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Under the guise of fighting the federal budget deficit, a renewed attack on Social Security is being plotted in Washington by a commission that’s meeting in secret and intends to push its plan through Congress after the election. Concerned citizens need to educate themselves about this stealth assault on our country’s most successful and popular social program, and take action to defend it before it’s too late.
Earlier this year President Obama set up the National Commission on Fiscal Responsibility and Reform. It’s a bipartisan body with equal numbers of Democrats and Republicans. Its co-chairs are Erskine Bowles and Republican former Wyoming Senator Alan Simpson. But while the mandate of the commission is to deal with the federal budget, it has focused its attention to cutting Social Security. Some critics have nicknamed the group “the Catfood Commission”, since it could lead to policies that would force senior citizens to subsist on pet food.
Erskine Bowles is a former president of the University of North Carolina and, since 2005, a member of the board of directors of Morgan Stanley, a major investment bank that received $10 billion in the TARP bank bailout. In 1997-98 he served as Bill Clinton’s White House Chief of Staff, during which time Bowles secretly negotiated the partial privatization of Social Security with Newt Gingrich. The deal fell apart in the Clinton-Monica Lewinsky scandal – one of the few positive outcomes of that sordid affair.
Alan Simpson is a particularly nasty politician who makes crude jokes about wheezing old folks (although he himself is 78.) In a confrontation in June with Alex Lawson of the group Social Security Works, Simpson said, “I don’t know where you get all the crap you come up with. ... We’re trying to take care of the lesser people in society...” Being called “lesser people” is probably a worse insult than being called “small people,” the term by which the chairman of BP referred to Gulf Coast residents.
The commission has held most of its meetings in secret, and plans to issue its report after the election this November – too late for voters to do anything about it. It is then expected that there will be a bipartisan push (backed, no doubt, by Wall Street and the corporate-controlled news media) to get a lame-duck session of Congress (a session including all the members of Congress who are retiring or were defeated in the election) to adopt the commission’s recommendation on an up-or-down vote with no amendments allowed.
WORK UNTIL YOU’RE 70?
The commission is expected to call for raising the Social Security retirement age to 70, along with other possible cuts in Social Security and Medicare, linked to some tax increases that are meant to reduce the federal budget deficit.
We’ve seen some senators and representatives remain in Congress until well into their 80s and even 90s. It appears that their jobs is not very physically demanding – which may be why some of them think it’s reasonable to raise the retirement age to 70. But is it reasonable to expect a waitress, on her feet all day carrying trays of heavy dishes, to keep that up until her 70th birthday? Should an iron worker be expected to climb around on eight-inch wide girders, 30 stories about the ground, at age 69 ½? How about bathing, feeding, moving and subduing sometimes-agitated patients in a state mental hospital – how many people could do that in their late 60s?
According to a study by the Urban Institute, raising the retirement age to 70 would push 1.5 million seniors into poverty.
Following Alan Simpson’s “lesser people” outburst, University of Texas Professor of Economics James K. Galbraith appeared at one of the Catfood Commission’s few public sessions. He called for Simpson’s resignation, saying “he lacks the temperament to do a fair and impartial job.” He also blasted the commission for operating in secret, for dealing with a topic (Social Security) that is beyond its mandate, and for following policies on both Social Security and the deficit that are at odds with the facts.
Social Security’s leading foe is Wall Street billionaire Peter G. Peterson. Over many years Peterson has spent some $12 million on think tanks, foundations and front groups that advocate privatizing Social Security and cutting benefits. Peterson’s propaganda outlets have spread numerous lies about Social Security – which often get repeated by the mainstream media – including the lie that it’s about to go broke and the lie that it causes the federal budget deficit. The Catfood Commission seems to be a dream come true for Peterson, and the commission has welcomed his financial and other support – a fact which Professor Galbraith called “a conflict of interest” and “a disgrace.”
When UE goes to Capitol Hill in September, we’ll be letting everyone we visit – Democrats and Republicans – know that we’re aware of the plot against Social Security, and that any attempt to cut Social Security or raise the retirement age is an outrage that we will not accept. In the weeks and months ahead, all UE members need to deliver that message to members of Congress and candidates for Congress. Below are some important facts to keep in mind.
IMPORTANT FACTS ABOUT SOCIAL SECURITY
The Social Security trust fund continued to grow in 2009 and now stands at $2.5 trillion. (This is the Golden Egg that Wall Street privatizers would love to get their hands on.) The trust fund is expected to get even bigger over the next decade, but then, if no changes are made, it’s projected to decline to zero by about 2040 due to the size of the baby boomer retiree generation. But even if that happens, Social Security could continue paying 78 percent of benefits, on a pay-as-you-go basis.
The FICA tax is capped, and currently taxes income only up to $106,800 a year. That means the very rich are taxed on a small fraction of their income than the rest of us. Removing the cap would easily overcome any future shortfall and assure the program’s fiscal soundness far into the future.
The claims of a Social Security “shortfall” are bogus. This year and next, because of the deep recession, the program’s costs exceed its income from FICA taxes and income tax on benefits. But the program has another source of income – interest on the Treasury bonds in the trust fund. This year that interest income in $118 billion.
Social Security has no role in the federal budget deficit because Social Security is not part of the federal budget. It is funded by the FICA payroll tax, which really amounts to a savings program that we all participate in. It’s our money and it’s there solely to pay Social Security benefits – not for any other purpose.
In 2009 the program paid out $675 billion to 53 million beneficiaries, with administrative costs of less than 1 percent. No private pension or insurance plan can come anywhere near that level of efficiency.
LEARN MORE
Plans to cut Social Security have received very little coverage in the mainstream media. One progressive website that tried to fill that void is Firedoglake, which has provided critical coverage of the Catfood Commission.Veteran journalist William Greider has done some excellent reporting on this issue for The Nation magazine.
On August 16 Paul Krugman, a Nobel-prize winning economist, published a strong defense of Social Security from its attackers in his New York Times column.