Yves here. The war against what little is left of the American middle class includes the ongoing campaign to squeeze Social Security and create a private, as in crappy, system in its place so as to further enrich our betters. This interview usefully unpacks, in layperson English, some of the false claims made about the program as well the implications of various “reform” measures.
By Lynn Parramore, Senior Research Analyst at the Institute for New Economic Thinking. Originally published at the Institute for New Economic Thinking website
Besides death and taxes, there’s one more thing you can be sure of: Americans like the Social Security program — a lot. The vast majority, despite partisanship and political rhetoric, seem to agree that a secure retirement is a good thing: Poll after poll shows that voters in the U.S. — across the aisle — strongly support Social Security and do not want to see the program cut. A whopping 9 out of 10 of them who receive benefits have a favorable view of the program. Another 80% are opposed to raising the retirement age, and the majority would like to see wealthy citizens pay more taxes on their earnings to strengthen the program.
That’s what actual people think in America.
Politicians eyeing Washington (and listening to big money donors), not so much. For them, what voters want often fades from focus, the tune changing as the political winds blow. Biden once supported cutting Social Security, now he says he wants to expand it. Donald Trump once wanted to privatize the program and called it a Ponzi scheme, now he bashes fellow Republicans for demanding changes and cuts. Ron DeSantis has talked about changing (code for cutting) the program for younger Americans, now he blasts Nikki Haley for promising to raise the retirement age for young folks if she’s elected.
In the following deep dive with the Institute for New Economic Thinking, Social Security expert Eric Laursen, author of The People’s Pension: The Struggle to Defend Social Security, dissects the rhetoric and realities of the popular program, confronting questionable claims, debunking myths, and scrutinizing misinformation around solvency. He unveils sneak attacks on Social Security that come in the form of harmless-sounding ideas like means-testing, and he exposes political ploys disguised as deficit reduction. For Laursen, Social Security is part of the glue that holds us all together — and this is no time for America to come further undone.
Lynn Parramore: Once upon a time, Donald Trump called for privatizing Social Security and raising the retirement age to seventy. Nowadays, he criticizes fellow Republicans pushing for program cuts, setting himself apart from other GOP presidential candidates. How do you view his changing stance?
Eric Laursen: Back in 2016, as a Republican nominee, Trump was the only one to not endorse “reform” of Social Security. I remember one debate very vividly when Jeb Bush and the rest of them were all talking about it and Trump said, “You’re crazy!” So you’re right, in recent years he’s really distinguished himself among his fellow Republicans in taking that stance. Frankly, it may speak to the fact that he was a more astute political candidate than any of them. It also really has to do with how the Republican Party has aged. Trump has been reading his audience better than the rest of them on this, and the older voters seem to appreciate it. Whether he really believes what he says or not is a whole other thing, but Republican voters in general seem to appreciate his position.
LP: Trump has made some pretty odd statements about why he doesn’t favor cutting Social Security, saying at a recent Fox event that he would tap into domestic oil and gas to pay for any future shortfalls. Is that realistic?
EL: No, it isn’t. The idea that you could use some portion of oil and gas revenues does not reflect the economics of Social Security or the way the program works.
LP: When Florida Governor Ron DeSantis recently spoke about Social Security in Iowa, he seemed to avoid talking directly about cuts. Instead, he expressed the view that Social Security Disability Insurance (SSDI), the part of the program that pays monthly benefits to disabled workers and certain family members, was rife with fraud. Is that true?
EL: This is what they’ve been saying forever, and no, it’s not true. If you actually look at the overall rate, the cases of fraud are pretty few and far between. Usually, they cite some numbers that sound really frightening, but if you look at the actual percentage of all beneficiaries, it’s tiny. The real problem with disability insurance is that it’s an enormously complicated system and how it’s handled varies from state to state. People asking for benefits face a woeful lack of administrative law judges in the system, and they’re the ones who have to make rulings on claims. That problem is due to Republican congresses consistently cutting the Social Security Administration’s administrative budget. It’s underfunded and there aren’t enough judges to handle claims. The rules of the disability system in this country make it very tough to claim benefits to begin with. It takes a long time. Some people die before they got their claims adjudicated.
