Last night, rumors began flying that the president would offer cuts to Social Security as part of a deal to raise the debt ceiling. The administration is now trying to stem the tide of outrage, suggesting that the President merely wants to "strengthen" Social Security. Never mind that as Roosevelt Institute Senior Fellows Robert Johnson and Thomas Ferguson have clearly shown, the program is strong today and predictions about shortfalls decades down the road are wildly exaggerated. We asked Roosevelt fellows and friends to weigh in on the Social Security fracas.
Richard Kirsch, Senior Fellow at the Roosevelt Institute:
"Here are three numbers that tell the whole story on Social Security: $14,000; 90%; $0.
$14,000 is the average amount that a retiree gets a year from Social Security. A related number is 19.8 million, the number of people (including retirees; surviving spouses and the disabled) who are kept above the already skimpy federal poverty line because they collect even those low Social Security payments. Social Security makes up 90% or more of income for one-third of older Americans and 50% of income for half of retirees.
90% is the proportion of earnings that, if taxed at that level, would assure that Social Security is fully solvent for the next 75 years. For years that was the share of earnings on which workers paid Social Security, but the current level is closer to 83%. While middle-income wages have stagnated, upper incomes have grown rapidly, so that the Social Security cap of $106,800 in 2011 (the same as in 2010) is applied to a lower portion of earnings than it has been historically.
$0 is the amount that Social Security has contributed to the federal deficit. Ever.
Marshall Auerback, Senior Fellow at the Roosevelt Institute:
"Cutting Social Security is 'Change you can believe in' - if you're a member of the GOP. If the rumors are true, then President Obama would be taking policy decisions in areas where even Reagan and Bush dared not to tread. Cutting Social Security and Medicare on the back of a debt ceiling which might well be unconstitutional would certainly take his party out of its comfort zone (as he phrased it the other day). But it would also effectively eviscerate one of the Democrats' most substantive social welfare achievements of the 20th century. Social Security is not "broken." It is not "going broke." It will, as Robert Eisner told us more than a decade ago, "be there" as long as we protect it from its so-called saviors. The balance in the Social Security Trust Fund is absolutely irrelevant when it comes to the government's ability to make payments, in full and on time -- today, tomorrow and forever. Even Alan Greenspan has acknowledged that "A government cannot become insolvent with respect to obligations in its own currency."
Doesn't anyone remember 1983, the last time we saw 'incremental reforms' of the kind many 'responsible politicians' supported? As a result of those 'reforms', today's workers are contributing more and retiring later. And for what? Those reforms were supposed to make the system solvent for 75 years. Now, here we are, less than three decades later and it's still 'broken'? And we're supposed to believe that further incremental cuts will succeed"
ND20 Contributor Harvey J. Kaye, Professor of Democracy and Justice Studies at the University of Wisconsin-Green Bay:
'Should any political party attempt to abolish social security, unemployment insurance, and eliminate labor laws and farm programs, you would not hear of that party again in our political history. There is a tiny splinter group, of course, that believes you can do these things. Among them are H. L. Hunt (you possibly know his background), a few other Texas oil millionaires, and an occasional politician or business man from other areas.'
Obama must keep in mind now that it's difficult for many Americans to imagine that a party in power that raises taxes and cuts social security will win at the polls next time around -- or even should. If he supports Social Security cuts, what will Obama's 2012 campaign ads say???
Lynn Parramore, Media Fellow at the Roosevelt Institute and Editor of New Deal 2.0:
Americans know that they have been ripped off. They've seen bank CEOs making record-breaking profits and then they hear talk of cutting Social Security and other programs that keep millions of people out of poverty. They know it doesn't add up. The current hysteria over the deficit is an opportunity for elites to rob ordinary people all over again. Bankers want their hands on our Social Security because there are windfall profits ready for the taking if our retirement money is put into private accounts -- just think of the fees they can charge! That's why the paltry $14K per year that Americans can now expect on average in their retirement years -- in a time of declining pensions and economic uncertainty -- is something that the financial fatcats just can't resist getting their paws on. Keeping us poor and insecure is also a means of driving our wages down and insuring that we will work for peanuts. Financial elites are lying to the American people about the 'cost' of Social Security and the program's future, and they are spending money hand over fist to get politicians on board with their propaganda. Any American president who serves the people must resist this attack on the dignity, well-being, and economic rights of our citizens. Full stop.
William K. Black, ND20 Contributor and Associate Professor of Economics and Law at the University of Missouri - Kansas City:
Tom Ferguson warned us -- in person, unequivocally, forcefully, and repeatedly.
What I certainly did not understand was that at a time when the Republicans had locked themselves in a politically disastrous position and in light of the NY special election showing the political advantages of holding firm on this type of program (I put aside the fact that Social Security is an immense success on the merits because it is clear the administration does not care about the merits) -- Obama would choose to seize defeat from victory. Geithner has proven to be the perfect Republican mole.
This article originally appeared in the New Deal 2.0 blog.