In a March 12 column in The Tech, Keith Yost argued for gutting the Social Security. He argues that, “Besides having a negative effect on our economic security, Social Security is destructive to our political process.” I would agree that something needs to be done for the economy but Social Security is not the problem. It may actually be part of the solution.
It is worth remembering that Social Security is one of the most popular government programs in the U.S., and that even Reaganites, who were set on privatizing everything, could not touch it. Social Security is one of the major anti-poverty programs in the US, and it helps not only retirees, but their families and dependents. It is a social program that spreads risks and costs over the whole population and shows that we care about what happens to the elderly or disabled in our country. In that respect Social Security is quite progressive, as the poor get more benefits than they pay in. This is a good thing, and all the more reason to expand Social Security, Medicaid, and Medicare, rather than finding ways to shrink them.
So what is the problem with Social Security? We are told that demographics are changing, meaning that the ratio of retired people to working people will increase. However, it is also true that the absolute ratio of dependents (children and elderly) to working people will remain about the same. Noam Chomsky rightly points out that we are stuck with an accounting problem — shifting money from child care to elderly care, which is cheaper — rather than an economic problem. It is also the case that the total taxed income for Social Security is declining. Social Security taxes have an income cap of $106,800. But over the last few decades, income has shifted to the over $100,000 bracket, as indicated by the increased division between rich and poor. Consequently, a family making $110,000 will pay the same Social Security tax as Bill Gates. If we remove the income cap on Social Security, taxes can help fix the program’s financing problems.
Cutting social programs has another unfortunate consequence; it makes workers more dependent on their corporate masters for health care and retirement benefits. If workers had more security, they would have greater leverage to negotiate with their corporate masters, which, as any CEO will tell you, is bad news for corporate profits.
Keith Yost’s article brings about one essential point: The economy is not functioning well for the vast majority of people. It is quite obvious that the manufacturing economy is in shambles with continuing layoffs. There is some uplifting of the financial sector, at least part due to large bailouts. This will be short lived and likely require further bailouts; there is no such thing as jobless recovery! So what is being done for the people, for the taxpayers and the unemployed, to alleviate their problems and uncertainties? Where are our taxes going? Obama’s Job Recovery Act is composed mostly of corporate tax cuts and incentives, which can increase corporate profits. Whether it will increase employment remains to be seen.
Employers are unlikely to hire workers unless there is certainty that increased production will result in increased sales, which is dependent on increased demand and purchasing capacity of customers, which is unlikely without increased employment. Cutting social programs in uncertain economic times, when people need such security program the most, is equivalent to a crime. Yet the current administrations in Massachusetts and the U.S. are curbing just such programs to balance state and federal budgets. Massachusetts cut health care for thousands of legal immigrants, ordered cuts in programs for the elderly including home care, geriatric mental health services, and prescription drug assistance, cut pre-kindergarten programs (Head Start), reduced higher-education support, cut child-care assistance programs and imposed cuts and furloughs of state employees. Obama’s federal budget proposal is also quite interesting, proposing an 11 percent reduction in Medicaid, 12.7 percent reduction in pensions and benefits for veterans, 47 percent reduction in unemployment insurance programs, and 32 percent cut in education for the disadvantaged programs.
While the balance of power is so heavily tilted in favor of corporations, there will be little improvement in the overall economic condition of people, regardless of which wing of the Business party (Republican or Democrat) dominates in Washington. In this economy, cutting Social Security borders on unconscionable.
Alexi Goranov is a postdoctoral fellow at the David H. Koch Institute for Integrative Cancer Research.