Saturday, August 14, 2010

Happy Birthday!

Today is the 75th Anniversary of Social Security, one of the most successful and popular government programs ever. The Los Angeles Times went out of its way to note the anniversary by including two separate pieces in its editorial section.

The first is an opinion column written by Peter Dreier and Donald Cohen which takes a look at the history of Social Security and the crazed fear mongering that went on while President Franklin D. Roosevelt tried to get the landmark legislation passed. The authors wisely selected a portion of an FDR speech to show just what was being argued at the time:

"A few timid people, who fear progress, will try to give you new and strange names for what we are doing," he said in a June 1934 "fireside chat" on the radio. "Sometimes they will call it fascism, sometimes communism, sometimes regimentation, sometimes socialism. But in so doing, they are trying to make very complex and theoretical something that is really very simple and very practical.... I believe that what we are doing today is a necessary fulfillment of what Americans have always been doing — a fulfillment of old and tested American ideals."

Those arguments against the program certainly sound familiar, do they not?

Fortunately, as Dreier and Cohen point out, Roosevelt prevailed. Now, 75 years later we are being deluged with statistics which allegedly point to an imminent meltdown of the Trust Fund unless we undo the very underpinnings of the Social Security Act. I think the writers have captured what our response should be nicely:

America, one of the world's wealthiest nations, can afford to provide an economic cushion for the elderly and the disabled. By making some minor adjustments, Social Security will remain vital and solvent for this and future generations. Economists say that raising the income ceiling on the payroll tax, applying the Social Security tax to nonwage income or adding a modest increase to the payroll tax could add decades to the health of the Social Security trust fund.

In retrospect, it is obvious that Social Security's Depression-era opponents engaged in fear-mongering, not economic reality. Their opposition was based on a free-market fundamentalist ideology that abhorred any attempt to use government to improve Americans' living conditions.

Just as the early battle over Social Security wasn't really about old-age insurance, current fights over public policy are really placeholders for broader concerns. They are about what kind of country we want to be and what values we consider most important. Today, business groups and right-wing zealots oppose healthcare reform, tougher financial regulations, stronger workplace safety laws, policies to limit climate change, higher taxes on the rich and extension of unemployment insurance to the long-term jobless. The issues vary, but the mantra is the same: This policy will kill jobs, undermine the entrepreneurial spirit and destroy freedom.

But the center left editorial board either didn't read this well-written essay or, having read it, didn't get the message. Its editorial simply goes directly to the fear mongering in support of weakening the generational and social contract that has guided the program successfully for 75 years.

While it rejects the proposal to privatize the system (I guess even the editorial board has learned something from "The Great Recession"), the editorial still lists some of the options which apparently the board considers potential answers to the nagging fear that the Trust Fund is about to implode:

The real options for improving the trust fund's solvency include raising the retirement age, which analyst Henry Aaron has likened to an across-the-board benefit cut of more than 6% per added year. The trust fund board's report also said the gap could be closed by immediately and permanently raising payroll taxes by nearly 2% or by cutting benefits by 12%. But the former would deter employers from hiring, sabotaging the economic recovery, and the latter would have the greatest impact on those struggling to stay afloat. ...

The Committee for a Responsible Federal Budget has outlined several less draconian approaches. These include trimming the automatic cost-of-living adjustments, which some analysts believe overcompensate for inflation; tweaking benefit formulas to replace a smaller percentage of high-income workers' wages; and basing an individual's benefits on a longer work history, which would reduce benefits for some workers by factoring more of the years they spent working for lower wages. Another alternative is raising the amount of wages subject to the payroll tax above the current cap of $106,800. Unless the taxes on those wages translated into higher benefits for the people who paid them, however, the change would make Social Security look less like insurance and more like a transfer of wealth.

And God forbid we engage in any kind of transfer of wealth! That would be communistic, or fascistic, or something.

While I am grateful that the editorial board has tossed the privatization plan on the dung heap where it belongs, I am disappointed that it has also apparently tossed the raising of the cap on payroll taxes in the same direction. I am even more disappointed that it does so using the same tired arguments from 75 years ago.

At least the Los Angeles Times noticed the anniversary, and engaged in some discourse on the issues facing the system. Sometimes half a loaf is better than none at all.



Anonymous Anonymous said...

I guess the editorial writers and upper management of newspapers are way to comfortable economically. They have forgotten where they come from and how things are with the mass public. Too bad we can't devise a real experiment in reducing their incomes so they really feel how it is to live on something like $1,200 a month -- pay rent, utilities, medicine costs and food from just that. Let them feel the pain.

4:53 AM  

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