PDF of this report (5pp.)

By Paul N. Van de Water and Arloc Sherman

August 11, 2010

End Notes:

[1] Kathy A. Ruffing and Paul N. Van de Water, Top Ten Facts About Social Security, Center on Budget and Policy Priorities, forthcoming.

[2] Social Security Administration, Annual Statistical Supplement to the Social Security Bulletin, 2010, Table 5.J10.

[3] U.S. Census Bureau, Income, Poverty, and Health Insurance Coverage in the United States: 2008, Series P60-236, September 2009.

[4] Charles P. Blahous III, Reforming Social Security for Ourselves and Our Posterity, Westport, CT: Praeger, 2000, p. 13.

[5] Eugene Smolensky, Sheldon Danizer, and Peter Gottschalk, “The Declining Significance of Age in the United States: Trends in the Well-Being of Children and the Elderly Since 1939,” in John L. Palmer, Timothy Smeeding, and Barbara Boyle Torrey, eds., The Vulnerable, Washington: Urban Institute, 1988; Gary V. Engelhardt and Jonathan Gruber, “Social Security and the Evolution of Elderly Poverty,” National Bureau of Economic Research Working Paper 10466, May 2004.

Copyright © 2008 - 2010 Center on Budget and Policy Priorities.

Alf Landon, the Kansas governor running as the Republican Party's 1936 presidential candidate, called it a "fraud on the working man." Silas Strawn, a former president of both the American Bar Assn. and the U.S. Chamber of Commerce, said it was part of President Franklin D. Roosevelt's attempt to "Sovietize the country." The American Medical Assn. denounced it as a "compulsory socialistic tax."

What was this threat to American prosperity, freedom and democracy they were all decrying? It was Social Security, which Roosevelt signed into law on Aug. 14, 1935 - 75 years ago Saturday.

The opponents of Social Security were not right-wing extremists (the counterparts of today's "tea party") but the business establishment and the Republican Party mainstream.

In the early Depression years, more than half of America's elderly lived in poverty. But most business leaders and conservatives considered the very idea that government had a moral responsibility to help senior citizens retire with dignity to be outrageously radical, a dangerous trampling of individual liberty. They predicted that the Social Security tax would bankrupt the country.

As New York's former governor, Roosevelt knew that business groups had opposed the most important pieces of social legislation on that state's books, including the factory inspection law (passed as a result of the 1911 Triangle Shirt Waist factory fire that killed 146 women), the law limiting women's workweek to 54 hours, unemployment insurance, pensions for the elderly and public works projects to put people back to work.

Once elected president, FDR viewed Social Security as part of his broader New Deal effort to humanize capitalism. Born to privilege, he understood that many wealthy people considered him a traitor to his class. They were, he thought, greedy, unenlightened and on the wrong side of history.

FDR outmaneuvered Social Security's opponents, using his bully pulpit to explain why they were misguided.

"A few timid people, who fear progress, will try to give you new and strange names for what we are doing," he said in a June 1934 "fireside chat" on the radio. "Sometimes they will call it fascism, sometimes communism, sometimes regimentation, sometimes socialism. But in so doing, they are trying to make very complex and theoretical something that is really very simple and very practical.... I believe that what we are doing today is a necessary fulfillment of what Americans have always been doing - a fulfillment of old and tested American ideals."

Most Americans agreed. Running for reelection the next year, FDR beat Landon in a 60.8% to 36.6% landslide.

Today, Social Security insures families against the loss of income caused by retirement, disability or death. It provides more than $600 billion in benefits to 51 million people. It lifts more than 35 million older Americans out of poverty. One-third of Social Security's beneficiaries collect survivors or disability insurance, keeping millions of families with a disabled or deceased breadwinner from destitution.

Americans view Social Security as a central component of the nation's social contract. It is probably the most popular federal government program. Not surprisingly, when President George W. Bush tried to privatize Social Security - essentially asking Americans to put the security of their future in the stock market - the people considered it a preposterous idea, especially after they had watched thousands of Enron investors lose their savings and saw the stock market lose 38% of its value between January 2000 and October 2002.

