaries. Few if any European countries spend even 2 percent of their national budgets on arms and war. In the U.S. it’s 20 percent of the federal budget that goes to the military if you just count the Pentagon and Veterans Affairs budgets, and include Social Security benefits in the denominator. If you leave out Social Security and a portion of Medicare though, which would be proper because they are taxed separately by payroll deductions, not income taxes, another way of looking at the U.S. budget is that 57 percent of all discretionary spending – budgets set each year by Congress – goes to the military or to pay for things like intelligence operations and taking care of veterans of U.S. wars.
No wonder it’s so hard to come up with decent public health care and a decent retirement program comparable to what all other developed – and even many less developed – nations in the world have.
You can look at it another way too: The U.S. accounts for a staggering 34 percent of all global military spending! No wonder we have such a ratty highway system, dilapidated and antiquated mass transit and intercity rail system, shabby overcrowded schools with underpaid teachers, a patchwork health care system that is the costliest and most complicated to negotiate in the world but that still leaves 30 million Americans unable to afford to see a doctor. And no wonder our elderly still have to retire to live like paupers after working for a lifetime.
We can change all of this, but instead of just letting Congress try and tinker with it, let’s start by building a mass movement to demand a secure and improved Social Security system. We can start by just tossing out of office in 2020 any senator or representative who won’t support a fully funded and adequate Social Security System. With that victory in hand, we can move on to a more expansive nation-changing campaign, including cutting the military down to size and ending this nation’s endless wars.