LP: We know by now that long COVID can cause serious mental and physical health issues, but reports show that workers have a particularly difficult time getting disability benefits for it.
EL: Yes, and even if your application goes favorably, you have to expect that you’re not going to actually see any money for a year and a half to two years. If you’ve got long Covid, obviously this is a problem.
In DeSantis’s case, he’s beating a horse that the Republicans have been beating ever since Reagan. They’re essentially treating SSDI not as an insurance program, but as if it’s some type of welfare system, which it is not. It’s a very cynical ploy.
LP: Thinking of Social Security as welfare seems to be a common misperception, despite the fact that everyone working pays for this insurance to be there if they become too impaired to work.
EL: Right. And going back to Trump for a moment, this is one of the areas where his hypocrisy emerges. He says, “I’m the one who’s going to defend Social Security for you.” But he’s attacked disability benefits. It’s the long-time whipping boy for fiscal conservatives who don’t want to attack Social Security directly. This position that disability benefits are wasteful and people are getting money who are not really disabled has been a somewhat safer political tack to take if you don’t want to be seen as attacking the whole program.
Both DeSantis and Haley are similar in that they will say in broad terms, “I’m not going to take your Social Security away from you” and so forth. But when they actually drill a little bit deeper, they do start talking about taking benefits away from younger generations. Haley has talked about this, referring to her kids who are in their 20s and the need to revisit Social Security for them. DeSantis also says he’ll change the program for younger people. They try to play it as if that’s not an attack on Social Security, but it is just that. The stark reality is that younger people are the ones who are going to need Social Security even more because they’re not going to have pensions. They’re only going to have 401(k)s, if that.
LP: If they aren’t raiding those 401(k)s to pay off their student loans…
EL: Right. It’s becoming harder and harder for younger people to save. It’s harder and harder to own a home, which is really people’s primary way of saving in this country. I would say politicians are underestimating people’s intelligence if they think they are going to buy the idea of just keeping the program as it is for the current retirees but making changes for the younger people.
LP: Nikki Haley consistently talks about Social Security going bankrupt. Is it true?
EL: No, that is not correct. First of all, technically, it’s not possible for Social Security to go bankrupt. The closest you could come is that it possibly could become insolvent, which means that it’s not bringing in enough money to pay out current benefits. But even that is not really accurate, because by law, if Social Security didn’t have enough money to pay its current benefits in 2033, for example, benefits would be cut automatically to the point where they could be paid.
LP: So the law is clear that even if there was a shortfall someday in the future – which is not a certainty — people wouldn’t suddenly stop getting checks.
ER: Yes, and at that point, Congress would have to decide whether to enact changes to preserve benefits. It wouldn’t actually go bankrupt.
LP: Let’s talk about what Congress could do to prevent this from happening. The maximum earnings subject to Social Security taxes in 2024 stands at $168,600. Many argue that raising this cap would deal with any possible future funding shortfall. What’s your take?
ER: The earnings cap is ridiculously low. Raising it would solve an awful lot of the problem. But the key thing to remember about Social Security’s finances is that the last time the program was seriously restructured or revamped was 40 years ago, in 1983. When that was done, the expectation was that they were going to be making it solvent for the next 75 years, at least. But they didn’t anticipate the wage stagnation American workers have faced since then. Shrinking wages means shrinking contributions from employers’ and employees’ paychecks, so that 75-year horizon has shrunk and shrunk.
Wage stagnation is the real culprit here. People are simply not earning what they used to, which is a problem exogenous to Social Security itself. If you want to strengthen the program, you’d really be looking at wage stagnation. I’m all for raising the cap, but American workers’ wages are the key. None of these presidential candidates we’ve discussed is suggesting anything that’s going to address that.
LP: Let’s turn to the other side of the aisle. Biden has talked about raising the cap and even expanding benefits. But if you go back into his history, he wasn’t always so supportive of the program. Biden called for cuts to the program in the ’70s and ’80s, and he stated that he was open to reforms that would reduce benefits in 2005. How do you view his changing positions?