Today, 77% of Americans - even 68% of Republicans - believe that policymakers in Washington should "leave Social Security alone" and find other ways to reduce the deficit, according to a national poll in June by the University of New Hampshire. In fact, 75% of tea party supporters favor Social Security and Medicare, a New York Times/CBS News poll found in April.

There are still a handful of Americans who bash Social Security. They dress up their arguments in different clothing, but their views haven't changed much from those of their counterparts 75 years ago. We can't afford Social Security, they say. It's going bankrupt. It will destroy our economy and our society.

America, one of the world's wealthiest nations, can afford to provide an economic cushion for the elderly and the disabled. By making some minor adjustments, Social Security will remain vital and solvent for this and future generations. Economists say that raising the income ceiling on the payroll tax, applying the Social Security tax to nonwage income or adding a modest increase to the payroll tax could add decades to the health of the Social Security trust fund.

In retrospect, it is obvious that Social Security's Depression-era opponents engaged in fear-mongering, not economic reality. Their opposition was based on a free-market fundamentalist ideology that abhorred any attempt to use government to improve Americans' living conditions.

Just as the early battle over Social Security wasn't really about old-age insurance, current fights over public policy are really placeholders for broader concerns. They are about what kind of country we want to be and what values we consider most important. Today, business groups and right-wing zealots oppose healthcare reform, tougher financial regulations, stronger workplace safety laws, policies to limit climate change, higher taxes on the rich and extension of unemployment insurance to the long-term jobless. The issues vary, but the mantra is the same: This policy will kill jobs, undermine the entrepreneurial spirit and destroy freedom.

The White House and progressive activists should aggressively challenge assertions about the disasters that will befall us if government protects consumers, workers, seniors, children, the disabled and the environment. Throughout our history, progress has been made when activists and politicians proposed bold ideas and then won a series of steppingstone reforms that redefined the social contract.

 

President Obama’s Deficit Commission is all smoke and mirrors. Its members are making a big show of laboring over ”painful” choices and considering all options in their quest to bring down the deficit. But inside the Beltway everyone knows what’s going to happen: The commission will reduce the deficit on the backs of the old and the poor, through cuts to Social Security, Medicare, and Medicaid. Some opponents have taken to calling it the Cat Food Commission, since that’s what its victims will be forced to eat once the commission gets done slashing away at their modest entitlements.

In fact, the true intent of the Deficit Commission was evident before it was even formed. That intent was only driven home when Obama appointed as its co-chair Alan Simpson, a former Republican senator from Wyoming who is well known for voicing, in the most colorful terms, what Paul Krugman calls the "zombie lie" that old-age entitlements will soon bankrupt the country.

So why the big show? Because neither Obama nor the Congress wants to get caught cutting Social Security and Medicare in public, certainly not before the November elections. (Medicaid will be cut as well, but politicians tend not to worry so much about poor people, since they don’t go to the polls in the numbers we middle-class geezers do.) So instead, they are foisting off this unpleasant task onto the Deficit Commission, showing what the lawyers call “due diligence,” sucking their thumbs and pretending to study how to cut the deficit. They’ve got $1 billion in walk-around money to pay for propaganda so the PR industry ought to be plenty happy. So too should billionaire Pete Peterson, as he and his foundation lackeys push forward towards a victory in their longstanding attack on so-called “entitlements.”

Quite frankly, if the Republican Right could get itself together and shove the Tea Party nuts back into their cave–as Reagan did with the crackpots hanging around him–they too could reap the benefits of the Cat Food Commission’s work. Ever since the New Deal, the Right has been kicking and screaming about Social Security. Things just got worse in the 1960s with Medicare and Medicaid. And now, thanks to our supposedly “socialist” president, they are within a few inches of cutting a nice hefty hunk out of the largest social programs this nation.

But just when it looks like the right wingers have collected themselves, the nutcases throw spanners into the works. This time it’s not the Tea Party, but economists from the Federal Reserve and intellectuals from NYU and Harvard. Four of these people have united to publish an 8-page paper via Boston College’s Center for Retirement Research last month entitled ``What is the Age of Reason?’’

