It ain't broken
Buell, John
John Buell If AIN'T BROKE Social Security really works Perhaps no noun in our political vocabulary is more misused than the term "crisis." Crisis language is used to suggest that institutions are...
...Money borrowed by government at all levels to finance schools, basic research, health, and transit is an investment in our future...
...Limited investment by a government agency of some of the Social Security Trust Fund in the private economy might have merit...
...Social Security takes an increasing share of the budget not merely because the percentage of elderly citizens has grown but also because the economy itself has failed to expand anywhere nearly as rapidly in the last two decades as in the quarter century after World War II...
...And if benefits were financed by a tax on all earned income (by removing the $62,000 cap on income currently subject to Social Security taxation), the tax burden on the poorest workers would be reduced...
...The largest individual pension is about $15,000...
...Crisis language is used to suggest that institutions are at a fundamental turning point...
...2. The notion that this country, the wealthiest nation on earth, can no longer afford Social Security is based on even more suspect assumptions...
...But reductions in Social Security's income support for the elderly are only likely to erode the purchasing power of retirees during economic downturns, thus making the economy even more fragile...
...Social Security isn't a retirement plan...
...1. Cutting government programs to eliminate yearly deficits is a route to disaster...
...If Social Security's critics were really interested in class or intergenerational justice, they'd take a closer look at estate taxes, labor law, and minimum-wage standards...
...With lower birth rates the norm now, it is expected to increase, but only to .795 to 1 in the next forty years...
...Those concerned about economic stagnation might well look elsewhere-to trade treaties and labor policies that erode workers' wages and productivity (see "Getting It Backwards: Why Balancing the Budget Isn't Enough," Commonweal, October 25,1996...
...Most Americans don't want to allow the elderly to starve, regardless of how well or poorly their life efforts fared...
...Social Security, by providing a cushion against economic vicissitudes, has not only eased personal suffering...
...Rates of poverty among the elderly have decreased in the last generation in large measure because Social Security has been so successful and efficient a program...
...These include two decades of relatively slow wage and productivity growth, the distrust of government, the decline of organized labor, and the rise of budgetary fundamentalism...
...The winners are likely to have diminishing interest in supporting even the most minimal guarantees...
...Welfare politics has surely taught us this lesson...
...Embracing fixes that will endanger these achievements may well occasion a real crisis...
...Three quarters of Social Security recipients have total incomes, including Social Security, under $25,000...
...The familiar antigovernment agenda, now taking aim at one of the New Deal's most significant and enduring contributions to our political economy, is far more dangerous than any distant shortfall in the Social Security Trust Fund...
...it goes back to earliest days...
...The case against Social Security is based on four related assertions: (1) continuing budget deficits are bankrupting the U. S. economy, (2) future benefits to a cadre of aging baby boomers will further erode the budget, (3) closing those deficits with higher Social Security taxes would sow intergenerational warfare by padding the accounts of many already affluent elderly, and (4) a more generous but less costly retirement program could be implemented through reductions in guaranteed minimum benefits coupled with individually managed retirement accounts...
...If giving more Americans a chance to play the market is their goal, adequate wages and private pensions would be a good start...
...Those who spend most of their lives working and paying taxes merit adequate protection when illness or age makes work more difficult...
...Even this hypothetical "problem" assumes exceedingly pessimistic projections regarding the growth of the Social Security Trust Fund and the U. S. economy as a whole...
...Over very long periods, stocks have outperformed other investment vehicles, but most of us have little choice as to when we reach retirement or become ill...
...4. There are rich people on Social Security, but Social Security is not the source of their affluence...
...The presumed bankruptcy of Social Security is now being used to give greater plausibility to further attacks on labor protection and affirmative government...
...Requiring such spending to be paid for out of current income is like limiting home ownership to those who can pay cash...
...Even using the Social Security Administration's most pessimistic estimates about economic growth, the fund could be kept solvent under current accounting conventions with an increase in Social Security taxes of only one-tenth of 1 percent per year between 2010 and 2040...
...Jeff Faux of the Economic Policy Institute argues that the best way to measure the economic burdens on any working population is to calculate the ratio of all non-workers to workers...
...What makes this particular reappearance more ominous is that it occurs in the conjuncture with several other dangerous trends...
...The ratio of nonworkers to workers today stands at about .7 to 1. It was as high as .946 to 1 in 1960, when we baby boomers were all in school...
...Social Security's critics then turn around and assure us that the value of individually managed retirement portfolios will grow rapidly in the same economy...
...John Buell writes regularly on labor and environmental issues...
...Nonetheless, any form of public investment in the market should include public guarantees of minimum levels of performance...
...His most recent book, co-authored with Tom DeLuca, is Sustainable Democracy: Individuality and the Politics of the Environment (Sage...
...Thus, if for no other reason than to slow the steady march to an economy dominated solely by corporate interests, it is important to provide a different perspective...
...The current call to dismantle Social Security is hardly new...
...Predictions of Social Security bankruptcy are based on assumptions that payroll taxes will be collected from an economy growing more slowly than at any period in our nation's history...
...Turning Social Security into a smaller, sub-subsistence-level program supplemented with individually managed stock accounts will foster big winners-and losers...
...Their ignominious defeats put this agenda on hold, but phoenix-like it seems to reappear every generation or so...
...Remember, Social Security is basically a way for younger working generations to pay for the maintenance of their nonworking parents and grandparents...
...At most, Social Security's current problems may require modest tax increases to avoid a shortfall-three decades hence...
...Its godparents are Alf Landon and Barry Goldwater, Republican nominees for president in 1936 and 1964...
...No modern economy grows without these investments...
...it has also stabilized the market economy...
...Each of these arguments is either wrong or misleading...
...If Social Security is at such a point, it isn't because of major financial problems in the system...
...It is a form of social insurance for everyone...
...The modest pain in such minute increases would be largely offset by relative decreases in the amount of money society would need to commit to the very slow-growing population of the young...
...3. Even if we must raise taxes to keep the system solvent, there are good reasons not to worry about the impact on the economy of small tax increases designed to preserve such a successful program...
...In politics, much ado about relatively little almost always suggests a hidden agenda...
Vol. 124 • February 1997 • No. 3