EL: You’re right, in the ’80s Biden worked closely with Bob Dole on these issues. At the time, it wasn’t so much Social Security that was the issue but this idea that the deficit was so damn high that we had to do something about it. There was a huge obsession about that in Washington. The idea was that if you don’t put Social Security into the mix, you can’t cut the overall debt and the overall deficit.
LP: Does Social Security actually contribute to the deficit?
EL. No, it doesn’t. Social Security doesn’t contribute to the deficit or the debt. It’s self-financing.
You can argue that, well, the money that goes in each year is used for other things since it’s invested in Treasury bonds, but the reality is that the program supports itself.
If you want to use Social Security as a way to bring down the debt or the deficit, you have to basically cut benefits and keep payroll taxes where they are so that more of that money can be used to fund other government activities, or retire debt. That was opposed by progressives in the ’80s because it treats Social Security like it’s any other part of the budget, which means that it’s cuttable, that the benefits are not guaranteed and you can’t rely on them. Treating Social Security in this way breaks down the wall that protects it, and that’s what was so dangerous about what politicians were doing back then. But eventually, the deficit obsession receded and pretty soon you had Dick Cheney saying that deficits don’t matter!
Since then, Biden has remodeled himself as Working Class Joe, the defender of unions, which he never really was before. But that is part of his political persona now, and it has been for quite a few years. When he says that he is opposed to cutting Social Security, what it means is that his political calculation tells him that that’s the position he has to take. That’s a fairly serious thing. If he understands that as a political fact for his life, then he will he will stick with it, at least until the political landscape seriously changes.
LP: Yet now it looks like that deficit obsession is emerging again.
EL: Yes. You had a kind of milestone a year ago when Kevin McCarthy, then the House Speaker, endorsed the idea of a fiscal commission, which would put everything on the table to reduce the deficit. That’s something that Republicans have broadly supported. The term “fiscal commission” is code for throwing Social Security into the mix, just the way they tried in the ’80s.
LP: Many will recall something like that under Obama, when Erskine Bowles, a Democrat, co-chaired a deficit commission with Republican Alan Simpson. They were both very much attacking Social Security.
EL: Yeah, exactly. Although the Bowles-Simpson Commission failed, Obama himself courted Republicans on a deficit reduction deal in 2011 and 2012. He boosted the replacement of the current CPI formula with what’s known as the “chained CPI,” which is something that Nikki Haley has endorsed.
LP: The chained CPI idea refers to changing cost-of-living adjustments to Social Security to follow this revised version of the consumer price index, which adjusts more slowly to rising prices. How would using it affect the program?
EL: Using the chained CPI would drastically cut benefits over time. It would make Social Security less and less significant as a bulwark against poverty.
LP: Proponents claim it’s a more accurate reflection of inflation than the regular CPI measure currently in use. Is it?
EL: It’s not more accurate for elderly people, for whom health care costs and housing costs loom much larger. But now that Haley has endorsed this zombie idea, it’s back again. My point about the deficit now is that since it was an obsession in the ’80s – and Joe Biden really bought into that obsession — I can’t be confident that he wouldn’t follow that particular siren song again.
LP: And once re-elected, we can’t be sure what he would do.
EL: Right.
LP: Speaking more broadly of the party, Democrats today are pretty vocal about supporting Social Security. Senator Bernie Sanders and Senator Elizabeth Warren introduced the Social Security Expansion Act in February 2023 to provide updates and increase benefits, reflecting the reality that voters like the idea of expanding the program. Yet their plan doesn’t seem to get traction. Why aren’t Democrats making sure that it does?
EL: Ideas about updating and expanding Social Security have been around for a while now. Sanders endorsed them back in 2016. Hillary Clinton even somewhat cautiously endorsed them then. But yeah, they keep getting pulled off the table, partly because people keep raising this idea of Social Security going bankrupt. They say, how can we improve benefits when Social Security is going to go bankrupt, etc?
LP: Even though, as you noted, the program can’t technically go bankrupt.