This paper is about what to do when old people start losing their marbles, plunging into dementia, euphemistically called ``Cognitive Decline among Older Adults,’’ and simply aren’t up to such basic tasks as investing their own money. To save these poor fools from themselves, the intellectuals propose ``possible policy choices,’’ including such anemic remedies as full disclosure in such things as mutual fund and 401(k) fees.The authors doubt disclosure will have much import. Then there is the intriguing prospect of ``Financial `Driving Licenses,” which would require ``that individuals pass a `license’ test before being allowed to make nontrivial financial decisions,such as opting out of `safe harbor’ investment products.’’ Another scheme envisions ``mandatory advance directives. It is described as follows:``One direct way to address the impact of cognitive decline on financial decision-making would be to require older adults to put in place a financial advance directive before reaching a certain age, so that the management of their assets could be transferred to a third party in the event of incapacity.’’

Get the picture? Cuts in entitlements, including Social Security and Medicare, will be accompanied by a push to get people to invest part of their Social Security income in Wall Street so as to make up what is being lost in the cuts. And since we are to believe that old people are going crackers, why then, wouldn’t it make more sense to let Wall Street take charge and invest the money directly? That would save a lot of hassle and bring about a windfall in earnings. Remember how we made so much money in our 401(k)s in the recent recession that we all went broke? Wouldn’t it be fun to do it all over again?

It’s going to take a lot to waylay the likely course of future events:  The Cat Food Commission will undoubtedly recommend, and a lame duck Congress will pass, legislation that looks fairly innocuous: trimming Social Security a bit, maybe by upping the age by a few years, and cutting a little from Medicare–none of it affecting anyone who is over 65 right now. That will enable the politicians now in office to look like they are protecting seniors and fending off any drastic cuts, while at the same time appearing “tough” on the deficit. But the legislation, in the usual Washington mode, will gradually widen as the years go by, so that by the time this bunch of pols are retired (on their fat pensions) and out of the fray, the new rules will be eating into entitlements in a big way.

The other side of this Faustian bargain would appear to be Congress passing some tax increases. ”In setting up his National Commission on Fiscal Responsibility and Reform,” William Greider recently wrote in The Nation, ”Barack Obama is again playing coy in public, but his intentions are widely understood among Washington insiders.” As Greider puts it, “The president intends to offer Social Security as a sacrificial lamb to entice conservative deficit hawks into a grand bipartisan compromise in which Democrats agree to cut Social Security benefits for future retirees while Republicans accede to significant tax increases to reduce government red ink.”

It remains to be seen how “significant” those tax increases actually turn out to be. But even former Federal Reserve Chair Alan Greenspan seems to be on board with this general plan. Greenspan’s credentials include chairing the first major entitlement-cutting commission back in the 1980s, as well as promoting the Bush-era tax cuts that helped the deficit grow to its current proportions. He still says that reductions to Medicare benefits are necessary–but in a recent interview in the New York Times, Greenspan also says that he now wants to remove all the Bush tax cuts. Seeing as it comes from the champion of “let them eat cake” economics, this pronouncement must be seen as predictor of how conservatives could end up voting. In short, the old and the poor will have to eat cat food, but the rich might kick in a few crumbs as well.

Alan Simpson believes that Social Security is "like a milk cow with 310 million tits," according to an email he sent to the executive director of National Older Women's League Tuesday morning. Simpson co-chairs the deficit commission, which is considering various proposals to cut Social Security benefits.

Simpson's email, which OWL chief Ashley Carson released publicly, (PDF) was sent in response to an April blog post Carson wrote for the Huffington Post. Carson criticized Simpson for repeatedly describing his Social Security opponents as "Pink Panthers," arguing that the description had sexist connotations.

His email is peppered with exclamation points and condescension. At one point he urged Carson to read a certain graph, "which I hope you are able to discern if you are any good at reading graphs."

Simpson concludes by implying that leading a major organization dedicated to the interests of middle-aged and elderly women is not "honest work."

"If you have some better suggestions about how to stabilize Social Security instead of just babbling into the vapors, let me know," he writes. "And yes, I've made some plenty smart cracks about people on Social Security who milk it to the last degree. You know 'em too. It's the same with any system in America. We've reached a point now where it's like a milk cow with 310 million tits! Call when you get honest work!"

It's unclear from Simpson's email if he means Social Security is the milk cow or if he's referring to America in general. A Simpson assistant responded to a HuffPost email saying that Simpson was traveling and unable to comment immediately.

