What is it about a self-financed pension system that is funded 20 years in the future that enrages them so? What is so galling to them about the idea that millions of seniors don’t have to beg for sustenance as was the case before Social Security?
And yet, the moneyed elite and their idiot minions in the conservative base have been on a rampage against it from the minute it was passed into law in the 1930’s. And now they - and Obama, their enabler - want to cut benefits as a means of bringing down the country’s deficit when SS has absolutely nothing to do with the deficit, never has and never will. The Social Security Trust Fund has $2.7 trillion in the bank, actually it is held in US Treasury Bonds, the same bonds that foreign governments and rich people own.
The meme in Washington among the punditocracy is that ‘entitlements’ must be cut if there’s any chance of bringing down the deficit. Entitlements is in quotes because SS and Medicare are self funded; they are not entitlements, you only receive those benefits if you’ve paid into the program. Medicaid, on the other hand, the federal program that provides medical assistance to those who otherwise can’t afford it or have no access to insurance, is an entitlement because any American who fits the qualifications is eligible for aid.
Those three programs make up about 60% of the US budget, $2 trillion out of $3.4 trillion so they are easy targets for regressives. If you’re interested in this budget stuff, I highly recommend a web site called usdebtclock.org. It keeps a running total of debt and income totals; it’s truly fascinating to watch the numbers rolling along. But, once again, SS and Medicare really do not belong in the budget because they are self funded, so having them there clouds the issues.
It’s worth spending a few minutes on how SS became part of the budget. Lyndon Johnson started the practice of folding SS into the budget to try to mask or minimize the cost of his Vietnam war. SS being so large it made his war expenditures a much smaller part of the total budget. The reality was the same but the perception was different.
In 1980 Reagan doubled down on the scam. He looked 30 years ahead and said, My god, the Baby Boomers are going to overwhelm the system when they start retiring in the next century so we need to raise payroll taxes now to put some money away for the coming crunch. SS payroll taxes are as regressive as you can get. Not only does everybody pay their 6 ¼ percent regardless of how poor they are but the wealthy are exempt for all income over about $120,000 annually. So, raise taxes on the lower classes and it looks like you have an extra $200 billion a year coming in which you can then use to lower taxes on the wealthy, which is exactly what Reagan did.
It’s more familiarly called slight-of-hand. The additional money coming in off of the increased SS tax is borrowed from the SS trust fund, so it’s not really the government’s money, but it looks like the budget is more balanced than it really is. Despisers of SS say the SS Trust Fund is just a bunch of IOUs; very true, but China holds a trillion dollars of those same IOUs and you wouldn’t hear any American politician or pundit say that to China, now would ya?
The way Obama wants to reduce SS benefits is called chained CPI or consumer price index and it’s supposed to reflect the ability of people to substitute cheaper items when the price of the things they want to buy rise too much; so buy margarine instead of butter, pork instead of beef. This is Obama’s plan, the Repugs have not proposed it and if Obama gets his way the same Repugs who hate SS will use Obama’s Chained CPI to campaign as the true defenders of the program… fucking hypocrites, but that’s what will happen and it could easily cost the Dumbocrats in the next election, if they don’t find some intestinal fortitude take a stand against Obama.
The loss to SS recipients would not be a lot of money – 3% over 10 years up to 10% over 30 years if they live that long. But they don’t have a lot of money to begin with. The average monthly check is about $1200. That is not the high life. In many parts of America that is just scraping by. Some 60% of recipients depend on SS for 80% of their income. A lot of people like myself receive far less. Even the largest checks do not involve a lot of money. A fellow I talked to recently, who paid taxes at the maximum, said he’ll receive $2600 per month at 62. Plenty enough for me, but hardship for a lot of Americans.
And why are SS recipients, which to be clear include the disabled as well as seniors, being asked to make this sacrifice. What is the purpose? What is to be gained, vis-à-vis the budget?
This cut in benefits will reduce the total budget by about $163 billion over ten years, $16.3b per year. To put that number in perspective, last year GE, one of the world’s largest, most profitable corporations earned nearly $14 billion, of that they paid no taxes, but instead received a $3.7 billion refund. If they had paid the standard corporate tax rate of 35%, then the Treasury would’ve received about $5b. So add up the tax they should have paid and the refund they shouldn’t have gotten and that comes to $8.7b or more than half the savings the government would gain by screwing pensioners. Now that’s only one corporation, though admittedly one of the sleaziest. Or how about the $8b in corporate welfare that goes to the largest oil companies? Exxon needs a subsidy? Ripping off SS recipients is more important than ending that subsidy?
Meanwhile, once again, it’s not the government’s money anyway, it only looks better on their bottom line: it’s our money, we paid for our benefits. The government can borrow that money if they want, but if they renege on their commitments and raid the Trust Fund they’ll be stealing. In this case stealing from the poor to feed the rich, which is nothing new in today’s America, but still…