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.

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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

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cross posted with ataxingmatter