Why Expanding Social Security Is Crucial to Addressing Inequality in America in 2014
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In coming decades, America will face an economic crisis of epic proportions as tens of millions of citizens lean toward poverty as they reach their senior years. What is done about it will define what kind of country the U.S. will become.
Poverty increasingly will have an older, non-white and female face. The results may be unlike anything the nation has experienced since the 1930s Depression, when the middle and working classes were gutted by economic collapse. Then Congress responded by creating the first federal safety nets that are still relied on today, starting with Social Security.
What’s unfolding now is that much of the 76-million-member Baby Boom generation—all demographics—has not saved enough for their retirement, making Social Security and Medicare their primary means of support. Only 20 percent seniors, with incomes of more than $58,000 a year, will not rely on Social Security as their primary income source, the National Academy of Social Insurance found last fall. Women and communities of color will be especially hard-hit, experts report, citing long-time wage and savings disparities.
“Two-thirds of working Americans cannot maintain their standard of living in retirement—and that assumes they work until 65,” Syracuse University’s Eric Kingson, co-director of Social Security Works, testified in Congress last fall.
The causes of this pending crisis are well known. Pensions have disappeared. Wages have been flat for decades, even as productivity has risen. Healthcare costs have spiraled, and so have college tuitions. Private plans like 401ks haven’t produced enough. Periodic recessions, high inflation and joblessness all have tapped savings. The result is that the national retirement deficit, or what people would need to maintain current lifestyles, is about $12 trillion, Diane Oakley, executive director of the National Institute on Retirement Security, testified.
The average monthly Social Security check will be $1,290 in 2014, a $30 increase from last year, according to the Social Security Administration. One underappreciated problem is that annual benefit increases haven’t kept pace with inflation since the 1980s. According to progressive economist Dean Baker, they are 25 percent less than they were in 1983, when Congress started shaving off fractions from annual cost-of-living increases.
Another problem is that for many years, the politics surrounding Social Security have been dominated by Wall Street heavyweights who have cynically blared that the federal government is drowning in debt, fueled by future safety net obligations. Libertarian billionaires like Pete Peterson have bankrolled massive “ Fix The Debt” campaigns, casting the issue as one of better budgeting while opposing tax increases and ignoring human needs.
Their rhetoric has been fine-tuned to rail against “entitlements,” explained Drew Westen, a psychology professor at Emory University and author of The Political Brain. That frame says beneficiaries are undeserving or greedy—not average taxpayers who’ve spent their lifetime working and investing in a public social insurance program.
“That’s not a term [entitlement] that FDR [Franklin Delano Roosevelt] ever used to describe any program in the New Deal,” he said. “Entitlements suggests that you are asking for something that you don’t deserve… Instead you are so much better talking about insurance that you pay for through your taxes.”
In recent decades, the political world has not portrayed the issue as being about how the elderly, people with disabilities or tragedy-struck families can live with dignity. Similarly, it has avoided putting a clear price tag on that basic standard of living, such as suggesting that no one live below a modern poverty line—not one pegged to 1960s statistics, which is how the federal poverty line is calculated. And greedy financiers have predictably said that they could better manage the government’s Social Security accounts, eyeing billions in charges and fees.