Simpson's tirade continues a pattern of erratic behavior that threatens to undermine the commission's work. In June, he unleashed a stream of error-riddled invective on a Social Security advocate wielding a camera outside a closed-door commission meeting, leading Paul Krugman to conclude (happily) that Simpson was killing the commission.

OWL is now calling on the former Republican Senator from Wyoming to resign.

Watch Simpson berate a Social Security advocate:

 

Alan Simpson is the co-chair of President Obama's Deficit Commission, which is charged with creating a bipartisan consensus for balancing the budget. Lately Simpson's foulmouthed tirades have drawn at least as much attention as the Commission's actual work. His latest rant -- which includes denigrating an activist for women's issues with remarks about "a milk cow with 310 million tits" -- crosses the line once and for all. It demonstrates conclusively that he possesses neither the judgment, the ability, nor the emotional stability to carry out his mission. He's become an embarrassment to the President and an impediment to his Commission's objectives. He must resign immediately. If he's unwilling to do so, the President must fire him.

Simpson's notoriously thin-skinned, and he's in the habit of pelting his critics with abusive monologues or emails. That argumentative streak, which has only gotten worse in recent months, leaves him spectacularly ill-suited to the mission the President laid out for him when he announced the formation of his Commission. The President said "I'm confident that the Commission I'm establishing today will build a bipartisan consensus to put America on the path toward fiscal reform and responsibility."

Instead of building consensus, Simpson's been showering skeptics with abuse, rather than persuasion. His run-in with activist Alex Lawson became an Internet sensation, both for Simpson's unbalanced demeanor and for the sheer irrationality of his attempted counter-arguments. A Simpson email to Dean Baker read in part: "if this is the way that you do your reporting, I would think that you would have damn few fans or readers!" (He seems unaware that Baker's a highly respected economist.) Simpson adds: "I loved the picture accompanying your piece. With chin in hand, I first thought of Rodin's The Thinker -- but after reading the piece I can see you haven't done very much of that!"

There's a temptation among Washington insiders to shrug or laugh and say, "That's just Alan being Alan." But this is no laughing matter: He's gone from being refreshingly candid to being abusive, rude, and emotionally unstable. As for the Ashley B. Carson email, it's not just that he deprecatingly refers to activists for women's issues as "Pink Panthers," or even that he used the word "tit" in writing to a woman. Simpson could claim that he's known for barnyard metaphors, although its beginning to look like there's a certain disdain for women at play too. But the problem isn't just emotional balance, courtesy, or even respect for women: It's objectivity.

Here's that three-letter word in context, from his email to Ms. Carson: "... (Y)es, I've made some plenty smart cracks about people on Social Security who milk it to the last degree. You know 'em too. It's the same with any system in America. We've reached a point now where it's like a milk cow with 310 million tits!"

This comment makes something else clear about Simpson: He really hates people who collect Social Security. He already made that feeling pretty clear when he referred to retired Social Security recipients as "greedy geezers." He's not just referring to wealthy Americans who collect Social Security benefits here -- 310 million is the entire population of the United States. He's saying every American who contributes to the Social Security system and is therefore entitled to its retirement benefits is suckling at the teat of the system -- even though they and their employers funded that system!

This is a person who's made up his mind: People who collect Social Security are "milking the system." (How, exactly? People don't calculate their own benefits, after all.) But to Simpson, they're parasites. And anyone who has a different perspective on Social Security is to be attacked, not engaged in dialog.

Here's what the President said when he appointed Simpson and his co-chair: "I know they'll take up their work with the sense of integrity and strength of commitment that America's people deserve and America's future demands." Simpson's Commission is charged with undertaking its task in an unbiased manner, then reporting its conclusions to the American people in a way that will instill confidence in their fairness and objectivity. Alan Simpson has proven that he's unable to carry out that task.

I've expressed my own opinions before... I disagree with Simpson's position, and those of some others on his Commission. But I'll make a confession: I've always had a secret fondness for Simpson himself, because he always seemed unpretentious and direct. Either my judgment was wrong, or he he's gone off the deep end in recent months -- perhaps as a result of intense criticism. He's gone from blunt talk and candor to irrationality, rage, and unrestrained hostility toward the people whose financial interests he's charged with protecting.

