Author Archives: EOI

About EOI

The Economic Opportunity Institute is an independent, nonpartisan, nonprofit public policy center advancing new ideas to build an economy that works - for everyone. As a 501(c)3 organization registered in the state of Washington, we are fully funded through the charitable contributions of individuals, foundations, and other organizations. We pursue change through research, media outreach, public dialogue and policy initiatives that help make Washington State a better place to live, work and do business.

A call for apathy in the face of attacks on Social Security and the middle class?

A recent article by James K. Galbraith in Mother Jones News is in one respect a call to arms – a powerful reminder of how public decisions made by those we elect to office affect our lives and jobs, houses and health, and paychecks and wealth. But it is also a (perhaps unintentional) call for apathy in the face of mounting attacks on Social Security and middle class economic security.

Galbraith is spot on, for example, in ringing the alarm bell about emerging plans to cut Social Security and Medicare right after the November elections:

The attack will come right after the election, when the Bowles-Simpson commission on deficit reduction issues its report. It will almost surely recommend deep cuts in Social Security, probably in the form of an increase in the retirement age. This is a direct cut in benefits, targeted in an especially nasty way at minorities and all others who work harder, earn less (PDF), and live shorter lives (PDF) after retirement than, say, college professors or senators.

 

The cochairman of that commission, former GOP senator Alan Simpson of Wyoming, has made his views clear. In an August email (PDF)Â to the head of OWL (née the Older Women’s League), he called Social Security “a milk cow with 310 million tits.” He wants you to think of Social Security as welfare, not something you’ve earned—a boondoggle, rather than a program that puts money into the economy every day.

The fact is, even if you were never an autoworker, were never in a union, never owned a house, even if you’ve never been sick and never got anything else from the New Deal – whoever you are, Social Security and Medicare help you right now. They support your business: Spending by old folks is part of the income of small and large companies everywhere, an effective and stable support for the economy. Social Security provides survivors’ benefits that raise children in your schools. It will keep your parents off your back. And when you do get older, Social Security and Medicare will protect you, and they will protect your children from bankrupting themselves over you. That is, if these programs are protected, now, from their assailants.

What’s odd is that while Galbraith ably describes the threat facing Social Security and Medicare, he writes as if the decision Congress is about to make is totally out of voters’ hands. His closing paragraph reads:

The House has agreed to vote on the Bowles-Simpson package – whatever it eventually contains – if it passes in the Senate. So it will come down to the Senate. Will the Democrats hold the line? Or will they give in to this assault on the last bastion of the American middle class?

This notion – of distant deliberative bodies passing down decisions from on high, or more broadly of powerful and inescapable forces shaping our lives – is woven throughout Galbraith’s column.

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Wake up, Muggles! Social Security will live forever – unless, of course, you let it die.

Anna Turner is publicly calling out her friends for not bothering to learn what they have at stake in Social Security:

I don’t bring up Social Security much around my friends, probably because it’s not exactly the most riveting topic, but mainly because I know most of us in our twenties haven’t given our retirement much thought. In fact, when I finally did bring it up, it soon became clear that 1) almost nobody knew the basics, and 2) just about everybody thought Social Security wasn’t going to be around when they got older.

 

This might all be solved if we ever bothered to educate ourselves beyond what we “think” we know about one of the country’s oldest and most successful programs. Try to remember why you first thought Social Security wasn’t going to make it by the time you retire. Then do yourself a favor and find out for yourself. If you, did you might find out that Social Security is not in crisis, that the Social Security Administration already planned for the baby boomer retirees in 1983, or that Social Security’s long-run shortfall is small and easily manageable with reform. In a nutshell: an easy fix.

Read Anna’s entire post, and if inspires you to learn a little more – which it should – then take a look at these Top Five Myths About Social Security:

 

Myth 1: Social Security is going broke.

Reality: There is no Social Security crisis. By 2023, Social Security will have a $4.3 trillion surplus (yes, trillion with a ‘T’). It can pay out all scheduled benefits for the next quarter-century with no changes whatsoever. After 2037, it’ll still be able to pay out 75% of scheduled benefits–and again, that’s without any changes. The program started preparing for the Baby Boomers retirement decades ago. Anyone who insists Social Security is broke probably wants to break it themselves.

Myth 2: We have to raise the retirement age because people are living longer.

Reality: This is a red-herring to trick you into agreeing to benefit cuts. Retirees are living about the same amount of time as they were in the 1930s. The reason average life expectancy is higher is mostly because many fewer people die as children than did 70 years ago. What’s more, what gains there have been are distributed very unevenly–since 1972, life expectancy increased by 6.5 years for workers in the top half of the income brackets, but by less than 2 years for those in the bottom half. But those intent on cutting Social Security love this argument because raising the retirement age is the same as an across-the-board benefit cut.

Myth 3: Benefit cuts are the only way to fix Social Security.

Reality: Social Security doesn’t need to be fixed. But if we want to strengthen it, here’s a better way: Make the rich pay their fair share. If the very rich paid taxes on all of their income, Social Security would be sustainable for decades to come. Right now, high earners only pay Social Security taxes on the first $106,000 of their income. But conservatives insist benefit cuts are the only way because they want to protect the super-rich from paying their fair share.

Myth 4: The Social Security Trust Fund has been raided and is full of IOUs

Reality: Not even close to true. The Social Security Trust Fund isn’t full of IOUs, it’s full of U.S. Treasury Bonds. And those bonds are backed by the full faith and credit of the United States. The reason Social Security holds only treasury bonds is the same reason many Americans do: The federal government has never missed a single interest payment on its debts. President Bush wanted to put Social Security funds in the stock market–which would have been disastrous–but luckily, he failed. So the trillions of dollars in the Social Security Trust Fund, which are separate from the regular budget, are as safe as can be.

Myth 5: Social Security adds to the deficit

Reality: It’s not just wrong — it’s impossible! By law, Social Security funds are separate from the budget, and it must pay its own way. That means that Social Security can’t add one penny to the deficit.