Proposals to raise Social Security benefits are a refreshing antidote to portrayals of the program as a mere drain on the Treasury. Details of some such plans are troubling – for reasons I’ll go into – but the change in tone is most welcome.
Democratic Sens. Tom Harkin of Iowa and Sherrod Brown of Ohio are leading a campaign to raise benefits by about $70 a month and alter the cost-of-living adjustments to the beneficiary’s advantage. The higher payments would be covered by raising the income cap, which is now $113,700, on paying Social Security taxes.
Interesting ideas all, especially raising the income limit. This alone could end the concern that in 2033, Social Security may be unable to maintain the current level of benefits.
But most importantly, it counters the nonsense that Social Security is in dire trouble. A completely self-sufficient program, workers and their employers pay for every penny of it. The accounting for the trust fund is cheesy, that’s true, but there is no way the Treasury won’t pay back the money it borrowed from it (again, real dollars collected via Social Security taxes).
Why it was a short eight years ago that Republicans were trying to launch the dismantling of Social Security through a privatization scheme. Recall former President George W. Bush pushing for a plan to let future retirees put their Social Security contributions into the tender hands of Wall Street. There was much bravado comparing the returns on private investments to “returns” on the government program.
All this ignored the reality that Social Security is insurance, not an investment. And it does other things, like help the children of workers who have died.
At the time, stocks were booming and house prices bubbling. Bush reassured workers that he would not let them invest their retirement savings in risky places.
Then the bottom fell out. Prices for the finest blue chip stocks cratered. Imagine the fallout had Bush’s plan come to fruition. An enraged Joe Public, seeing his government-approved stock portfolio shot to smithereens, would have descended on Washington along with a million lawyers demanding to be made whole. What followed would have been one heck of a government bailout.
As many middle class Americans survey the ashes of more recent reversals in their finances – fallen house values, investments gone awry, lost jobs, shrinking pensions – Social Security is looking good. If all else goes bad, it will be there to pay the electric bills.
Today, only 43 percent of workers have more than $25,000 set aside for retirement, according to shocking numbers from the Employee Benefit Research Institute. That’s down from an already unimpressive 51 percent in 2008.
Note that most of the above anxieties belong to the middle class. It is this rude awakening – plus the reality that Republican voters are getting older and themselves less confident – that has changed the politics of Social Security.
Thus, ideas being floated by left-leaning think tanks to tinker with Social Security’s broad base by shifting more of its benefits to low-income people are dangerous. That turns it into a welfare program, and you know what happens to welfare programs in this country.
Politicians don’t mess with Medicare, which serves the rich, poor and those in between, the way they mess with Medicaid, a program mainly for the poor. Liberals should observe that a conservative tactic for weakening Medicare is to stuff it with so much means testing – scaling benefits according to income – that the well-to-do care less and less about maintaining the program.
Rising income inequality is an important concern, but there are other ways to help the poor. Social Security is strong because it works for everyone.