EL: That’s correct. And they’d say it even though some of the updates we’re talking about in terms of a minimum benefit or raising benefits modestly for everybody wouldn’t actually contribute much to any possible future shortfall. But this bankruptcy claim just always comes up. Frankly, there aren’t enough politicians, even in the Democratic Party, who have that much commitment to Social Security. If you talk to Bernie Sanders, he’s pretty committed, but even in 2016, Hillary Clinton was really cautious about it. Al Gore could talk about it in 2000 because there was a budget surplus and this kind of thing seemed much more doable in Washington terms. But now the Democrats aren’t really serious about it.
LP: Another idea surfacing in this presidential cycle is means-testing — doing away with benefits for wealthy people in the name of saving money. Some Democrats have looked on it positively even though the idea is more associated with the GOP. In 2011, when Obama was talking about that chained CPI you mentioned, he also talked about means-testing Medicare. Recently, Nikki Haley has been touting means-testing for Social Security. What’s your view on it?
EL: Well, it’s an attack on the program. There are a hell of a lot of billionaires in the United States now, but if they all gave up all their benefits, it really wouldn’t make a whole lot of difference in terms of Social Security’s fiscal situation. It’s just not enough.
LP: The rich people only get a couple thousand a month like everybody else. Drop in the bucket.
EL: Right. The other problem is more fundamentally political. Talking about means-testing is something that sounds good and sounds fair, but Social Security is a social insurance program. The idea is that everybody pays in and everybody gets benefits. In a modest way, it’s part of the glue of our society
LP: Like everybody pays taxes to support public schools, and you can send your kids no matter what your income is.
EL: Yes. It’s one of the more egalitarian things in a less and less egalitarian society. The problem is that if you means-test Social Security, then upper-income people no longer have any stake in it. Social Security effectively becomes a welfare program. And welfare programs in this country get cut.
LP: And stigmatized.
EL: Exactly. If you can means-test it for people in the top 5%, then what’s to stop you from means-testing it for people in the top 10% a few years later? Or the top 15%? On and on it goes, because essentially, politicians can always look at the remaining population that gets it and say, well, they don’t really need this, or they don’t really need this much. That’s how the cycle works.
It’s really about attacking the whole idea of social insurance. The idea that you are entitled to something simply because you have been a working person is a problem philosophically for Republicans. That’s why they love means-testing. Nikki Haley started talking about this maybe three or four months ago when it was looking like her profile was growing. She was assiduously courting the billionaire class. You had Ken Langone of Home Depot talking enthusiastically about her, and he was coupling that very specifically with her stand on Social Security, saying, hey, I’m a billionaire. It’s ridiculous that I get benefits, etc. Haley knew her audience very well.
When you start talking about the deficit, and you start talking about means-testing Social Security, you’re going to appeal to the billionaire class and a good part of the Washington policy-making and pundit community.
LP: Let’s talk about what Social Security means to different generations. A recent article in Business Insider highlighted increasing rates of homelessness among younger baby boomers who can’t keep up with the high costs of growing older in America. The author suggested that current Social Security payments aren’t enough to prevent this. What do you think?
EL: We need to expand benefits, but a really big part of the problem is the lack of long-term care. You’ve got a population living increasingly to ages where they simply can’t live on their own so they get shuttled around, or at worst end up homeless. There’s a desperate need for a viable long-term care benefit program in this country. Long-term care insurance is a classic case of a failure of the private sector. It’s something it can’t do. This type of insurance is incredibly expensive — if you can get it at all.
LP: And even if you have it, insurance companies often find ways to avoid paying claims when you need it.
ER: Yes, they’re fighting tooth and nail not to pay. But the debate about Social Security’s fiscal situation has made it really difficult to even talk about things like this. On the state level, there have been attempts to enact some kind of long-term care insurance, but they have not worked. It is expensive, but it’s something we’re going to have to face unless we want to have more people living on the streets.
LP: How about younger people who may not think the issue of Social Security is that urgent for them?
ER: I find it ironic that people in their late 20s or early 30s would think this is not their issue when so many of them are living with their parents. They may never own a home. With the gig economy, there’s more working under the table, which impacts Social Security contributions and benefits. Social Security urgently needs to be updated to address these issues, but the whole bankruptcy discussion over the last 40 years keeps sucking the air out of the room. There’s no movement on the federal level.
