In his first address to Congress this evening, President Obama will explain his economic policies and legislative agenda. He may or may not discuss Social Security – there is some argument within and without his administration on whether that program is too much to take on at the same time as the housing, credit, banking, auto, unemployment, health care and other crises.
Nevertheless, an assault on Social Security is planned and you need to know about it. Today's post will give you some context if the president does mention Social Security tonight and prepare you for what's ahead.
Back in 2004, when President Bush tried strenuously to privatize Social Security, I wrote a long series of posts tracing the history of the program and its remarkable success over 70 years, refuting every point of Bush’s disingenuous sales pitch. If you remember, it was his brilliant idea to allow workers to invest about half their Social Security contributions on Wall Street. It doesn’t take any imagination to know where those investments would be today if he had succeeded.
President Bush is gone now, but his fellow travelers have not given up their goal of looting Social Security and even eliminating it altogether. The low-level rumblings about Social Security that could be heard during the debate on the stimulus package are now being revved up for a full-bore attack in what journalist William Greider calls a “fiendishly clever grand bargain.”
“…an impressive armada is lined up to push the idea,” he writes, “Washington’s leading think tanks, the prestige media, tax-exempt foundations, skillful propagandists posing as economic experts and a self-righteous billionaire spending his fortune to save the nation from the elderly.”
- - The Nation, 11 February 2009
[A reading of Greider’s easily digested full story will give you a clear and detailed understanding of the forces aligned against Social Security.]
That billionaire is 82-year-old Peter Peterson who made his personal fortune working at the shadowy Blackstone Group and he has undertaken a media blitz to hoodwink the country into accepting his devious plan to impoverish retirees.
The plan, in its simplest explanation, is to use the $2.5 trillion Social Security Trust Fund surplus to recover the money spent to bail out the banks. The result, obviously, would be to drastically reduce future retirees' (our children and grandchildren who will be old one day) benefits.
“Since the early 1980s, Peter G. Peterson has been warning that future entitlement deficits would crash the economy,” writes Robert Kuttner. “Yet when the crash came, the cause was not deficits but wild speculation on Wall Street.”
- - The Washington Post, 23 February 2009
Complicating the public discussion of “Social Security reform,” which you will be hearing a lot about in coming months, are those ill-informed journalists who routinely reference the program’s “looming financial shortfall” as The New York Times blithely assumed in a political story last Sunday with no source or explanation. This morning, in a story about its latest public opinion poll, The Washington Post refers to the "runaway" costs of Social Security also without source or explanation.
Let us be clear: Social Security faces no imminent crisis. Nor is it “broke” as President Bush tried to make us believe. That $2.5 trillion surplus, confirmed by Social Security’s trustees in 2008, will continue to grow for few more years. There is no danger to benefits until 2041 when only 78 percent of obligations can be met. But that can easily be fixed, especially if we start now, with only minor changes to the program.
Among the better proposals that emerged during Bush’s privatization campaign are gradually raising the age at which full benefits are paid and eliminating or raising the salary cap on which the Social Security payroll deduction is imposed - currently at $107,000 annual income. These are both feasible moves that would ensure Social Security for years beyond 2041. The latter, of course, is opposed by fiscal conservatives - Peter Peterson, et al.
While it is true that the Trust Fund monies have been borrowed by presidents going back at least to Ronald Reagan for other purposes, the treasury bill IOUs sitting there in place of the dollars are legally binding obligations (with interest) of the government.
During the presidential campaign, Barack Obama indicated support for raising the income level on which FICA deductions are calculated, but the pressure on him from Peter Peterson’s group, Republicans and blue-dog Democrats to take the steps that would, in time, dismantle Social Security will be enormous.
Kuttner, in his Washington Post story, makes an interesting point in regard to the charge from these forces that in an era of deficit spending, the United States can no longer afford Social Security (and Medicare and Medicaid, but that’s a story for another day):
“History provides a parallel. At the end of World War II, the public debt was about 120 percent of GDP – about three times today’s ratio. Yet the heavily indebted wartime economy stimulated a quarter-century postwar boom – because all that debt went to recapitalize American industry, advance science and technology, retrain our unemployed and put them to work.
“We need to increase public spending and debt now to restore economic growth and then gradually reduce the debt ratio once recovery comes.”
Greider, in his story, has this to say about turning back the latest attack on Social Security:
“The Social Security fight could become a defining test for ‘new politics’ in the Obama era. Will Americans at large step up and make themselves heard, not to attack Obama but to protect his presidency from the political forces aligned with Wall Street interests?
“This fight can be won if people everywhere raise a mighty din - hands off our Social Security money! – and do it now, before the deal gains momentum. Popular outrage can overwhelm the insiders and put members of Congress on notice: a vote to gut Social Security will kill your career.
“By organizing and agitating, people blocked Bush's attempt to privatize Social Security. Imagine if he had succeeded - their retirement money would have disappeared in the collapsing stock market.”
Often, postal mail can be more effective than email. You can find correct addresses at this website which also links to email pages for members of Congress. We need to do this, and do it repeatedly, not for ourselves – our benefits are probably safe - but for our children and grandchildren.
I urge you to read William Greider’s entire story. It covers much more than I have in today’s post and will give you a thorough grounding in the entitlement fight that is already underway. It also includes a link to Peter Peterson’s response to Greider.
[At The Elder Storytelling Place today, Susan Gulliford brings up the forgotten world of Metal Band-Aid Boxes and Dime Phone Calls.]