The best anti-poverty program we have ever had just turned 78, and many in Congress as well as the president want to cut its essential benefits. At a time when millions were near starvation during the depths of the Depression, the U.S. adopted the system of social insurance we know today as Social Security. Confronted with overwhelming need and an economy on the skids, the country committed nevertheless to the task of rescuing millions from destitution. Now that we're the richest country on earth, somehow we can't afford to maintain the current standard of benefits?
Social Security was cut significantly in 1983 when the full retirement age was raised from 65 to 67 (to be phased in by 2027). Still, more than 40 million older Americans of all incomes now receive benefits, and 17 million more who are disabled or minor children also receive a monthly check. And as for fighting poverty, Social Security lifts nearly 15 million -- almost 47 percent -- of those aged 65 and over from falling below the poverty line as well as more than one million children. In fact, Social Security is the largest program benefiting the nation's children, providing $2.5 billion every month to 4.4 million minors who survived the death of a working parent or whose parents are disabled. It also saves nearly six million adults aged 18-64, mostly disabled, from impoverishment. That's 21 million people all told.
For women, the prospects in retirement are dire. In 2011, the average annual Social Security income received by women 65 years and older was $12,188, while men received $15,795. Unmarried women -- including widows -- age 65 and older relied on Social Security for half their total retirement income, while Social Security comprised only 36 percent of unmarried elderly men's income and only 31 percent of elderly couples' income. So women rely more heavily on Social Security than men do, receive less to begin with, and will therefore suffer more from any cuts.
Nevertheless, the government's commitment to Social Security both as a concept and as a program is under attack -- on the one hand from those who find it ideologically distasteful and on the other from those who would "help" Social Security by cutting benefits. The proposal by President Obama to reduce monthly checks by revising the cost of living adjustment -- substituting the so-called "chained" CPI or Consumer Price Index -- is a dispiriting breach of trust to future generations by the Administration.
The president's proposed cuts mean that an average earner retiring in 2011 at age 65 would lose more than $6,000 over 15 years. The chained CPI under the president's proposal would also be imposed on many other federal programs and on federal pensions, multiplying its harmful effects throughout the workforce. These cuts would come at a time when workers' savings are already paltry. Three quarters of near retirees (ages 50 to 64) have annual incomes below $52,201 and average retirement savings of only $26,395, and the decline in home values has only made the situation worse.
It is true that Social Security is need of adjustments to ensure its long-term stability. Such adjustments have been made in the past and no doubt will be in the future. But they have always been made to achieve stability in the program itself - that is, any gains made by such changes have been used to sustain the viability of the system. They have not been offered as a bargaining chip in some grander deal that penalizes recipients - including current recipients - for the sake of a concession in Congress on some other completely unrelated matter.
In fact, rather than cut benefits, there is actually a case to be made for raising them. Americans have long been told to think of their retirement income as a three-legged stool -- a pension, savings, and social security. Defined benefit pensions -- the traditional notion of a pension that baby boomers grew up with -- are vanishing in the corporate world. Even IBM no longer offers pensions to new employees. But too many workers can't afford to save what they need due to stagnant incomes over the last decades. And public employee pensions aren't what they used to be either. They are often underfunded at the state and local level and can't be relied on to deliver what was promised.
We do need a broad public discussion of the future of Social Security. But first we need to recommit ourselves to its original goal of providing a strong underpinning to that three-legged stool and remember its original purpose -- pulling a generation out of poverty.