LP: What, in your view, is the most important thing we need to do to update the program itself?
ER: If we’re talking strictly about Social Security, there are two things. Number one is that there should be a modest boost in benefits at all levels, because Social Security, right now, on average, only meets maybe 32% of one’s income needs in retirement. That’s not enough. So that needs to be improved. Secondly, there needs to be a more effective minimum benefit that will keep people out of poverty. Supplemental Security Income (SSI) does that to some extent, but it’s a really patchwork system that’s constantly under attack. If you want to have something that would specifically keep people above the poverty level, it needs to be done within Social Security, within the old age income system. Otherwise, it’s too vulnerable.
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This is a hugely important issue, IMO. We have had so much disinformation and lies about SSI and SSDI over the years, it seems the politricksters and the sycophant-stenographers of the MassMedia are softening up the public for another act of kleptocracy: steal and privatize what is left of any public good, like SSI and Medicare.
Congress is bought and paid for, so they will ultimately do the bidding of their bribe-masters. The evidence of bipartisan plans to gut SS and/or privatize it is pointed out in the post. Also, since FICA withholding is a separate revenue stream, how has Congress got away with raiding the fund, and then claiming it’s gonna go bankrupt? This looks like a set-up.
And, since benefits have fallen so far behind inflation for many years, it looks like taxpayers are getting ripped off that way as well.
Also, the narrowly-framed narrative is always “the deficit”, “we’re broke”, “govt. shutdown looming” “budget crisis” then, when it comes time to fund Israeli genocide of Palestine, fund Ukro-Nazis, over a trillion for weapons/war/security/surveillance every year – there is an endless supply of funds. Funny how that works.
“…since FICA withholding is a separate revenue stream, how has Congress got away with raiding the fund, and then claiming it’s gonna go bankrupt? This looks like a set-up.”
IIRC, the means of raiding the SS fund was by borrowing from it and then replacing the funds taken with T-bonds. So they spend the money that they borrow for things like tax cuts or wars, or something, and then claim that the interest on the funds taken is a drag on the budget. By some sleight of hand, they then say that the program as a whole is a part of regular budgetary income and can therefore be cut accordingly. It is a set up, and one that is so easily pointed out that one has to wonder who buys it, because I don’t actually think anyone does. Simpson Bowles was a disaster for this very reason, and it hurt Obama badly enough that I suspect that is what Biden actually remembers.
Well put, thank you. Sleight of hand trickery, of course, bipartisan kleptocracy strikes again
That was the whole point of Dole’s SS “compromise” back in the 80s- Increase FICA contributions, put funds into treasuries & then raid the “Trust” fund.
SS meets only 32% of the income needs of upper middle class people. Anybody got a ready figure for what % of elderly people live entirely on their SS?
A lot.
Table 1.
Number of people receiving Social Security, Supplemental Security Income (SSI), or both, December 2023 (in thousands)
Type of beneficiary Total Social Security only SSI only Both Social Security and SSI
All beneficiaries 71,603 64,177 4,921 2,505
Aged 65 or older 54,426 52,023 1,033 1,370
Disabled, under age 65 a 11,587 6,565 3,887 1,135
Other b 5,589 5,589 . . . . . .
SOURCES: Social Security Administration, Master Beneficiary Record and Supplemental Security Record, 100 percent data.
https://www.ssa.gov/policy/docs/quickfacts/stat_snapshot/
I can fix Social Security tomorrow–put a trillion dollars in the trust fund (or, if you prefer, $100 billion a year for the net ten years). Problem solved.
What that you say about the deficit? Does it matter if it’s $34 trillion or $35 trillion? How would you know the difference. . .
40.2 percent
A plurality of older Americans, 40.2 percent, only receive income from Social Security in retirement
https://www.nirsonline.org/2020/01/new-report-40-of-older-americans-rely-solely-on-social-security-for-retirement-income/
Thank you!
It makes a big difference also if you outright own your own lodgings or are still paying rent or a mortgage. SS is not adequate by itself for people in the latter category.
