As Obama's Fiscal Commission prepares for its June 30 hearing, the Roosevelt Institute's New Deal 2.0 blog invited me to participate in its Social Security's Fiscal Fitness series, which examines the soundness of the program, its relationship to the federal deficit, and the vital role it plays in America's economic future.
Former Senator Alan Simpson, the co-chair of the National Commission on Fiscal Responsibility and Reform, was on a tear when he declared that the traditional defenders of Social Security "don't care a whit about their grandchildren... not a whit." Besides being disrespectful, the logic of his assertion is all wrong. The nation's children have a huge stake in the preservation of Social Security. Even more than their parents and grandparents, they stand to gain the most from the organized efforts of older Americans to strengthen the program, not cut it. Here's why.
Social Security's protections are by far the most important life and disability safeguard available to virtually all the nation's 75 million children under age 18. Through Social Security, working Americans who are married with two young children, for example, earn life insurance protections with a present value around $400,000 to $500,000 dollars. They earn similar protections for themselves and their families in the event of a severe disability. Today:
As much as children need Social Security protections when young, those hoping to work, or to have children or retire one day, also need it. The Social Security Administration reports that 30% of 20 year-olds will become disabled prior to reaching retirement age. Disability insurance certainly has clear value over the course of their lives. Further, nothing approaches Social Security in terms of providing secure retirement income protection. Neither stock market fluctuations nor inflation undermine its value. As billions of dollars of pension and home equity "wealth" disappeared over the two years, no one raised the specter of Social Security failing to meet its obligations. This is because, as Nancy Altman discussed earlier in this blog series, Social Security is conservatively financed.
Ironically, Senator Simpson and others who want to cut back and transform Social Security assert that they are doing so for their children and grandchildren -- but those changes hurt grandchildren the most. These include retirement age increases, privatizing and slowly changing the benefit formula so that over time the value of benefits decreases for all but the most low-income beneficiaries. Instead of helping children, these changes facilitate the plundering of the $2.6 trillion trust fund built up over 27 years through the payroll tax contributions of hard-working Americans. But, as Greg Anrig will argue later in this series, many reasonable ways exist to address Social Security's modest projected financing problem that do not require benefit cuts that fall most heavily on the young.
Children, as they age, benefit from knowing that their parents are protected by Social Security. By providing an orderly way for individuals to make modest payments in exchange for protections against premature death, disability and retirement, Social Security takes some of the tension out of family life and reinforces the dignity of many. Knowing that one's parents have Social Security often frees up the generation in the middle to direct more family resources towards their own children.
So, what's all the fuss about? Why do those opposing the traditional Social Security program make claims that the program is unfair to today's children? Like Alf Landon, the Republican presidential candidate who campaigned against Franklin Roosevelt in 1936 arguing that the United States government's obligations to pay Social Security benefits were just "worthless IOUs." Or like former President G.W. Bush, who made similar claims. For some it's just about not liking big government, even when efficient and delivering a service American's want. As Professor Marmor's post in this series highlighted, what we're really talking about are fundamental differences between views about human nature and the proper role of government. We're talking about differences between what G.W. Bush termed the "ownership society" versus a vision of a society in which "we are all in it together."
In an unguarded moment, David Walker, President of the advocacy organization funded with a billion-dollar donation by Wall Street hedge fund manager Peter G. Peterson, opined:
[W]e used to have debtors prisons, now bankruptcy's no taint. Bankruptcy's an exit strategy. Our society and our culture have changed. We need to get back to opportunity and move away from entitlement... It's pretty fundamental.
Walker's views stand in sharp contrast to the values underlying Social Security -- the beliefs that we, as a people, should protect our children, families and selves; honor our parents; care for our neighbors; live with dignity and receive a fair return for hard work; that we have responsibilities to each other, as families, communities and as a nation. Contrasting these views, I submit that children have a stake in living in the kind of society that maintains a sound and compassionate Social Security program, and that we have an obligation to pass it forward, without diminishing its value.
Cross-posted from New Deal 2.0.