A version of this article was originally published in New Ground 77, July — August, 2001
by Bob Roman
By the time you read this, Dubya’s marvelously bipartisan commission on Social Security will have recommended diverse and devious ways of “strengthening” a system in “crisis”. This is rhetoric from George Orwell’s 1984, where peace means war, where words in political discourse mean whatever is presently advantageous.
Of course, the conservative side of the debate has no monopoly on misdirection. Social Security was promoted in Congress and to the public as something analogous to a private pension plan. It was financed as a payroll deduction, split equally between the employee and employer, just like something from a collective bargaining agreement. The benefits were based in large part on the monies earned. Surplus revenues were placed in a “trust fund”. It all sounds so very fiduciary, something so very familiar to people accustomed to receiving their benefits as a condition of their employment. In fact, Social Security is and has been a “pay as you go” government program that provides disability and survivor benefits as well as old age pensions out of current revenues. The surplus gathered by the payroll taxes is not entirely irrelevant but it is primarily a matter of bookkeeping by the government. And, it might be added, not entirely honest bookkeeping.
If you need an example of why the expedient argument is not always the best argument in the long run, Social Security is it. The same arguments used to sell the system to a wary public, particularly a wary business class, turn out to be the same arguments to use in destroying it. Because as a financial trust, Social Security can be portrayed as vulnerable to changes in the economy and to demographics.
Draw the trend lines. At some point they’ll intersect; sound the alarm. You’ve got a great story: the monumental crash of a program that will send millions of soon to be elderly into poverty. It is a story that will guarantee a multitude of eyeballs and thus advertising revenue, one that is sufficiently complicated to deter any reporter or editor from explanatory reporting that would spoil the fun, one that nicely serves the needs of all levels of the media enterprises from reporter to editor to publisher to owner.
The moderately obvious problem with trend lines is… that they are trend lines, a static representation of a dynamic system, subject to change without notice. For a long while, the left attempted to use a variation, a subset of this argument. The left pointed out that projections calculated by the Social Security Advisory Board, and used as ammunition against the program, assumed a rate of economic growth that was historically conservative. Use a different but plausible number, and your lines intersect at a point so far in the future as to be no longer very interesting.
There are many problems with this argument, including the fact that higher levels of economic growth ultimately result in higher benefit levels and that given the vagaries of history the Board’s economic growth projections could have just as easily been optimistic. More to the point, it maintains the myth of Social Security as Trust Fund.
Happily, this debate happened during sustained period of economic expansion. The crisis point kept receding into the future. The news media were confronted with what should have been obvious: this story has no clothes.
What to do?
Because we live in a 1984 political world, where past political news dims into irrelevance within a span of months, it’s easy enough for the opponents of Social Security to at last admit the obvious. The draft report of Dubya’s Commission clearly describes Social Security as a pay as you go government program. But now, it is that very nature of Social Security as a government program that is identified as a problem.
The Commission’s report states:
“Many working adults do not believe that they will ever collect retirement benefits from Social Security. Such a failure has never once happened in a program that dates well back into the last century.” (Page 2)
” workers and retirees have no legal ownership over their Social Security benefits. Instead, what they have is a political promise that can be changed at any time, by any amount, for any reason. In any retirement system a lack of legal ownership is a source of insecurity.” (Page 3)
Later, the report continues:
“Today’s beneficiaries are not living off financial assets accumulated in the past. Today’s workers are not accumulating financial assets for the future. Workers ‘invest’ their payroll taxes not in financial assets but in the willingness of future politicians to tax future workers to pay future benefits.” (Page 10)
Is this a problem? Just who are these politicians who are unwilling to fulfill this promise to the working people of our country? In fact, they are the President’s cronies and allies. They are the people who, year after year, have been insisting that the system is in crisis, that something needs be done now. They are the usual suspects: that vast right wing conspiracy of money, foundations, mouth pieces and tame elected officials.
The AFL-CIO has identified some of the principal players in the campaign to destroy Social Security. The libertarian Cato Institute has made Social Security a major priority. They have an ideological agenda and this is a major motivation for the much of attack on the program, although for cynics and Marxists it is enough to point out that much of the Cato Institute’s funding comes from Wall Street firms and banks that would directly benefit from a privatized “social security”. Another player is The National Development Council/Economic Security 2000, which plays a role on the right similar to that of the Campaign for America’s Future on the left. The National Center for Policy Analysis is another major player. This organization was one of the top backers of California’s Proposition 226, and it has promoted privatized Social Security for the past 10 years. It also supports school vouchers, massive tax cuts for the wealthy, privatized prison labor, paycheck deception legislation and funds bills opposing patients’ rights. And finally it should be no surprise that the Investment Company Institute, the lobbying arm of the mutual fund industry, has made trashing Social Security a top legislative priority.
Let us be clear and plain. There is no problem with Social Security. Social Security will be there for us and for our children if we have the guts to stand up and fight a gang of thieves and ideologues who mean to take it from us.
The problem is not programmatic. It is political.
What of those intersecting trend lines? The average age of our population is increasing, and if we hope to limit the number of humans on our planet, let us hope this trend continues. As it continues, Social Security will become more expensive. If one insists on financing the program strictly out of payroll taxes, which are limited to the first 80,000 dollars of income, the payroll tax would increase from the present 12.4 percent to, at worst, 15.4 percent, split equally between employer and employee. This is according to the Social Security Advisory Board. To whom is this a problem?
And there are other possibilities regarding payroll taxes:
“Making all earnings covered by Social Security subject to the payroll tax beginning in 2002, but retaining the current law limit for benefit computations (in effect removing the link between earnings and benefits) would eliminate the deficit. If benefits were to be paid on the additional earnings, 88 percent of the deficit would be eliminated.” (Social Security: Why Action Should Be Taken Soon. Social Security Advisory Board, July, 2001. Page 27)
And finally, why should Social Security be restricted to the payroll tax? If providing for the elderly, the bereaved, the disabled is a priority then partially financing it out of general revenues should not seem unreasonable. But it does mean, perhaps, that we will need to decide which is more important: Social Security or Star Wars? Social Security or another carrier battle group? Social Security or a tax cut for the wealthy?
The last resort of the enemies of Social Security is an appeal to greed. Heaven knows, we are a people well trained to gluttony, so this argument should have some affect. Beyond tedious explanations of the difficulty in making comparisons between private investment and the benefits of the Social Security program, it should be enough to simply note that for the rich and the reasonably well off, we already have a privatized supplement to the Social Security program in the form of the various Individual Retirement Accounts and 401(k) plans. These subsidized forms of retirement savings only sometimes provide enough to actually support retirement; the less well off end up raiding or borrowing against them for immediate needs. But more to the point, as the New York Times recently reported, the average 401(k) plan actually lost money last year. And while it’s probably too complicated for a mass audience, it wouldn’t hurt to point out the uncertain record and uncertain health of our nation’s private pension plans.
Dubya’s tame Commission argues that there is no guarantee in the promises of politicians: of course not. It’s not entirely up to politicians to keep promises; it’s our responsibility as well. But neither is there a guarantee in the value of financial assets, as the stock markets have so well demonstrated recently.
The drive to privatize Social Security is not an isolated issue. It is part of an ideological attack on the working people of this country. It is nefarious plot by Dubya and his band of thieves to carve the U.S. government as if it were a Christmas turkey, and sell it, piece by piece at bargain prices to the wealthy.
Are you going to let them get away with this?