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A society's system of "Social Security" deals explicitly with a fundamental
human issue: What do we, as a society, do about human suffering? The
key word being "we." Whose responsibility is it to address the suffering
created by a system that produces more than enough for everyone, but
leaves some in desperate need? Because Social Security touches every
working American's life in a very tangible way, and because the right
wing has created an atmosphere of crisis around this social program,
we have a rare opportunity to make some quite radical proposals that
will appeal to millions of people in this country. Let's not miss out
on it.
The current debate about the future of Social Security has largely
been framed by corporate and right-wing interests as a debate about
how best to "save" the system from "bankruptcy." As has been pointed
out in Z Magazine (March and September 1997) and in numerous other places,
there is no "crisis," and the system is not going "bankrupt." The fact
that this is the widely-accepted premise for the current discussion
tells us just how powerful the right has become.
The United States is certainly facing more than one serious crisis,
with the increasing economic insecurity of the majority of Americans
near the top of the list. Far from being the source of this crisis,
Social Security could be a large part of the answer to it. But that
can only be true if the current system is seriously reformed in accord
with the principles and values espoused by the left. What follows is
a proposal to do just that.
Social Security is a program that pays cash benefits to workers, and
dependents of workers, who suffer a loss of wages due to death, disability,
or retirement. Almost all wage-earners are taxed to provide benefits.
It is financed by payroll taxes on wages up to about $68,000, with one-half
paid by workers and one-half paid by employers. Benefits are based on
past earnings, with low-income workers receiving a higher percentage
of their wages back than high-income workers receive. Social Security
was and is intended to be one "leg" of the so-called "three-legged stool"
of retirement income. The other two legs are your own savings and the
private pension you get from your employer. In theory.
However, the majority of Americans do not get private pensions, and
the problem is worse among women, racial minorities, part-time workers,
low-income workers, non-unionized workers, and workers in small companies.
In addition, wage inequality has been increasing, meaning that fewer
people are able to save any significant amount for their retirement,
since they have to spend all their income on living. So the "third leg"
of the three-legged stool increasingly becomes the only leg. People
are thus trying to balance on a one-legged stool, and that's hard to
do. Especially since the average monthly benefit for a low-wage retiree
is now $537 per month. For two-thirds of elderly people in the United
States, Social Security provides over half of their income; for 3 in
10 it is 90% of their income. Sixteen percent of all seniors live on
their Social Security check and nothing else, and 78% of African Americans
over age 70 do so.
The success of the right-wing assault on Social Security is based on
a shrewd recognition of the fact that, for all of its popularity over
the years, there is some measure of unhappiness with the program as
it exists, and the numbers above give an indication of why. A significant
minority of respondents to a Fortune Magazine survey on Social Security's
popularity in April of 1937 said that they opposed Roosevelt's program
because "It doesn't go far enough to provide real security." That sentiment
survives today, although, to the best of my knowledge, surveys on Social
Security long ago stopped offering this response.
Part of the success of the right-wing attack on SS is therefore due
to a very smart strategy of playing on people's legitimate dissatisfaction
with an inadequate program. Although there are a few features of American
Social Security that are sound and should be retained, such as portable
benefits that follow workers from job to job, and cost-of-living adjustments
that protect benefits from the erosion caused by inflation, overall
our Social Security system is a "good news/bad news" affair. To illustrate:
- Good news: Social Security has reduced poverty among the elderly
in the U.S. from 35% in 1959 to under 11% now, which is a lower rate
than for the population as a whole. Bad news: What kind of anti-poverty
program leaves 1 in 8 people still poor?
- Good news: Social Security includes disability and life insurance
protection, which is provided to everyone, without regard to the health
of the individual. Bad news: Have you ever tried to apply for Social
Security disability benefits? Or to live on them?
- Good news: Married women who have spent their lives working in the
home, without pay, receive cash Social Security benefits if they live
longer than their husbands. Bad news: Pretty paltry benefits, especially
compared to the men. Elderly women are almost twice as likely to be
poor as men.
- Good news: Social Security benefits continue as long as you live.
Bad news: You call this living? All but the highest-income workers
try to get by on under $900 per month. Also, rich people live longer,
so they get more in benefits. Add to that the fact that Social Security
taxes are regressive (all wages are taxed at a fixed rate, but wages
in excess of $68,400 are exempt), and it's even less fair.
- Good news: Social Security benefit amounts are tied to the income
you earned when you were working. Bad news: Social Security benefit
amounts are tied to the income you earned when you were working. So,
even though the benefit formulas are progressive, low-income workers
still get less, even though they need it more, for the reasons stated
above.
- Good news: Social Security is a very popular program. Bad news:
At the moment, many people seem to support specific proposals that
would effectively destroy it.
- Good news: Two-thirds of respondents in recent surveys are smart
enough to realize that Social Security benefits are not sufficient.
Bad news: Benefits are not sufficient.
- Good news: Surveys show that most people would be willing to pay
higher taxes to maintain the system. Bad news: They may have to.
The ascendance of the "New Democrats" has given rise to the saying,
"Give people a choice between a Republican and a Republican and they'll
choose a Republican every time." Indeed, the pattern in American-style
"multiple-choice" democracy is increasingly one in which corporate interests
settle on a series of business-friendly choices and then let "the people"
choose among them.
The discussion of proposals to reform Social Security is a wonderful
illustration of this pattern. All of the myriad plans essentially boil
down to one of two choices: Cut back the system, or destroy the system.
The proposal to destroy the system is known as "privatization."
Privatization would dismantle the current system of taxing all workers
to pay benefits to those who need them, and replace it with a system
of "Personal Security Accounts" (PSAs) wherein each worker would set
aside money for their own retirement, along the lines of the current
IRAs or 401(k) plans in the private sector.
Under the PSA plan, workers would still have the same amount of tax
(or more) taken out of their paychecks, but they would now be required
to invest part of it into the stock market. When they retire, they would
get their money - however much might be - to do with as they please.
After a slow start, numerous liberal and progressive think tanks and
publications have pointed out why this would be a disaster for most
workers. Such an individual, market-based system would remove the "social"
from Social Security, and the fact that all costs and risks in the system
would fall on each individual worker would remove the "security." As
in any market-based, individualized system, the most suffering would
be born by those with the fewest resources at their disposal; that is,
poor and working-class people. As one might expect, this alternative
is promoted by rich and owning-class people.
Given the extreme nature of the various privatization plans, a plan
to merely cut back the current system is being presented as the "liberal"
alternative. Ideas such as raising the retirement age, reducing the
cost-of-living adjustments, and increasing the averaging period for
calculating benefits all would hit hardest on poor and working-class
people.
Here we have the American people being asked to participate in a "national
discussion" aimed at choosing between the right-wing option, under which
the majority would lose, and the liberal option, under which the majority
would lose a little less. It's not surprising that the only ones getting
excited are the wealthy and the Wall Street interests that cater to
them.
What is needed is a genuinely progressive alternative, one that would
provide real security for all of us by building a system based on solidarity
and compassion. Such a proposal, which could inspire and mobilize millions
of currently disengaged Americans, is not hard to imagine. In fact,
we don't have to imagine it at all. A look around the world and into
our own past provides some great ideas for real Social Security reform.
Part 2 of this article will lay out the principles and values that should
be the foundation of a real system of Social Security, and outline what
such a system might look like. Stay tuned.
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