Of the other 60%, who have some income in addition to Social Security, I wonder for how many Social Security accounts for 50, 60, 70 or 80 percent of their incomes. To say that SS comes to only 32% of Americans’ retirement income just doesn’t tell the whole multi-faceted story at all.
I get SS and a retired teachers pension. My teachers pension is double my SS benefit. I apparently fit right into the stats.I have two children that are now grown up and on their own. I based my retirement on when they were going to graduate from college. Before they graduated from college I wasn’t able to save much money.I unlike many parents helped them financially so they didn’t have a lot if debt after graduation. That in effect was their inheritance. Since they are on their own I can now save. I live off of my pension and save my SS benefit. If I stay healthy they will inherit my savings and assets. It all hinges on staying healthy.
May you have robust health all your days!!!
The fact is that in the past few years before my social security payments kicked in, I reckon I lost about 40% of the buying power of my annuity, and we are on an odd bi-flationary front now, where expensive items such as houses and cars are actually going down in price, while most everything else is going up.
The easy way for our er, leaders to do away with SS is simply to remain on course to where a couple grand will buy a week’s worth of food.
That is where we are headed, methinks.
Gee, what happens when by presidential fiat, a country stops importing cheap grain from Russia, as well as multiple types of fertilizers, metals, uranium, crude oil, refined diesel and blocks any derivative trade by seizing a trade partner’s reserves held in its banks?
Do
A. Prices for food go down?
B. Go up?
FJB! Trump may be an egotistical a**hole,
but that’s who we are going to vote for.
We were far more secure and better off financially when he was president. 9 out of 10 of our friends in Berkeley are going to do the same, including an ex Black Panther, a university professor and a Honduran migrant.
Sparing on SS. Amazing that they go on about something I have paid into my entire working life – full weight as I never passed that income bar that let me get a break in my rate – but now it just boggles the mind how twisted our bribed and political class is somehow calling it welfare when they are really whinning -like the financial titans always do – how are we to make a buck if we got this large chunk of cash in public hands —
We already got education and elected office pretty much off limits to anybody trying to get by through their own hard earned efforts via the financialization of those two pillars of democracy — got to pay to play – got to spend your time begging from the donor class – seems the only way to do that is to be able giving the lip service of giving a damn about the “we the people” and democracy — you want an education-pay the financial class and rentiers, you want a place to live – pay up sucker.
We are in a democracy of corporations and profiteers – the rest need to live as serfs. How else to explain the presidential choice coming up between a coward and a prostitute. You got Biden telling us how he is helping those indebted students when it was his push for a bill that made higher education so expensive and did not allow for bankruptcy. No wonder you got people thinking that a coward is being so picked upon he is doing it for you all
It appears to me that these two schmucks only care about how the Mega-PR campaigns will result in their appearance in history –
the coward as a brave man of integrity the whipping boy who is standing up for you poor misunderstood…..Barnum was right – a sucker every second
And then you got the corporate prostitute wanting to be the Guy who saved democracy, the next FDR, and if you don’t vote for him because this is how he wants to be remembered – then you don’t deserve democracy.
Of course, we (apologies for the use of we) can’t hold these two professional con-men (politicians) to account for anything, because the two parties have locked themselves in financially.
We have come a long ways from our founding – to think that in the emoluments – a large push against corporations was made to include corporations in the clause . — now it is the major source of funding for office.
And then we got Citizens United where cash is speech – how do you give corporations a say in we the people – what ever can they say in unified voice… given they are made up of diverse sets of people – what do they have to add except their self interest or to amplify the speech (give a double voice) for the owners of the corporation – WTF
This, I guess, leads people into politics not to represent the majority and the common good but, only self aggrandizement and financial gain.
No wonder their is such anger and frustration by the body public in it’s long fight against financial parasitism
I wish they’d answered the question about how much raising or eliminating the maximum earnings subject to Social Security taxes would help.
Depending on how it was implemented, according to the Congressional Research Service, it could cover up to 73% of the long-term deficit. Totally funding the program would require an increase in FICA of about another 1%.
Or, as pointed out above, we could just create the money to keep benefits whole. That’s what Alan Greenspan told Paul Ryan back in 2005.
