Another reason for NOT cutting Social Security benefits–seniors poorer than you think
by Linda Beale
Another reason for NOT cutting Social Security benefits–seniors poorer than you think
As everybody knows, a constant refrain of the far-right GOP establishment is a desire to cut taxes for the wealthy while cutting benefits for the poor.
The ideological right talks about benefits for the poor as “welfare” but never talks about the tax expenditures for the wealthy–which amount to much more of an income redistribution, from middle class to wealthy–as “welfare”. They should, because that’s what it is. The tax preference for capital gains, a “privileged” tax rate, favors the very wealthy who own most of the financial assets, who itemize and who have much of their income in the form of capital gains (now, after the Democrats’ weak-handed agreement to extend almost all of the absurd Bush tax cuts, also used for corporate dividends), just as the overly generous estate tax exemption levels and rates favor the very wealthy, who are the only ones EVER subject to the estate tax at all.
(For some interesting stats on the very wealthy around the world, you might find the charts and information here interesting.)
The ideological right also talks about benefits for the elderly–which they have paid for throughout their working lives under earned benefit provisions in place since FDR–as “entitlements”, a generally derogatory term meant to engender hostility from middle class hardworking folk (based on the “those welfare bums are not like me” idea). What the right fails to point out is how important Social Security earned benefits are as the very underpinnings of a decent standard of living at later stages of life, paid for as much as possible by hardworking folk. It is in fact a decent standard of living when you are older and less able to take care of yourself, when you depend more on community and on what you have managed to put aside during your prime, that is at stake.
Of course, much of the right’s ideological tirade against Social Security “entitlements” is misleading and downright wrong. For instance, you’ve undoubtedly heard the argument for cutting Social Security benefits that goes something like this:
Seniors do fine in America today, and can live long after they retire. We think social Security was just intended to cover the little time between retirement and death that faced Americans a half century ago. So we should up the retirement age or at least cut benefits, because with fewer workers supporting the big baby boom of retirees the Social Security fund is going bankrupt and we’re now sacrificing our children’s futures, by contributing to the deficit with a “bankrupt” Social Security system, just to provide a cushy retirement to seniors that don’t need it.
This argument is wrong in so many ways it is hard to count them. Social Security is one of the most effective programs we have. It is not bankrupt. We’ve used the Social Security surplus for years to mask deficit spending–especially the wasteful deficit spending of the Bush years, to fund his wars of choice rather than pay for them with taxes that has been our preferred means of paying for wars in the past. To reneg on the promise of benefits now would make millions of seniors, many of whom have fought for this country in Korea, Vietnam, Iraq and Afghanistan or by keeping the mom-and-pop store going and the home fires burning, pay for Bush’s wars instead of the wealthy Gun, Oil and other corporate interests that support the neo-liberal/neo-conservative militarization campaign. There is no need for benefits to be cut–we are a wealthy country and could actually increase benefits by taxing the wealthy on all of their earned income (or better still, eliminating the distinction throughout the Code between earned and “capital” income) and extrapolating the progressive nature of the benefit schedule for those increased income levels as well.
But the biggest issue is the one that gets overlooked–many of our seniors are not doing so well, and without Social Security would be doing horribly. Even with Social Security, the medical expenses near life’s end are all-absorbing for many seniors, a situation that we should be remedying rather than worsening. And this is particularly bad for those poorest seniors who worked at grueling labor jobs during their prime–they tended to make less money and receive less in benefits than others, yet have more potential job-related health issues and be less able to work into their seventies as others can do.
For information on the poverty of American seniors, taking into account not just their direct incomes but their benefits from transfer systems and their real costs, see Dylan Matthews, Senior Poverty is Much Worse Than You Think, Washington Post WonkBlog (May 20, 2013). The graphs are particularly helpful in seeing the way poverty and near-poverty take a heavy toll on the senior population.
We should not cut benefits. We should in fact move to a single-payer Medicare-for-all system that would continue the health care savings that we’ve begun, and we should move to at least full wage coverage for Social Security taxes, with a corresponding extension of the progressive benefits scale.
Robert Reich: Chained CPI Makes No Sense For Seniors
Obama caves yet again: offering Social Security cuts to appease the right…
Richard (RJ) Eskow: Austerity Is Dead, So Drop the Chained CPI and Increase Social Security
States with the Most Americans on Disability
cross posted with ataxingmatter
I would like to agree with you. Social Security should not be cut. And it should probably be “increased,” as long as we are willing to pay for it.
