Economy  
comments_image Comments

The Social Security Scam: a Bipartisan Plan to Put the Squeeze on Older Americans

When Washington players talk up “bipartisan compromise,” it usually means the people are about to get screwed.
 
 
Share
 
 
 
 

An appalling consensus has developed among Washington elites: they tell themselves cutting Social Security is a slam-dunk. If the two parties will hold hands and act together, they reason, voters can’t blame either one. When Washington players talk up “bipartisan compromise,” it usually means the people are about to get screwed.

It’s part of the new austerity—American-style. We’ll all have to learn to live with less, we’re told, in order to reduce America’s swollen federal deficits. So we’ll whack Social Security benefits, dump school teachers and other state employees, and suppress wages by accepting high unemployment.

Barack Obama is actively collaborating with this conservative ploy. He created a presidential commission on deficit reduction, stacked with conservative deficit hawks from both parties. They will not reveal their recommendations until after this fall’s election—too late for voters to push back.

Obama is playing coy himself, but his aides have made clear his intentions. Social Security is the sacrificial lamb. It will be offered up to Republicans to get them to make a deal on taxes. The tax cuts for the wealthy enacted in the Bush era are set to expire, but Republicans and many Democrats are loath to let that happen.

The crude logic of deficit reduction is that Washington can’t aid state and local governments unless it cuts money somewhere else. This sounds a lot like what the International Monetary Fund does to poor countries in financial trouble.

THE MEDIA LIES

The reporting in major media is factually distorted and one-sided, leaving some people confused whether Social Security contributes to the federal budget deficits. It doesn’t.

Social Security operates its own separate trust fund which has amassed a huge surplus—money paid in by workers every paycheck. The social insurance system is separate from government, and workers are the true beneficial owners.

Thanks to the increased FICA deductions enacted 25 years ago, American workers have saved vast wealth to pay for their retirement benefits in advance. The present surplus is $2.3 trillion and will grow to $4.2 trillion by 2024.

You might ask your local newspaper why these huge surpluses are never mentioned when fiscal experts are quoted on “entitlement reform.” In reality, Social Security spending has never contributed a dime to the federal deficits, and cutting Social Security benefits would have no impact whatever on reducing the deficit.

The members of Obama’s deficit commission know these facts, and so do the many think-tanks targeting Social Security. When they talk up its “crisis,” they mean a problem that won’t arise for 27 years, when the trust fund will experience a moderate shortfall. As Obama explained in his campaign, that problem can be fixed with a few modest adjustments—not the wholesale gutting the “fiscal experts” recommend.

THE NEW AUSTERITY

The establishment’s real objective is to reassure creditors worldwide by demonstrating that the U.S. is willing to trim away the social benefits and middle-class expectations created by generations of reform.

If the political system succeeds in whacking Social Security now (when it isn’t a problem), it will do so again and again, while also stripping away other hard-won public programs that benefit the broad population.

 
See more stories tagged with: