May 2, 2005
This article is the text of a forum presented in Detroit April 17, 2005.
All we need to know about Social Security can be conveyed in one sentence: SOCIAL SECURITY IS NOT IN CRISIS.
What's more, it's in better shape than any other government program. It is simple, it costs very little to administer – and it has a surplus of money, a big surplus. Not only does it have 1.7 trillion dollars surplus in U.S. Treasury bonds today. The program administrators estimate that by 2016 it will have six trillion dollars, surplus. Six trillion is more than half the value of all the goods and services produced by all the workers in all 50 states last year.
No, there's no real crisis. But Social Security is under attack because the politicians want to go on taking its surplus to give away to the corporations and the wealthy. And they can CREATE a real crisis for all workers.
We hear about the "baby boomers" and all the scare stories about how they are going to break the Social Security fund. All lies. The fund already took in extra taxes going back to the Carter Administration and increasing since then, under the pretext it was banking that surplus to take care of the baby boomers when they retired.
The trustees and actuaries who administer Social Security make "what if" predictions. Their most pessimistic prediction is that Social Security's money is good to cover every penny of every person's benefits until 2041. If everything goes as wrong as it possibly could, Social Security is safe for 36 years. That's what the professionals say. They have another "what if" prediction, too. If everything goes well, then social security is good for another 39 years after that.
In fact, the economists know they can't predict what will happen even 36 years from now. So when Bush and Company want to get us all excited about 2041, they are stacking their deck. With jokers.
But let's suppose that all the facts are wrong and Bush is right; that Social Security will need more money in 2041. There's a simple solution to that: tax the wealthy at the same full rate as everyone else.
Why is it that income above a skilled worker's wage level has never been taxed for Social Security? Workers pay the FICA tax on every dollar they earn. But the wealthy pay only on their first $90,000. Relative to income, the FICA tax falls hardest on those least able to pay. Every worker who grosses less than $90,000 has to pay FICA for every single hour he or she works, all year long; at 40 hours a week that's 2080 hours. But when Ford CEO Bill Ford gets paid 17.5 million dollars a year, how many hours does he pay FICA on? 10.7! 10.7 hours out of his year. In January he clocks in for one 10-hour shift (or 5 of his 2-hour shifts) and he's done paying for the year. That's how unbalanced the Social Security tax is. Well, balance it, and there would be lots more money for Social Security.
Ignoring all that, Bush insists that Social Security needs to be rescued by turning it into private investment accounts. Sounds like he wants us to go back about 80 years. Back to the Roaring 20s, they were called. There was no Social Security, and people worked until they died. A few workers, lucky enough to have a little extra money, invested in their own private accounts in the stock market. Then, too, bourgeois economists touted the stock market. But l929 – just like every stock market "correction" since – showed that private security was no security at all.
With the last stock market downturn, workers with 401(k)s discovered just how quickly they could lose their security.
Yet we hear Bush and all kinds of people telling us we should forget about social security and go back to privatization. They have got to be crazy.
Of course they're not crazy, they are just in favor of supporting Wall Street with our money. Privatizing Social Security means that windfalls of Social Security money will be transferred to investment houses like Charles Schwab and Merrill Lynch. Even if there's no stock market crash, the way they "manage" accounts means that they manage to take all the money they can.
The Democrats pretend to be against privatization. They say they aren't ready to hand over our retirement money to Wall Street. But they aren't ready for us to keep it either!
They say that if Bush takes the idea of privatization off the table, then everything else is on the table. That "everything else" includes:
1. Making us work longer, maybe until we're 70. Already in 1983, the government moved up the age of retirement from 65 to 67, and that is now being phased in by monthly increments.
2. Shrinking our monthly benefits. By a variety of little tricks, they would reduce the monthly benefits that future retirees start out with – with much bigger reductions for those who retire "early."
3. Reducing our cost of living protection. Since l972, Social Security benefits have had a cost-of-living raise every year. But almost as soon as it was introduced, government economists began tinkering with the formula that is used to calculate COLA. Since 1983, the formula has been revised 13 times – and each time, we lost money.
4. Penalizing still further anyone who was unable to work for a while: people who had a long-term illness, for example, or someone laid off repeatedly, or women who took off work to have children and raise them.
5. Increasing the FICA tax rate – the tax we all pay now for Social Security.
Add it all up. It means a great big attack on every worker – and especially the youngest workers.
The one thing Congress is not proposing is to tax the wealthy on every dollar of their income. Anyone who tells us Social Security is in trouble, but doesn't propose to tax the wealthy fully, is running a scam on us.
Both parties know perfectly well that Social Security is not in trouble. So why are they so eager to take our money?
It has nothing to do with Social Security. But it has everything to do with government deficits and tax cuts for the rich. The entire scam is to cover the deficits and protect those tax cuts.
The government has always taken care of its corporate sponsors. Starting in the John F. Kennedy administration and speeding up since then, the rich have been served up enormous tax cuts and breaks. But what happens then? Those tax cuts immediately show up as budget deficits. The government has covered up the deficits for many years now by using what? The Social Security surpluses! It increased Social Security taxes in l977 under Carter, and again in l984 under Reagan. Their excuse, by the way, was that they had to prepare to take care of the baby boomers! Anyway, the new taxes created a very big Social Security surplus, which the government promptly "borrowed" – for its own spending, its own wars, for the corporate welfare it hands out on every side.
As fast as Social Security banks its surplus – the government "borrows" it and gives the Social Security account U.S. Treasury bonds as its IOUs. Those are the famous IOUs that Bush pointed to and called worthless – U.S. Treasury bonds. Those bonds will start to come due – and not in 2041 but in 2017. Will the government have money to repay what it borrowed from Social Security AS WELL AS have money to cover the rest of its budget? Not unless they start laying some real taxes on the wealthy, they won't! But that's what they don't want to do. And that's why they're talking about "reforming" Social Security – so they can take more of our money. From workers' pensions, workers' benefits, workers' FICA taxes, workers' labor.
That's the whole dirty deal behind all the scare stories about having to "save" Social Security. The politicians are all agreed that workers should work more years before retiring; should pay more and higher taxes for those years; should get even smaller monthly checks; should receive less and less reward from the society that they spent their lives building up. All so the government can take still more Social Security money, cover their budget deficit with it, and therefore protect the wealthy from any more taxes. That is the whole crisis in a nutshell.
It's no surprise, of course, that this is not Bush's own idea. He's just the clown in front. But, given how the Democrats have been talking, it might be a surprise to learn that Bush is pushing Bill Clinton's program. Democrat Bill Clinton set up a commission that proposed the changes Bush is proposing. Clinton was going to go ahead with ending Social Security as we know it, just like he ended welfare as we knew it. But along came Monica – and that ended his presidency as he knew it. The job of cutting Social Security passed to Bush.
And if Bush doesn't succeed, the job will pass to whoever's next. This is a project of the ruling class, and they don't care if it's a Democrat or a Republican, so long as it gets done. That gives us an idea of what we are up against. That gives us an idea of how strongly the working class must say NO. We have to make the wealthy fear us enough so they back off, not just for now, but for a long time to come.
The Social Security program has always been a sort of measure of the balance of power between the working class and the capitalist class. The first Social Security law of l935 – which included not only pensions but also unemployment and disability benefits – was passed after the three big strikes of 1934: in Toledo, Minneapolis and San Francisco. And it was quickly improved just four years later, after a huge strike wave, sit-down strikes, union organizing spread all through the industrial states. In the same way, Medicare was added to Social Security as one result of the vast mobilization of the 1960s.
If Congress is coming for Social Security now, it's because they believe the fight has gone out of workers. Despite all the attacks mounted on working people, we haven't called them to account yet. They believe they can make us pay even more of society's bills so they can keep their tax cuts and exemptions.
Eighty-two out of the top 275 corporations paid no taxes in at least one of Bush's first three years in office, and some of them even got money back from the government. As a% of Gross Domestic Product, corporate profits are the highest since just before that crash of l929 – and the owners of those corporations want to make even higher profits. They want to go on taking our Social Security taxes – to go on covering their government's expenses. They want to cut back pensions, make workers work longer, see the next generation of workers face absolute poverty – anything to keep their profits high and their share of taxes close to zero.
IF they can. That's a big IF. The way to keep Social Security from shrinking and disappearing is to prove to the politicians, and the wealthy ruling class behind them, that the working class, our class, is not as beaten down as they think. If workers 80 years ago could be stuck in the hole of the Great Depression and still organize themselves to the point that the bosses had to come across with some Social Security for the first time – if they could do it, then we can find a way.
The fact that Bush has been back-pedaling lately shows that the ruling class already is a bit worried. It doesn't mean they've given up, but their fear can reinforce our determination to protect what we have – and to improve it.
From workers' point of view, Social Security does need to be brought up to date. In the opposite way from what the politicians are proposing! We should retire earlier. We should get a really livable pension. They set 65 as retirement in the 1930s. Since then the productivity of labor has grown immensely. The social surplus value available from our productivity has grown far beyond anything that could have been imagined in l939. They say there's not enough money? There's more than enough money to let us all retire at 50, and not on peanuts, either. Real Social Security should allow us to live at least as well in retirement as when we worked.
None of the wealth that exists would be here if somebody hadn't worked, put in labor, to create it. Workers have created more than enough wealth, far more than enough to provide everyone a decent retirement. Those who created it should have first claim on it. But just like it's always been: we can't get our rights without a fight.