Social Security – Part 19: Destroying the Safety Net

[EDITORIAL NOTE: This is the thrilling Social Security post, with some minor tweaks, Crabby intended to post last Friday when she was so rudely interrupted by life.]

Now that Laura Bush's distasteful, little comedy act comparing her marital life to those of Desperate Housewives on television is fish-wrap, Crabby Old Lady can take a serious look at the consequences of her husband's latest Social Security offering. Paul Krugman in The New York Times got it exactly right: "a gut punch to the middle class."

The president was a-twitter in his radio broadcast following the announcement of this latest attack on the Social Security safety net, portraying himself as a defender of the poor:

“By providing more generous benefits for low-income retirees, we’ll make good on this commitment: If you work hard and pay into Social Security your entire life, you will not retire into poverty.”

Crabby Old Lady is here to tell you that Mr. Bush’s “more generous benefits for low-income retirees” is a simple falsehood. According to his new “progressive indexation” plan, benefits for those whose average earnings are about $16,000 a year in today’s dollars would remain the same, not increase. Their benefits would be “more generous” only in comparison to extreme cuts to everyone else.

Crabby knows in her bones that the president knows this perfectly well. He was trying to fool her by not mentioning that middle class retirees – those who earn between about $36,000 and $58,000 in today’s dollars – would take a benefits hit, in the long term, of between 28 and 42 percent.

And, of course, the plan would affect richer people, for whom Social Security is a tiny proportion of their retirement income, in no substantial way since they do not rely on these benefits to live. It sounds like the same old story this administration has been selling the public since it first took office: feed the wealthy, starve the poor.

If this plan is adopted, it will change Social Security from a program of social insurance for everyone into a poverty program and Crabby Old Lady knows what happens to those: they become ripe for even more cuts by politicians who answer first and always to their corporate benefactors. Have you seen the stories on the proposed Medicaid cuts - in the billions - this past week?

Many actuaries have backed the findings of Steve Goss, the chief actuary for the Social Security administration, that eliminating the salary cap on Social Security payroll taxes – currently at $90,000 – would come so close to eliminating the future shortfall that the remaining money needed is negligible.

And removing that cap would affect only six percent of the population - the people who can most afford it.

In weighing ideas for any Social Security changes, Crabby thinks we should be asking ourselves what kind of a country we want to live in and what moral values (to cop a phrase from the right wing) we wish to live by. Do we believe in every person for himself, sink or swim on their own? Or do we believe in cooperation, compassion and the duty to help care for one another?

Crabby reminds you that no one ever got rich on Social Security, and she suggests that in your personal deliberations on these proposals, you ask yourself why President Bush wants to destroy the safety net that keeps 40 percent of the over-65 crowd from sinking below the poverty line. When you have an answer, please let Crabby know.

...to be continued...

Social Security Privatization Series Index

Comments

[Tamar]

Well, I can't answer your last question! But I think that this is the important crux of this whole matter:

"In weighing ideas for any Social Security changes, Crabby thinks we should be asking ourselves what kind of a country we want to live in and what moral values (to cop a phrase from the right wing) we wish to live by. Do we believe in every person for himself, sink or swim on their own? Or do we believe in cooperation, compassion and the duty to help care for one another?"

SO well put that all I can say is "Amen" to that.

[AlwaysQuestion]

Ronni, I second Tamar. You nailed it.
The proposals to change social security, to change Medicare/Medicaid, to flatten the income tax and make it more "fair"... it all comes down to who we really are.
The poor and the middle class pay tax into social security from their entire income for reduced benefits. The more wealthy pay only on the first $90K of their salaries for benefits they'll never need. This is our new national strategy for social security.
Mr. President! Mr. Rove! "The Widow's Mite"... look it up!

[Louise]

Hear, hear!

[Crabby Old Lady]

For anyone else who is as deficient in knowledge of the New Testament as Crabby Old Lady, here is "The Widow's Mite" story AlwaysQuestion refers to, from the King James Version, Luke 21, 1-4:

"And he looked up and he saw the rich men casting their gifts into the treasury. And he saw also a certain poor widow casting in thither two mites.

"And he said, Of a truth I say unto you, that this poor widow hath cast in more than they all: For all these have of their abundance cast in unto the offerings of God: but she of her penury hath cast in all the living that she had."

[M Sinclair Stevens]

I have a question about Social Security as "a program of social insurance for everyone". I thought it was, and is, a national pension program for workers who paid into it.

So few of us work for one employer all of our lives. And only 20% of the companies (according to CBS news today on United Airlines pension bankruptcy) actually have pension plans anymore. So, Social Security provided a plan for the rest of us workers. I worked for the government when Reagan gutted the Federal Retirement Program and force us over to the Social Security system. So Social Security is my pension plan.

And if I remember my old women's lib arguments, housewives and stay-at-homes Mom were at risk in their old age because they did not pay into the system and they wouldn't get benefits out. If your husband left you when you were 50, you had nothing to fall back on. And even if you didn't divorce, you were likely to outlive him. For all the homilies on Mom, women who devote their lives to family are the most at risk because they have no benefits of their own. Poor widows indeed.

Is this still true?

[Crabby Old Lady]

M Sinclair - Crabby mis-spoke: The Social Security program she is most concerned with in this series is social insurance for "everyone who works." It was set up as a pay-as-you-go system; current workers tax pays for retired workers benefits.

However, there are additional componenents to Social Security: widows, widowers, children 18 and under and sometimes divorced spouses can receive benefits when a spouse or parent dies.

There are other Social Security programs for the short- and long-term disabled, certain aged who don't otherwise qualify and SSI, which is for those in dire financial need who are otherwise not entitled to Social Security retirement benefits.

Crabby wrote about all this here.

[M Sinclair Stevens]

Right after I posted my comment, I did go to the SSA site and lookup benefits for widows. So there is some safety net.

The thing I understand least about the attempts to gut Social Security is this: our current society is fueled by consumerism. If you destroy the middle class and have a huge group of people living in poverty, won't this result in the economy spiralling downward?

It strikes me as being just the opposite of the economy on steroids (venture capital) of the 1990s. Money was being pumped into small dot-coms where the pay and benefits were high which encouraged consumption which resulted in more businesses, small and large, making good.

Well, I'm not an economist...