Social Security is one of the most popular federal programs in U.S. history. More and more seniors rely on it for survival. Sixty-two percent of current retirees get at least half their income from the program, and 34 percent rely on it for 90 percent or more. It also provides disability insurance to workers and death benefits to dependent children.
Still, Republicans and Democrats have worked together for years to undercut benefits. In 1983 they raised the full retirement age over time to 67, reducing benefits for those who retire early. In 1984 they imposed income taxes on up to half of benefits and in 1993 increased the taxable percentage to up to 85 percent.
Most importantly, they have maintained a ceiling on the earnings of high wage workers subject to the payroll tax, jeopardizing the ability of the program to pay out full benefits in the future.
Now, under the Trump administration, renewed assaults are underway. There is a campaign to convince workers that it must be “reformed” to death. Why? Wall Street finds the $2.8 trillion trust funds irresistible and politicians are happy to oblige.
New scams. Just before the midterm elections, Senate Majority Leader, Republican Mitch McConnell, used the ballooning budget deficit as an excuse to call for Social Security, Medicare and Medicaid to be “adjusted.” Never mind that the shortfall comes from the 2018 gift of $1.5 trillion in tax cuts for the rich and ever more trillions spent on conducting wars around the world.
Budget Director (now acting White House Chief of Staff) Mick Mulvaney concurred. He spoke in late November 2018 to a conference of the American Legislative Exchange Council (ALEC), a conservative, corporate-funded lobbying group. He confirmed that the Trump administration is targeting Social Security and Medicare.
“The president has asked me to fix the easy stuff first,” he said. He had previously specified that Social Security Disability Insurance was supposedly not a “core pillar” of the program. The over 10 million people with work-ending disabilities who rely on it would loudly disagree. Mulvaney said that cuts to benefits for “the primary pillars” of Social Security and Medicare wouldn’t be “needed” for a couple of years.
Other ploys are circulating in Congress. The proposed Student Security Act would allow young folks to delay their full Social Security retirement age in order to pay off student loans. Another proposal floated to the Social Security Subcommittee of the Senate Finance Committee in 2018 would delay full retirement age to provide parental leave.
Both these schemes would siphon funds away from Social Security now and theoretically pay them back much later. Given Congress’ refusal to increase overall funding, it’s evident the real purpose is to bankrupt the system.
Students do need relief from massive loans and parents deserve leave to care for their children. But such programs need separate funding, paid for by taxing the rich and reducing military spending.
A long-time proposal being revived calls for workers to be “allowed” to use some of their Social Security contributions to invest in the stock market. This privatization measure would undermine the system’s finances, make workers’ retirement funds vulnerable to market losses, and convert benefits that last a lifetime to a finite amount that can run out.
And, there’s a new push to raise the retirement age to 70 or even higher, even though low-income workers are not living any longer.
Same old scare tactics. What about politicians’ cries that “Social Security’s responsible for the deficit!” And “It’s going bankrupt!” Both are lies.
The Social Security trust funds are financed by dedicated payroll taxes. They have nothing to do with Congress’ budget or the federal deficit.
If Congress continues to refuse to increase funding, future Social Security payments will be reduced. This does not mean, however, that the system is going broke.
There are enough payroll contributions and interest coming in to fully fund checks through 2034 and to pay 79 percent of payments through 2095 even with no increased funding whatsoever. If the cap on taxable income was eliminated, those making over $132,900 this year (the amount increases with inflation) would pay their fair share on their total income, and benefits could be increased.
Even a small bump up of 2.83 percent in payroll contributions (split between employer and worker) would fully fund benefits for another 75 years.
Politicians try to divide and conquer by saying the system robs younger workers to support retirees. This pits seniors against the young, and ignores the many disabled workers and dependent children who receive benefits. Social Security is designed to be universal disability and life insurance as well as retirement security — just as vital to everyone at any age.
Activists need to educate people on the truth, and to secure and expand Social Security programs.
Room for improvement. Social Security has been successful for over 80 years. It has very low overhead costs of less than 1 percent — which no profit-making insurance company would ever duplicate. These benefits lift 15.3 million elderly out of poverty. But it could be much better.
According to the Center on Budget and Policy Priorities, the U.S. ranks 25 out of 34 developed countries in the percentage of workers’ earnings it replaces (less than 40 percent). Cost-of-living increases are usually eaten up by higher charges for Medicare and drugs. With the loss of many pensions and replacement of only some with 401(k) savings plans, Social Security has become a life and death matter.
Attacks on retirement benefits and pensions in other countries have followed the same neoliberal guidebook as in the U.S., with a goal of privatizing government services and further enriching the wealthy and big business. Workers around the world have felt the impacts and hit the streets in protest. It’s time for U.S. workers to do the same.
An upcoming story will cover the new efforts to undermine Medicare.