For many years, the smug elites of Wall Street have peddled “entitlement reform” as a sly euphemism for cutting Social Security. And Washington’s political elites, including President Obama, bought into the propaganda. Social Security, not to mention Medicare and Medicaid, was driving the nation into ruinous debt if government did not act to curb this venerable New Deal program. Think tanks and editorial writers, political reporters and TV talkers, witlessly embraced the big lie and promoted it as indisputable truth.
Except this self-righteous crusade for fiscal discipline failed to persuade the American people—the wage earners who pay the FICA deductions on every weekly paycheck and expect to get their money back as the retirement benefits promised by law. For many folks, the deal smelled like another Washington swindle. The people had it right, the experts were wrong. This time, the people are going to prevail.
This summer, though virtually ignored by the news media, the Democratic Party in Congress has launched a smart, spirited counter-offensive on behalf of Social Security. In the House and Senate, eight differing measures have been introduced by various Democrats to expand Social Security benefits to correct injustices for women and low-wage workers and to increase FICA payments for the wealthiest wage earners who make more than $400,000 a year. Instead of attacking Social Security, “entitlement reform” now takes on an opposite meaning—improving workplace fairness in this much-loved federal program and insuring its solvency for the next seventy-five years.
This may sound like a minor event, since none of these measures will be enacted anytime soon. But it reflects a major political shift underway in the reigning values of Democrats—a reawakening of the reform spirit that used to be the mainstream party’s identity, and another important way of confronting the society’s scandalous inequalities of income and wealth.
The Democratic president, one observes, is significantly absent and silent. Obama has made fine speeches about inequality, but he actually stood on the wrong side of the Social Security debate. Back in 2010, he made common cause with the anti-entitlement case of billionaire Pete Peterson, who recruited scores of influential policy types by dispensing generous grants. Obama opted for “austerity” economics and actively sought a bipartisan deal on trimming Social Security.
Some progressive voices in Congress, like Senator Bernie Sanders, Representatives Raul Grijalva, Keith Ellison and John Conyers said, No, this is wrong. But a lot of Democrats were silent. They may not have been for cutting Social Security, but they also didn’t oppose it. Back home, however, they encountered fierce resistance from their constituents. Ironically, Pete Peterson’s millions probably helped awaken the people to the threat. The more Peterson’s wealth financed noisy lobbying of the governing elites, the more he mobilized the anger of common folks.
It now appears that reforming Social Security in positive ways has once again become a mainstream idea of the Democratic Party, aligned with the party’s own base and public opinion regardless of party. Roughly half of the House Democratic Caucus has signed as co-sponsors of the strongest and most generous legislation, introduced by Senator Tom Harkin of Iowa and Representative Linda Sanchez of California. Their measure would gradually eliminate the cap on Social Security deductions now at $117,000 incomes. The bill would boost benefits for all Social Security recipients by approximately $70 a month, targeted especially to help low- and middle-income families.
In the Senate, Patty Murray of Washington, a member of Senate leadership, is co-sponsoring with Mark Begich of Alaska the Retirement and Income Security Enhancements (RAISE) bill, which proposes a more modest financing goal—a 2 percent FICA increase for incomes above $400,000, but no change for lesser incomes. Representative John Larsen of Connecticut would bump up benefits modestly for all recipients and guarantee a minimum benefit 25 percent above the poverty level. “No one who paid in the system over a lifetime should come out poor,” Larson explained.
The RAISE bill co-sponsored by Murray and Begich focuses on correcting many longstanding inequities that penalize women because of the changed nature of the workforce. Social Security was originally designed for the era of single-income families, when American companies typically provided generous retirement benefits. Now women are nearly 50 percent of the workforce but are especially vulnerable to hardship in retirement, particularly if divorced or never married.
Under current law, a widow or widower of a dual-income family gets a significantly smaller survivor benefit than a survivor in a single-earner family. Because women earn significantly less than men on average, they retire with significantly less in savings or pensions. Three of every ten women over 65 depend solely on Social Security in their later years.
These long-neglected social realities are at last coming back for honest political debate, and Democrats will doubtless argue many questions among themselves. Groups like Social Society Works, co-chaired by genuine authorities like Nancy Altman and Eric Kingson, have marshalled the facts and ideas that helped inspire the revival. Above all, they steadily refuted the Wall Street scare talk distributed by allegedly objective news media.
The basic distortion is the hysterical claim that the US economy faces a demographic calamity when the Baby Boomers retire. The sky is not falling, and it is not going to fall. The long-term actuarial forecast is that Social Security will absorb a little more than 6 percent of GDP in 2035—6.23 percent—and in 2085 it will amount to 6.17 percent and 6.23 percent in 2090. In other words, it’s a pretty flat line, not an explosion.
Perhaps the most pernicious lie told by Pete Peterson’s anti-entitlement crusade has been his crude effort to pit the young against the old. Peterson’s assorted front groups claim the old folks are robbing from the children by insisting on overly generous benefits. This demonstrates Wall Street’s utter ignorance of American family life. In reality, it is often Grandma’s Social Security check that holds the family together and keeps the grandchildren in hearth and home. Anyone who doubts the importance of these social relationships should consult the voluminous polling on how people feel about Social Security and why they stubbornly support it despite the so-called experts.
Or ask young adults, the millennial generation that faces bleaker prospects for jobs and incomes, savings and retirement. The leaders of Social Security Works feel their ultimate purpose is protecting Social Security from Wall Street, so it will still be around seventy-five years from now when the millennial generation needs it.