What will happen to our Social Security benefits? This question is being asked by the program’s 56 million recipients in response to the Obama administration’s proposal to cut the annual cost-of-living raise for all who receive these monthly checks, as part of his 2014 budget.
This scheme, which is being cheered by financial barons and many politicians and pundits, is an assault on the most vital and popular federal program, which most workers contribute to throughout their years of employment. It is a historic, frontal attack on the working class, which boldly fought for, won and has paid into the Social Security program for nearly eight decades.
Outrage and denunciations came swiftly from labor unionists, retirees, advocacy organizations and other major progressive groups. There is tremendous anger that a Democratic president — who pledged not to cut Social Security in his election campaigns — would make this offer, especially since his party is seen by many as a defender of this program since its inception.
Workers fought for Social Security
The Social Security Act was enacted by Congress and signed by President Franklin Delano Roosevelt on Aug. 14, 1935, as part of the second New Deal. Rather than being the gift of a generous benefactor, this law was the result of militant, massive class struggle by labor unions, unemployed councils, African-American organizations, socialists, communists and other progressives during the Great Depression. Hundreds of protests pressured employers and the government for Social Security retirement benefits and unemployment insurance.
The law was amended in 1956 to pay out disability benefits. Today, 39 million retirees and their family members are in the program. Nearly 11 million more workers with disabilities and their family members are included; 6 million survivors of deceased workers are covered.
Social Security benefits belong to the workers. Every dollar put into the Social Security Trust Fund comes from their labor, whether from workers’ paychecks or from employers’ contributions. The funds are deferred wages, to be paid out during retirement or periods of disability; the benefits are regarded as “sacrosanct” and “inviolable.”
Payroll taxes are deducted from workers’ checks; they pay for half of the cost, while employers pay the other half. The monies go into the Social Security Trust Fund, which is actually two funds, the Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund. Together, they’re known as Old Age, Survivor and Disability Insurance.
Gov’t raids Social Security Trust Fund
Social Security Trust Fund revenues that exceed what’s paid to beneficiaries are considered a “surplus” and can be counted in the federal budget and used by the government. In exchange, the Treasury issues bonds, or IOUs. The Treasury Department, in its “Monthly Report of Public Debt of the United States,” reported that $2.74 trillion in bonds was owed to the Trust Fund as of this Jan. 31 (Table III, page 9).
Although financial barons, right-wing politicians and pundits falsely claim that Social Security contributes to the federal “deficit,” and is draining the economy, the opposite is true. Not only has the program paid for itself with workers’ contributions, but the government has raided the Fund’s “surplus” for 30 years. It’s been used to pay for wars abroad, interest payments to banks and Wall Street bailouts.
There is enough money in the Trust Fund to keep the program solvent and pay benefits until 2033 without tampering with the current cost-of-living raise (COLA). The government is legally required to repay the loans, and this is where the crisis comes in: Will it pay back what’s rightfully owed to the workers? The capitalists and millionaire politicians don’t want to repay the debt, and so they constantly connive to figure out how to cut the benefits — or even eliminate the program altogether.
Major encroachments have been made already. The Reagan-era Social Security Amendments of 1983 raised the eligibility age for full benefits from 65 to 67, starting in the year 2000, and sped up payroll tax hikes, among other measures.
In addition, millions of undocumented workers have paid tens of billions of dollars in payroll taxes but aren’t entitled to get Social Security benefits.
Chained CPI: a cruel blow
The White House’s budget offers a tricky new way of establishing the yearly benefit increase, based on a “chained” Consumer Price Index figure. It would cut the yearly COLA increase, which is already woefully inadequate to keep up with the high cost of living.
Those who justify this chained CPI ploy erroneously claim that the current CPI — on which annual benefit increases are based — is higher than the inflation rate. They propose to “chain” the CPI to less costly items, which presumably consumers would purchase instead of higher-priced goods.
This nefarious scheme is an attack on the living standards of millions of seniors, veterans and people with disabilities and their families. Health care and medication costs are huge expenses; these costs rise astronomically every year.
The Strengthen Social Security website warns of its dire consequences: “Applying the so-called chained CPI to Social Security cuts the benefits of every single Social Security beneficiary, now and in the future,” and will especially harm women, youth and people of color.
The recession worsens the situation. Aging workers have lost jobs and savings, if they had any, so these benefits and increases are essential. Monthly benefits average $1,265, says the March 30 New York Times, with most retirees getting “two-thirds to all of their income from Social Security.”
The chained CPI’s impact would be cumulative, causing deeper harm as the years go by. Sen. Bernie Sanders explained that “65-year-old retirees would lose more than $650 a year by their 75th birthday,” and about $1,000 a year at age 85. (New York Times, April 2)
Elderly women would be particularly hard hit; many live just above the poverty line. Due to longer lifespans and years of unequal pay, many rely on Social Security for their only income. This is even more so for African-American women and Latinas, who will fare worse due to lower wages, and, thus, lesser benefits.
The National Women’s Law Center says the chained CPI would cause many women to lose funds equaling a week’s worth of groceries by age 80.
White House’s austerity plan
The Democratic administration is offering these cutbacks in a “grand bargain,” allegedly so the Republicans will reciprocate and vote for a “balanced budget” agreement that includes higher taxes for the rich, which they haven’t agreed to do. This cruel plan shows the White House’s willingness to put the deficit burden on the poorest people, throwing them to the wolves and unraveling their safety net. Once again, those who can least afford it are penalized.
Allegedly, the oldest, poorest Social Security recipients would be shielded from these cutbacks, but this is “demonstrably unworkable,” says the National Organization for Women.
The Congressional Budget Office says that over 10 years, the chained CPI would save $164 billion — $127 billion from Social Security and $37 billion from other programs for veterans, the poorest elderly and people with disabilities. (http://tinyurl.com/ckxsrma)
This is Wall Street’s strategy: to lower the deficit on the backs of the working class, while the super wealthy are let off the hook and escape financial responsibility.
The president’s plan offers a terrible trade-off, pitting higher expenditures for infrastructure repair and education against the economic well-being of older, poorer workers. This is wrong: All essential federal programs should be funded. The money could come from the Pentagon’s bloated budget, bank payments, etc.
Classwide fightback needed
Opposition to this heinous measure has begun. Activists from many advocacy groups, along with some Congress members, delivered 2.3 million signatures on anti-chained-CPI petitions to the White House on April 9. Two days later, a Congressional Progressive Caucus press conference countered the White House proposal.
AFL-CIO President Richard Trumka called the chained CPI an “economist’s fancy way of weakening one of Social Security’s most important protections … its cost of living increase.” (jobs-not-wars.org, April 11)
Trumka called on Obama to “drop these misguided cuts in benefits and focus instead on building support in Congress for investing in jobs.” (AFL-CIO.org, April 5) Actually, if all the unemployed were working, the Social Security program would be funded for decades.
On May 11, a Poor People’s Campaign march will assert, “Hands off Social Security and Medicare,” among other slogans, as protesters march from Baltimore to Washington, D.C. The People’s Power Assembly and Baltimore Southern Christian Leadership Conference are calling this action.
The multinational working class, led by labor unions, should resist this attack on their rights and benefits. Militant protests should surround the Capitol, involving Social Security recipients, activists and advocacy organizations from every state.
The working class can’t count on the Democratic Party in this battle. Just as it took a massive, bold struggle to win the federal Social Security program in the 1930s, it will take a strong, independent fightback movement to protect it from Wall Street’s vultures.