Simpson's note to Ms. Carson ends with these words: "Call when you get honest work!" Apparently advocating for older women isn't "honest work" -- unlike, for example, serving on the Board of Directors for an insurance and annuity fund or a biotech company. (Simpson's done both.) We can add public interest work to the list of things Simpson reflexively dislikes. As for Ms. Carson's particular area of advocacy, it should be noted that women receive significantly less in Social Security payments after retirement than men do. Given that it provides a marginal income at best, Mr. Simpson should be more interested in her work than he appears to be.

The only fair conclusions that can be be drawn from Simpson's latest outburst are these:

• He has a strong dislike for retired Social Security recipients.
• He is temperamentally incapable of coping with disagreement or criticism.
• He lacks both the judgment and the emotional stability to make unbiased decisions, or to communicate those decisions effectively on behalf of his Commission and the President who appointed him.

Simpson must resign immediately. If he does not, the President must fire him.

(Sign the petition to remove Alan Simpson)

Also: This blog post on the same topic has a better title than mine.

Former Senator Simpson Unfit for Deficit Panel

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Seven Key Facts About Social Security and the Federal Budget

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As I was pulling my Labor Day weekend brain cells back to consciousness with my first morning cup of coffee, I saw the scroll.  “Tony Orlando concert postponed in New Jersey amid fears of Hurricane Earl aftermath.”  I almost flew out of my chair.  I watched for a few more moments to make sure it was real.  It  was.  It scrolled at least five more times across the national news screen giving folks the news we apparently needed to have to begin the weekend.

What did not scroll?  What never scrolls?  “123 innocents in America died today because they didn’t get the healthcare they needed, and they were very sick.”  I have never seen that news reported.

When I was a kid, we used to see the Viet Nam war (it was a war to me, not a conflict) death toll every night at the top of the evening news.  Right there behind Chet and David.  And seeing that death count made me acutely aware that people were dying.  It alerted me to a number that I needed to care about.  Though I was young and should have been listening to my transistor radio or my 45s or hanging out with my friends, I watched that news report every night because the insistent dead bothered me. 

The insistent dead of our healthcare neglect bother me now.  I cannot stop seeing the number as if it were scrolling.  I see it and feel it.  People die because they couldn’t pay a co-pay soon enough or they didn’t have a job and the money to buy coverage or access to a government plan soon enough to access help.  123 people – at least – dead because they didn’t get the care they needed.  Care was available – we just refused to let them have it.  We knew they would die. We killed them.

So, I guess I do not understand why the Tony Orlando concert postponement rates the national scroll.

It’s Labor Day weekend.  Over these three days, at least 369 Americans will be dead because the barriers to their healthcare needs were too great to overcome.  They were killed by greed.  They were killed by indifference. 

Are we tired of the healthcare debate?  It wore us out?  Politics needed to shift gears?  An election is coming.  Taxes are too high for some and not high enough for others.  Peace in the Middle East is always on the cusp.  War in the Middle East is too.  Someone wants to cut Social Security.  Someone wants welfare moms to stop being so.  America needs reclaiming, say some.  The dream still lives, say others.

What dream?  What to reclaim?  This weekend, 369 dead neighbors and friends, moms and dads, sons and daughters, brothers, sisters.  Dead without healthcare in America.  Dead without care that was available to others.  Dead because we decided by our inaction and ignorance of blame that they should die.

Health insurance is not health care. Health insurance is a financial product marketed and sold to protect health and wealth which may do neither thing very well. I view it as a defective product. Yet, very soon we will be buying more of it and helping more of our fellow Americans buy more of it with the subsidies that support the great health insurance bailout that is being called "patient protection." What we need is an end to the protection of profits first - we need to provide a progressively financed, single standard of high quality care for all. We need to stop killing patients through our failed policy and protect them with our shared humanity.

But please don’t head to that Tony Orlando concert in Jersey.  That would be unpleasant to drive all that way only to find you couldn’t hear, “Tie a Yellow Ribbon ‘Round the Old Oak Tree,” one more time. Stay home.  And if you or someone you love feels sick and can access care, at least spend a moment remembering the 369, OK?

