For millions of elders, disabled people, widowed spouses, and children who have lost a parent, Social Security has been an indispensable lifeline. It has put food on the table and paid the bills for decades.
But for years, the public hears that Social Security is “broken.” That “our economy can’t afford it.” Instead of trying to fix it, those in power want to break it. Most recently, President Trump pretended to offer workers Covid-related “economic relief” by calling for eliminating their payroll taxes. The U.S. Chamber of Commerce joined him.
But … payroll taxes fund Social Security!
What Trump and his class have in store for workers is social INsecurity. Genuine economic well-being for recipients requires vastly expanding Social Security, not tearing it down.
Is Social Security really broken? That depends on whom you ask. To corporate owners, the answer is a resounding “Yes!” But what exactly do they mean by “broken”? That it does not make more money. It just uses it.
By this definition, anyone who sees only through the lens of profit thinks Social Security is a failing enterprise. It takes in nearly a trillion dollars annually, and currently has $2.89 trillion in its trust funds. But the anticipated shortfall between income and expenses points to reserves being depleted by 2035.
After that, payments will fall to about 75 percent of full benefits unless Congress lifts the cap on taxing wages above $137,700 (the amount rises slightly each year), a fix that has long been proposed. That’s why capitalists claim it’s broken.
But to those who depend on Social Security, it is not broken. It simply needs to be expanded, and protected from robbery by a tiny class of the privileged super-wealthy. The immense wealth generated by the working class over the last decades can easily provide for Social Security and the many other social services necessary in society.
For the working-class 99 percent, Social Security is a dire necessity. It keeps about 22 million people above the official poverty line. For women, who live longer, whose lifetime earnings are about 82 percent of men’s, and who are less likely to have pensions and savings, Social Security checks are even more crucial. Workers of color are critically dependent on Social Security, because racist discrimination has created lifetimes of low-wage incomes.
Surveys have found that two-thirds of all retirees rely on Social Security to make ends meet, and a full third have no other income. Beneficiaries today average less than $1,500 a month. To add insult to injury, 3.4 percent of Social Security’s revenues comes from taxes recipients pay on the meager checks they receive.
Payroll tax dilemma. Social Security’s funding is a burden on the very people it’s designed to help. Fully 90 percent of its revenues come from payroll taxes. Workers and their employers each contribute 6.2 percent of workers’ wages to the fund. Self-employed individuals pay the full 12.4 percent. But the maximum salary taxed is only $137,700 per year. Obviously, this method of funding is highly regressive and appallingly unfair. The lowest-paid forfeit more. The highest-waged pay far less. And the giant employers save billions not having to pay anything on the earnings of the highest paid.
Workers have put up with this absurdity, because eliminating or lessening payroll taxes — hence their Social Security — after working for decades is an unimaginable alternative. Since nearly 80 percent of workers live paycheck to paycheck, any financial relief is welcome. The capitalist class hopes that workers will approve Trump & Co.’s attempt to cut the payroll tax. But that’s not likely.
Targeting the program’s biggest funding source aims at its heart. Wall Street pretends to care about relief to workers, but all it really cares about is profit. And everybody knows it.
Capitalist tricks. The biggest problem capitalists have with Social Security, a government service funded by payroll taxes, is that the income from those taxes does not cover expenses. That should be logical for modern society. Public services are not designed to make profit.
But at this capitalist moment in history, less and less government money is made available for any non-profit public services — such as food stamps, healthcare, public housing, schools, mental health, environmental rescue, international humanitarian aid, immigrant and refugee aid, prison reform. Such luxuries are bad for the capitalist economy.
Wall Street has therefore floated the idea of turning Social Security into a vast stock market investment program. This would give private capitalists access to trillions of public dollars taken straight out of workers’ pay checks. Unfortunately for the billionaires, working people are not clamoring for this option. So, until the ruling class can fully privatize Social Security, the strategy is to try other tricks.
Politicians have proposed restricting retirement payments to those “most in need,” raising the eligibility age to 70 or 80, shrinking cost-of-living adjustments (COLA), and reducing retirement benefits by 23 percent. And now, cutting payroll taxes. This puts less money into the trust funds, which will eventually be depleted. Conclusion? The true capitalist goal is breaking Social Security until it is dead, one way or the other.
Expand Social Security. The capitalist class is fully aware of institutions and agencies which contribute nothing of economic value to the marketplace but which require vast resources. For example, the Pentagon, CIA, Homeland Security, Immigration and Customs Enforcement, and 18,000 police departments in the USA spend billions upon billions of dollars, and create no profit. Wall Street is not trying to break these agencies. It is out to break Social Security and many other public services.
Short of revolution, it’s time to expand Social Security dramatically. Here’s how. Immensely increase its income by taxing the highest-paid earners and their companies. Eliminate lower-paid workers’ payroll tax and increase their wages. Defund the armed bodies that protect profits rather than people. Halt bailouts and tax loopholes for billionaires to pay for Covid-19 relief, job training and public education at all levels.
Social Security is supposed to provide universal disability, life insurance and retirement security. Not only are these basic social needs, but human development has now reached an enormous capacity to meet them. It will take militant and informed organizing to see that it does.
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