Social Security turned 75 on Aug. 14, and to read major media reports it should be excoriated for robbing our children of their future security rather than celebrated for what it has achieved in keeping millions of Americans above the poverty line.
The program’s recent annual report, shows a very healthy program needing important, but modest tweaks in future decades. But those only listening to major media outlets might be forgiven for wondering when the hearse will roll up with cochairs of the President’s Fiscal Responsibility and Reform Commission, or the Debt Panel, in the front seat.
That is a bipartisan commission that has been charged with looking at how to attain financial sustainability over the long run. More than 100 progressive economists recently signed a petition telling the Debt Panel that Social Security is not part of general federal spending, is held in completely secured accounts and is an inappropriate target for cuts. The commission definitely has Social Security in its sights.
The Debt Panel’s Democratic co-chair, Erskine Bowles, a Wall Street banker, who was President Bill Clinton’s chief of staff, told the North Carolina Bankers’ Association last winter that if the Commission doesn’t “mess with Medicare, Medicaid and Social Security … America is going to be a second-rate power.”
Meanwhile, the Republican co-chair, former Sen. Alan Simpson has been widely quoted as calling older people protesting proposed cuts in Social Security “greedy geezers.” He’s also said repeatedly that people reaching full Social Security retirement age today have 20 years left and should be able to handle a couple more years’ delay, if the commission decides to recommend raising the full-retirement age to 69 or 70.
The argument goes that today’s older population is healthier, wealthier and more active than your father’s father, and that’s true for many. But the longevity revolution hasn’t been as generous to some groups. For instance, U.S. Census figures show that although many more people than ever now reach age 65, once there, whites can look forward to almost 18 more years on average, while African Americans live an additional 15 years or so.
Latinos actually live longer than whites – but do so with far greater prevalence of chronic illnesses, such as diabetes and heart disease.
As for increasing Social Security’s full retirement age to 70, one of the current proposals, economist Dean Baker of the Center for Economic and Policy Research (CEPR) reports that this measure would effectively cut lifetime benefits by 15 percent.
That amount might not sound like much, but the median retirement benefit today is already a scant $1,100 per month ($1,400 for a couple). For older women it’s about $900 monthly, and elderly women of color average even less.
A report released this week by the progressive advocacy group Social Security Works shows that in California alone, 44 percent of older Latino households and nearly 40 percent of retired African-American households rely on Social Security for every penny of their income. A 15 percent cut would definitely be felt hard.
At present the full retirement age is 66, and it is scheduled to rise to 67 by 2022. For older workers, the prospect of having to work to 69 or 70 would be daunting. A new report from CEPR shows that almost half of current workers who are 58 or older have jobs that are physically demanding or are in grueling working conditions because of such stressors as toxic materials, hazardous equipment and exposure to abnormal temperatures.
In the report, “Hard Work? Patterns in Physically Demanding Labor Among Older Workers” , economist Hye Jin Rho explains that the benefits of modern longevity revolution are disproportionately distributed across different socioeconomic groups.
“Raising the retirement age has important implications for more vulnerable populations, such as low-wage earners, less-educated workers and those in poor health or in physically strenuous jobs,” writes Rho.
Not only would many of these older employees have to work longer to offset the impact of these benefit cuts, but “finding a new, less physically demanding job before retirement is becoming increasingly difficult, as they are more likely to face age discrimination and shortcomings in job training than in the past,” says the report.
Rho analyzed the Current Population Survey and Occupational Information Network and shows that in 2009, 6.5 million workers aged 58 and older had physically demanding jobs, while 5 million had jobs with difficult working conditions. Many must endure both adverse conditions.
“An increase in the retirement age or other cuts in Social Security benefits are also likely to put a greater burden on demographic groups that have higher proportions of workers in difficult jobs,” says Rho.
Rho reports that of the 1.4 million Latino workers who are 58 or older, 62.4 percent held difficult jobs. Also, 53.2 percent of black workers, 50.5 percent of Asian Pacific American workers, and 42.6 percent of white workers in that age group had tough jobs.
Among immigrant workers who are 58-plus, almost half (47.5 percent) had have physically demanding jobs in 2009, compared with one-third of non-immigrant workers (33 percent).
Most presidential commissions routinely produce dust-catching reports that only Indiana Jones might find again in the bowels of bureaucracy. This one is different. The 18 bipartisan members – six each appointed by the White House, Senate and House of Representatives – need 14 votes to send a package of changes to Congress for an-up-or-down vote.
Social Security is a completely separate program with its own financing mainly from payroll taxes. But commission members, most of them members of Congress, have repeatedly said that “everything” must be “on the table” to get control of the national debt.
But not everything is on the table.
For instance, a Congressional analysis of the Bush tax cuts released earlier this week showed that by simply letting the cuts lapse for the top 2 percent of wealthy earners, the U.S. Treasury would reap another $700 billion in the coming decade.
Other tax measures that don’t seem to be on the Debt Panel’s table were suggested by Nancy Altman, cochair of Social Security Works.
She suggested in an e-mail interview, for instance, “Eliminating the preferential tax treatment on the salaries of hedge fund managers would pay for about half the cost of reinstating student benefits for children of deceased and disabled workers.”
Altman, author of “The Battle for Social Security,” also wrote, “Reinstating the federal estate tax at its 2009 level reduces the Social Security shortfall by around the same amount as raising the retirement age to age 70.”
Moreover, Altman said, “Imposing a modest tax on the sale of stocks, credit swaps, and other exotic financial transactions is a tax that would fall mainly on large banks trading on their own funds and other speculative, short-term trades. It would be a tax similar to what the UK has had in place since the 1970s.”
She added that were this transaction tax applied to Social Security, “it would not only restore Social Security to long range actuarial balance for 75 years and beyond, but would allow all benefits to be raised by about 5 percent.”
Altman allowed, of course, that resistance to any of these would be fierce. It remains to be seen whether public opposition will mount in the meantime against the Debt Panel’s apparent momentum toward dipping into the public’s wallets.
So, happy 75th, Social Security. May you have many happy – and secure – returns.