Whoops! What Crisis?
The wind has suddenly been knocked out of sails of those critics of Social Security and Medicare in Washington — Republican and Democrat — who have for years been warning direly that the two programs were going bust. Suddenly their favored “rescue” plans for these crucial programs — turning to a stingier way of calculating the annual inflation adjustment, raising the retirement age, and even reducing benefits for Social Security, and cutting benefits for Medicare — don’t make sense to anyone.
Thanks to an improved jobs picture, a marked slowdown in health care cost inflation and other factors, the latest annual Trustees Report from the Social Security Administration paints a picture of a much improved situation. As things stand now, this report says the Trust Fund that was built up, starting back in the early 1980s, to cover the anticipated increase in benefit payments to the wave of Baby Boomer retirees, will not be exhausted until 2033, which happens to be about the time that the last Baby Boomers born in 1964 will be retiring, and when the wave of 78 million Boomer retirees will be starting to shrink as early boomers born in the late 1940s and 1950s begin to die off (the oldest Boomers, born in 1946, will be 87 in 2033).
The Medicare Trust Fund, too, is looking much better. As recently as last year, it was being projected to run out in 2026, but now it looks like it will still have a positive balance in 2030.
What this means is that actually shoring up these two programs so that they will be fully funded and able to pay full retirement benefits to retirees and health benefits to all those on Medicare, should be much easier than and less painful to all concerned than the voices of doom in Washington have been threatening.
For example, just eliminating the cap on income subject to the Social Security payroll tax, currently set at 6.2% for employers and 6.2% for employees, but only on the first $113,400 of income, so that all income becomes subject to the tax, including the income of millionaires and billionaires, would fully fund the program way out past 2075, when the last Baby Boomer have long moved on to that great Woodstock in the sky.
That’s not such a bad idea really. The cap on income subject to the 1.45% Medicare tax on employers and employees was eliminated some time ago and the American economy as we know it didn’t come crashing down as critics warned.
Fact is, in the Scandinavian countries and Finland, the national pension tax is a heck of a lot higher than it is in the US, and their economies are doing quite well, thank you. Their companies compete well on world markets too, and without moving their operations and jobs abroad to low-wage countries. In Germany, for example, the largest export economy in the world after China, employers and employees pay a 19.6% combined payroll tax, split 50/50, for a much more generous retirement pension. The combined US payroll tax rate is, by comparison, a paltry 12.4%.
Interestingly, polls show that 68% of US citizens favor eliminating the cap on income subject to Social Security payroll taxes. That’s more than 2/3 of Americans, and if you think about it, it’s hard to get two-thirds of American’s to agree on anything.
So why hasn’t this been done, you might well ask.
Well, it gets to the question of whether the US is really a functioning democracy or just the shell of one. If it were really a government of, by and for the people, clearly that income cap would be long gone, if it were ever even established in the first place. But the capitalists basically own our politicians, thanks to the unlimited campaign funding they can provide, so instead of talk about ending the income cap, we still hear calls for replacing the Consumer Price Index with something called the Chained-CPI as a way of calculating the annual Social Security benefit inflation adjustment. Chained-CPI is really just a form of leaglized theft from the elderly and disabled. It is based on the fraudulent “theory” that when people can no longer afford one item in the CPI “marketbasket” of goods and services, they will switch to a cheaper substitute. Beef too expensive? Switch to chicken. Chicken too expensive? Switch to beans. Rent too high? Move to a cheaper neighborhood or a smaller apartment. LED lightbulbs too costly? Switch to candles.
Of course, that’s not what people really do. Old people particularly cannot easily move. Instead, if rents go up, they cut back on calories in their meals and go hungry. If food gets to expensive, they cut back on needed medical care.
With this new report from the Social Security Administration in hand, it’s time for Americans to go on the offensive to demand not cuts in Social Security and Medicare, but expanded benefits and lower costs for both programs. Tax the rich! Control drug costs and hospital costs! Make it illegal for doctors to refuse to accept Medicare patients!
Of course, the real answer to the Medicare funding problem is to toss out the whole mess that is Obamacare, and to make everyone eligible for Medicare, which is how they do it in Canada and most of Europe, at roughly half the cost both per person and as a portion of Gross Domestic Product as we spend in the US on medical care.
I have long argued that Social Security and Medicare, the two most popular government programs in this country, supported even by the right-wingers in the Tea Party (your remember them right?: those people carrying the signs saying “Keep your government hands off of my Social Security and Medicare!”), should become the cornerstone of a new progressive movement — one working outside of the corrupted two-party system and outside of simply electoral politics.
Most Americans these days are desperate about paying for their health care in old age, and about simply having enough money to live on after they are no longer able to work. Already, we’re seeing people working into their 70s and 80s because they simply cannot afford to retire.
This is an outrage! And it’s an outrage not just to the old and near-old, but to the children and grandchildren of those older Americans, who don’t want their grandparents and other older relatives living in poverty, and don’t want to be put in the position of having to pay for their food, lodging and health care.
What we need now is a Social Welfare Movement modelled after the Civil Rights Movement — a militant movement across region, race and class to demand real change. We need millions of people marching regularly on, and camping out in Washington, DC to demand a real national pension like they have in most of the countries of Europe, and a national health program like they have in Canada, Germany, France and the UK.
The interesting thing is, if we do this, all the other progressive demands we share — taking back government from the corporations and the rich, revitalizing our schools, rebuilding our highways and parks, defending our environment, and ending the nation’s obsession with wars and imperial conquest, will flow from this.
As the political scientists Bo Rothstein, of Sweden’s Göteburg University, and Eric Uslaner of the University of Maryland, have written, have written in a study of various national social security systems, “We argue that university social programs that cater to the whole (or very broad sections) of society, such as we find in the Scandinavian countries especially, promote a more equitable distribution of wealthy, (and) more equality leads to a greater sense of social solidarity — which spurs generalized trust. Generalized trust, in turn, leads to more equality.”
Sounds like a good idea to me, and a terrific antidote to the growing anti-social and divisive attitudes so typical in these so-called United States of America.
Dave Lindorff is a founding member of ThisCantBeHappening!, an online newspaper collective, and is a contributor to Hopeless: Barack Obama and the Politics of Illusion (AK Press).