Why Is Social Security So Insecure?

We all know that politics is rife with deceit of the public and deception of the self.  Claims as to the reasons a senator or congressman supports or opposes a bill or a policy are often merely “cover stories” hiding the widespread real reason the politicians vote the way they do – money.  The conflation of the financial status of Social Security with the problems of the national debt and the annual fiscal deficit of the U.S. is a case in point.  Much money is at stake, but rarely is the real issue directly faced.

Social Security is not part of the federal budget.  It is a self-funding program that provides very modest old-age and other benefits to those who have contributed to it during their working lives, and to certain dependants.  As they try to cut back benefits and destroy Social Security, politicians make disingenuous claims that they want to “protect the integrity” of Social Security.  They know that most Americans like the program and want it to survive.  In an economic environment where almost all private pension systems have been plundered by the corporations that administered them for the employees who contributed to them over entire careers only to lose it all at retirement, Social Security has become the de facto fall-back retirement system, despite it’s poverty level “benefits.”

Powerful forces, such as the national financial elite and extreme anti-government political ideologues, bent on destroying Social Security (and Medicare/Medicaid too, of course) don’t always have the same motivations.  The financial elite wants Social Security funds diverted into “private retirement savings accounts” to be managed by, you guessed it, their very own stock market brokerage firms.  What a windfall of commissions and fees that would be for the most powerful economic class!  And what a high-risk future for retirees!

But the growing insecurity of Social Security is a serious political problem simply because the corporate and financial elites and their congressional agents want it to be.  There is just too much money to be made for them to leave it alone.  Several simple changes in the system designed to compensate for both class injustices in the contributions of wealthy high-income employees versus average workers, and for generational changes in the demographics of employment and aging could easily be made without major problems of implementation.  However, those who would profit – either politically or financially – by the privatization/destruction of Social Security, carefully avoid the easy solutions to any long-term cash flow problems because they either want to take over the huge money flow involved or because they are politically opposed to any government social program that assists those in need.  The first group could be called the “Jackals of Wall Street” while the second group consists of extreme right-wing ideologues who oppose government no matter what.

But what’s the real issue?  Simply put, Social Security was originally conceived as an insurance program, meant to help those elders whose employment failed to afford them an adequate pension or life savings, to see them through after they could no longer work.  But with the corporate plunder of pension systems, Social Security became the default retirement system for most American workers.  Now, with the reduction of the vast majority of the middle class to near-poverty or poverty status, with personal life-savings virtually impossible for many to accumulate, and pension systems no more, Social Security is very often the last defense against homelessness and destitution.  If the Social Security payroll tax were applied to all personal income, including the millions of dollars in “executive compensation” in its many forms such as salaries, stock options, “incentive pay,” and bonuses of top CEOs, the fund would be sufficient to support the small “benefits” far into the foreseeable future for those who need it.

So, the real issue is whether the American people will tolerate the plunder of the Social Security system as they did corporate pensions, or whether they will demand that what was intended as a social insurance scheme actually be implemented as such.  That’s where the tricky language often applied to the Social Security debate needs to be overcome.  Insurance works on the basis of every “insured” person contributing and those who suffer losses collecting the benefits.  Simply put, if Social Security were actually implemented as a social insurance program rather than as a last-ditch inadequate retirement system –  and certainly not as a privatized “retirement savings account”  subject to the whims of the stock market – several principles would have to be invoked in order to make it work quite effectively.  They are:

  •  All personal income must be subject to the Social Security Payroll Tax.  Who has ever gotten fire insurance without paying the premium?  Why should high income earners not pay the premium on all their income?
  • Social Security benefits would be dispensed on the basis of need.  Who has ever collected on her/his fire insurance when there was no fire?   Why should wealthy retirees collect benefits from an insurance scheme designed to protect against the lack of income or loss of wealth in old age?
  • If one were so lucky as to have benefited from a prosperous pension system, then any Social Security benefit would be adjusted down on that basis.  And a formerly wealthy man who lost his fortune (stocks, bonds, dividends, buyouts, bonuses, “incentive pay”), would also draw the maximum Social Security benefit.  What’s wrong with that?
  • The net effect of the system should be that everyone could retire with assurance that they can live in at least modest comfort in their final years without fear of economic and social deprivation.

In an economic and social environment where so much income and wealth has been redistributed from the middle and lower classes of workers to the very top 0.1% of privileged Americans, only some form of re-redistribution can at this point re-establish a semblance of balance to the economy and stability to the society.  A real social security system would still be little more than a small compensation to those who have lost the most over their working lives to the insatiable greed of the financial elite.

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