Economy

Don't most Republicans need Social Security, too?

In recent days, two of our foremost progressive economic experts have weighed in on the stealth war that conservatives are waging on Social Security.

First, William Greider, describes this hair-raising scenario at the Nation in Looting Social Security:

Governing elites in Washington and Wall Street have devised a fiendishly clever “grand bargain” they want President Obama to embrace in the name of “fiscal responsibility.” The government, they argue, having spent billions on bailing out the banks, can recover its costs by looting the Social Security system. … an impressive armada is lined up to push the idea — Washington’s leading think tanks, the prestige media, tax-exempt foundations, skillful propagandists posing as economic experts and a self-righteous billionaire. …These players are [working] behind closed doors so the public cannot see what’s happening or figure out which politicians to blame.

Defending Social Security sounds like yesterday’s issue — the fight people won when they defeated George W. Bush’s attempt to privatize the system in 2005. But the financial establishment has pushed it back on the table, claiming that the current crisis requires “responsible” leaders to take action. … [Conservative advocates] could set the trap for a “bipartisan compromise” that may become difficult for Obama to resist, given the burgeoning deficit.

Republicans may march to the drummer of the super-rich among them. But aren’t most of them, aside from those in the working-class — notorious, of course, for voting against their best interests –- found in the upper middle-cass? Even before the recent financial downturn, were their portfolios really substantial enough to allow them to ride off into their sunset years without the safety net of Social Security?

For the sake of argument, let’s concede that their portfolios guarantee them and their spouses comfortable retirements. But what about, if still alive, their aged parents? If they weren’t able to afford long-term care insurance, are their children willing to spring for nursing home costs? Remember, Medicare is in Republicans’ cross-sights too.

Pulling back to the larger societal question, what do Republicans propose we do with legions of elderly poor that abolishing Social Security will spring upon the country? In effect, many will be reduced to homelessness.

Not even Republican wish to see legions of elderly roaming –- or creeping along — the streets. Obviously, they’ll have to be warehoused somewhere. Since that would entail not only building housing for them but feeding them, isn’t that whole process likely to be at least as expensive to federal and state governments as Social Security is now?

Now let’s factor in the current economic crisis. In The Economists Who Missed the Housing Bubble Are Coming After Your Social Security at Talking Points Memo Café, Dean Baker writes:

[All] this talk of reform is occurring with the baby boomers just as the cusp of retirement. Due to the reckless policies of the Rubin-Greenspan-Bush clique. … [tens] of millions of baby boomers who might have felt reasonably secure three years ago are now approaching retirement with little or no equity in their homes. …

The median household among older baby boomers [has] a net worth of $143,000 [with] most of their home paid off, but nothing else. … In short, the vast majority of baby boomers will be approaching retirement with little other than their Social Security and Medicare to support them.

Perhaps the idea of small government is of such central importance to their world views that Republicans, no matter their economic circumstances, are willing to adhere to it through thick and thin. In that case, you have to give them credit for being true to their principles.

But, by now, we’ve learned it’s folly to give Republicans credit for anything whatsoever. The lack of rhyme and response in their response to the stimulus suggests that at this point they stand for nothing more than sheer nihilism.

5 replies »

  1. Well i have no idea what the Republicans are thinking, or if they are thinking. But it is an issue that must be confronted. I read Baker’s piece and also read the CBO report that he links to, which says that outlays exceed revenues in 2019 and the trust funds are gone by 2049. (He conveniently ignored inconvenient statements like that, which appeared in the second paragraph.)

    What i took from his argument and tone was: “So we’re going to get ours and the rest of you can fuck right off.” I’m not sure that narcissistic self-entitlement is any better than nihilism.

    The fundamental problem, which nobody seems to want to address…and this goes triple for the Democrats who make questioning the system an ex-communicable offense…is that the government’s been looting the Social Security system since Johnson: calling it a trust fund and using it like a slush fund.

    There are major imbalances that go mostly unnoticed because the whole system is off the books, which would be fine if it really was all being locked away in a trust fund instead of being filled with intragovernmental IOU’s.

  2. I’m a registered Republican, and have been known to think once or twice. While I;m not in favor of privatizing Social Security, anyone can see that the benefits will not be enough for full retirement. I would not mind if our educational system taught students the concept of thrift, in all areas of life. Thrift, combined with living well below one’s means, will enable one to build a nest egg for retirement.

    Jeff

  3. “Even before the recent financial downturn, were their portfolios really substantial enough to allow them to ride off into their sunset years without the safety net of Social Security?”

    That’s not the relevant question. The relevant question is, “Would retirees be better off had they invested their Social Security taxes?” The answer is an overwhelming yes. According to the latest CBO report on Social Security, the average person will not even recoup 100% of their Social Security taxes in the form of benefits. The S&P 500, on the other hand, has delivered a 5.25% return over the past 40 years, INCLUDING the recent drop. That’s roughly 340% of what they would have invested.

    “Since that would entail not only building housing for them but feeding them, isn’t that whole process likely to be at least as expensive to federal and state governments as Social Security is now?”

    Not even close. According to the latest CPS data from the Census, the total income deficit in the United States is $217 billion. That’s how much it would cost to completely eliminate poverty for the year. Not just among seniors or children or whatever other special group you want to target – COMPLETELY. Toss in the cost of health insurance and the amount jumps to $472 billion. That’s still less than we spent on Social Security, alone.

    The problem is that Social Security is based on a false premise. The premise is that seniors need help and workers can afford to help them. To be fair, that was probably true back in 1935. But today, seniors are the second wealthiest cohort in America (second only to the soon-to-be-senior baby boomers). Do you really want to tax a a dozen minimum wage workers so Warren Buffett can get his Social Security check?

    I’m all for stealing from the rich to give to the poor. But that’s not what Social Security does. Social Security steals from workers to give to seniors. Instead of taking this silly shotgun approach, let’s set up goals for our social spending and metrics with which to measure them. I can say with 100% certainty that we can come up with something better than Social Security.

  4. *sigh* it’s really time for society to recognize that a comfortable retirement is a motivating factor to workers – social security IS economic stimulus. I was happy to read the essay Building Shared Prosperity by Lawrence Mishel and Nancy Cleeland in the book Thinking Big that’s just been released from the Progressive Ideas Network – as it made that very point.

  5. Let me get this straight. You’re claiming that taking $1,600 a year from roughly 20 minimum wage workers so Warren Buffett can get his $32K in Social Security benefits is economic stimulus? What school of economic though does that come from? I’d like to add it to my summer reading list.

Leave us a reply. All replies are moderated according to our Comment Policy (see "About S&R")

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s