But some of your thinking is not helping you with any audience that might have other than a reflex reaction: “social security good. must support it. ugh.”
you are incensed that “overly generous estate tax exemption levels and rates favor the very wealthy, who are the only ones EVER subject to the estate tax at all.” hmmm. only the rich pay estate taxes, so if the rate is lower than you think it should be that is evidence of “welfare for the rich.”
you claim that “workers paid for their Social Security” which is true, but then you spoil it by “paid for AS MUCH AS POSSIBLE by hardworking folk.” Well, I hate to tell you this, but SS is paid for entirely by hard working folk and it needs to stay that way. By adding “as much as possible” you open the door to making the rich pay for it… thus destroying your point.
Welfare… not your definition but the dictionary’s.. is the government forcing some people to pay for the needs of other people. Social Security has succeeded because it is NOT welfare. Your definition of “not welfare” appears to be… if its “justice” it can’t be welfare. Your definition of “welfare” appears to be “if taxes on the rich are lower than i think they ought to be, that’s welfare.”
and when you say the workers pay “as much as possible” you don’t seem to understand that an extra eighty cents per week each year is well within the realm of “possible” for workers to pay for their own future retirement, at a higher real benefit than today’s, over a longer life expectancy.
I’d be very glad to have you on the workers side in this. But you don’t help by confusing a “social justice” religious rant with plain facts and ordinary logic.
The workers can pay for their expected costs of social security. They might want to pay even more in order to have a higher income in retirement. They would only destroy Social Security by demanding “the rich” pay for it and turning it into welfare as we knew it.
If the rich need to pay more taxes… and i think they do… the income tax, or the estate taxes, are the place to look… but NOT to pay for Social Security.
We have not reached the point in this country where we need the rich to pay for our bread. And it would be better to work to avoid reaching that point than to simply rely on having the political power to force them to do it.
I whole heartedly agree with Dale’s general point, above. Social Security must be kept totally unrelated to any form of income taxation. No other form of taxation be it estate tax, capital gains tax taxes on earned or unearned income, etc. should even enter into the discussion of Social Security and its funding mechanism. It is bad enough that FICA contributions are euphemistically referred to as “payroll tax.” It confuses the issue. It makes Social Security appear to be a form of largesse sent by our friendly government and our wealthier citizens. It is not that. It is a retirement program that almost all workers contribute to for their own benefit in their later years. It is not a social welfare program. It is an investment mechanism of sorts, though required by law and administered by a government agency. Don’t make it sound like an entitlement that workers are not entitled to.
The fact is that workers can pay for their own expected increase in SS costs by raising their own “tax” by eighty cents per week per year… for a limited number of years.
If workers and voters understood this the whole attack on Social Security would be laughed out of court.
Instead, people like Linda turn it into a “tax the rich” issue, which keeps people from understanding how silly the whole damn thing is… and delivers it right into the “politics as usual” camp, with the same party and class divisions that keep workers from understanding what their own interests are.
Contrary to the religious faith of “progressives” the interests of workers are not always “tax the rich,” and enough workers understand that so Democrats lose elections they should have won, or end up electing Democrats in the pockets of those same rich
… well, not the same. many of “the rich” are perfectly sane. “the rich” who own the politicians, Republican and Democrat, are not sane… unless criminal greed is considered rational self interest.
As if to support this posting, there’s new reporting on yet another threat to retirement planning beyond Social Security benefits: our low interest rates are undermining pension plans that still exist. http://www.washingtonpost.com/business/economy/low-interest-rates-are-the-final-straw-for-many-company-pensions/2013/05/23/a83bf23a-adbc-11e2-8bf6-e70cb6ae066e_story.html?hpid=z1
Social Security provides a low floor for retirement but we’ve learned that too many people end up on the floor. Making this worse, wage stagnation for over three decades makes this floor lower than it ought to be. Workers can fund their own Social Security system, but the government also needs to address the private sector’s failure (for decades!) to do its part to provide for retirements. Even if that means some sort of Social Security II over-and-above Social Security.
i don’t have any objection to that. but don’t call it Social Security II. Social Security does what it does very well. Turning it into something else will just destroy it. SS was intended to work when nothing else does. Even with low rates of wage growth. Remember this all started in the Depression when wage growth was negative. SS will not make you rich, but it will keep you fed without having to beg.
as for the low interest rates, all i can say is that the Banks have cost “the rich” more money over the years than “taxes.”
but there i go again. falling for the Lie.
we are nowhere near SS not being enough. and we are nowhere near needing “the rich” to pay for it.
workers can, by present none too optimistic projections, pay for their own future retirement benefits at approximately twice the real value of today’s, for a longer retirement without raising the retirement age, by paying an extra eighty cents per week each year.
eighty cents per week.
why is that so hard to understand?
fix that eighty cents per week in your mind. understand it. tell the people. get it enacted.
then spend the rest of your career inventing a way to do more for the poor.
i’d suggest better unions, and better politicians to end the stranglehold on wages by the criminal rich.
(not all rich are criminal. just those who own our politicians.)