It's been two years since the Lehman Brothers collapse set off a global financial meltdown. The government bailed out big Wall Street banks and they're now making bumper earnings. Major corporations are sitting on $8 trillion in cash reserves, the biggest pile since 1963.

For working families, the crisis didn't start in 2008. They've been getting what New York Times reporter Steven Greenhouse calls "The Big Squeeze" for decades, as the income gap between the rich and the rest of us tripled. These families are continuing to bear the brunt of the economic crisis.

More than 15 million Americans are out of work, and there are nearly five job-seekers for every job opening. Long-term unemployment is at record levels. This "jobs deficit" is longer and deeper than any other post-war recession. If job growth for the next decade matches 2000-2010, the official unemployment rate will hit 13 percent by 2020. And that doesn't even factor in that workers are earning less, losing benefits, and working longer and harder.

Conservative activists and some members of Congress have been grandstanding about our massive budget deficit to block a recovery for the rest of us. Yet these same people want to maintain tax breaks for the rich and stop taxes on the Wall Street banks that created this mess in the first place--two steps that could help shrink the deficit. It's time for ordinary Americans to make our voices heard. It's time to declare a state of emergency on jobs.

Across the country, workers are already taking a stand. At a Mott's apple juice plant in New York, workers have gone on strike over wage cuts. Hugo Boss and Republic Windows workers in New York and Illinois have successfully prevented plant shutdowns.

Unemployed workers across the country are also organizing and demanding jobs with justice. Jobless doesn't mean voiceless or powerless.

Chicago's Unemployed Council has been collecting surveys at unemployment offices to get information on jobless needs and met with members of Congress to push for extended jobless benefits. In Eastern Maine, the laid-off committee gives tips on surviving unemployment and connects with local farmers to arrange food baskets. In Long Island, New York and Portland, Oregon, monthly potlucks help the jobless break out of their isolation and take an active role as citizens holding representatives accountable.

On September 15, coalitions of community, faith, labor, and student organizations are taking action in 30 cities, calling for "Full and Fair Employment," and demanding that officials explain what they will do to fill the jobs gap and put America back to work.

Polls clearly show that most Americans consider the jobs emergency a higher priority than the budget deficit--and after all, the best way to address budget deficits is to put people back to work so they can pay their share of taxes. Making Wall Street pay its fair share works well too.

There are several actions Congress could take as emergency first steps towards full and fair employment. For example, they could pass the Local Jobs for America Act, which would save or create 1 million good public sector jobs, providing needed services in communities that need it most.

A small tax on financial transactions would reduce the most harmful speculation games of Wall Street, and could potentially generate $200-500 billion per year for jobs programs.

Without jobs, there is no recovery. Without good jobs, there is no justice.

Michael Duke is the Big Wally of Walmart. As CEO of the low-wage behemoth, he siphons some $19 million a year in personal pay from the global retailer.

How much is $19 million? Let's break it down in terms that Duke's own workforce can appreciate. While Big Wally's workers average about $9.50 an hour, Duke's pay comes to about $9,500 an hour. He pockets as much in two hours as Walmart workers make in a whole year!

But WalMart doesn't give a damn about such gross pay gaps between privileged elites and the rest of us. As a spokesman scoffed, "I don't think Mike Duke...needs me to defend his compensation package."

Really? If not you, who?

Those who think that the hoi polloi don't notice or care about America's growing income disparity, should take a peek at a recent opinion survey run by the right-wing, corporate-funded Peter G. Peterson Foundation. This outfit intended to show that the general public backs the tea party's agenda of slashing  government spending, which includes balancing the federal budget by putting Social Security and Medicare on the chopping block.

But--whoops-a daisy--the survey of thousands of Americans went badly wrong for the Peterson ideologues. Far from wanting to gut Social Security payments, 85 percent of those interviewed favored extending the program. They want the rich to pay a tax on their whole salary which goes into the fund, like all the rest of us.

And--hey, Mike--this one's for you: nearly six out of 10 of the folks involved in the foundation's "America Speaks" survey want a new, higher tax bracket to make millionaires pay their fair share of providing for the common good.

The foundation tried to bury these surprisingly progressive results, but didn't succeed. You can read a good analysis of them at the Center for Economic Policy and Research: www.cepr.net.

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