What I don’t get is why would the billionaire class care one way or another about social security. It doesn’t cost them anything.
A successful government program might make the non-wealthy realize the power of government. They might take hold of that power. Then they might start wondering why we need billionaires.
They want the plebs to be reduced to debt peonage, thus utterly powerless and dependent. A nation of debt peons can hardly be called a democracy. Neo-feudalism?
My explanation is ‘to ever increase the reserve army of the unemployed”. Employers who have faithful and loyal workers who work their rear ends off without questioning anything really gnash their teeth when these servants retire when their SS kicks in ergo the hate. They do not want anyone to be able to retire, they want them to work till they die or can no longer function. This was how it once was before SS legislation was passed.
It’s time to tax all earnings (including unearned income such as interest, capital gains) to add revenues into the social security fund. Then there would be a surplus in the fund and these crooked politicians will shut up about it going broke.
What about pension contributions and 401K matches? Those get made with no SS tax attached also. You might have to fight the unions to take money from THEIR retirement funds to give others.
The privatization of retirement pensions was a genius move on the part of the ruling class. It makes working-class people dependent on the stock market to fund their retirement, thus co-opts them by bringing them into the financial system of casino capitalism, turning them from a potential proletarian revolutionary force into staunch bourgeois defenders of the status quo. “Better to have them inside the tent pissing out, than outside the tent pissing in.”
Even though they’re very unlikely to win very much in this rigged game of 401ks, and quite likely to lose a lot, they can’t afford the risk. It’s a prisoner’s dilemma: the possibility of getting an adequate retirement income from their 401k, however remote, is far preferable to the certainty of getting nothing should they not invest. So on average, they choose to play the rigged game rather than demand the rules be changed.
Like the Borg from Star Trek, capitalism attempted to destroy all opposition by assimilating everything. No one is allowed to be outside the system. Everyone is bought off by giving them a stake in the system. Never mind if their stake is infinitesimal and they’re only minor players whose main role is to lose to the major players. They’re in, and the cost of opting out is prohibitively high.
I doubt that. They will then start talking about how their money pays for “YOUR” cushy retirement. IIRC this was precisely the reason why FDR supported the ceiling. This would be particularly true of the PMC in the $300,000 and upwards salary range. These people would be easier to recruit because the rich are excellent at producing bogus charts and figures and numbers to ‘prove’ to them that SS is really a tax above all other taxes taken out of your private wealth to give to the poor. I once had a long and weary harangue with a Specialty Physician cousin of mine who came here in the 1980s after studying medicine on the tax payer dime in India. In this harangue he kept repeating the GOP talking point that “when SS was started there were x number of people paying into the system and only x-y number of people receiving it but today …blah blah”. The guy is addicted to Faux TV and gets his daily dose there. I was particularly struck by how he could cared less that he himself was going to get his SS but was hysterical about the ‘less’ deserving getting it as well. I have a similar Physician cousin in the UK who thinks most homeless and disadvantaged people are ‘bums’ and every time I try to talk to him about the NHS from where he retired as a Consultant and still works part-time he usually changes the subject. The PMC and bourgeoisie are really more worst enemies of themselves than the MAGA crowd.
“Right. It’s becoming harder and harder for younger people to save.”
Maybe because 15.3% of their income is siphoned off for Social Security and Medicare, a MUCH higher percentage than most recipients paid? Look, I’m older and benefitting from SS payments, but the fact remains: the system is a bad deal for young people.
If they all worked for the commonwealth of Massachusetts, which does not take part in Social Security, and took the 401a program that sets aside about 14.3% of income for retirement, they would be much better off.
No unsubstantiated assertions.
First, the reason for low-seeming Social Security payouts is that they are generally set to exceed inflation by 2%. We were in an abnormally low inflation era due to the aftermath of the global financial crisis, and then the government relying on ZIRP, which gooses asset prices, rather than net fiscal spending on the real economy.
Second, do you seriously think most people would voluntarily save enough???? Nearly 60% of Americans live paycheck to paycheck. Social Security assures they have something to fall back on in their retirement.
And that’s before getting to the fact that any private investment scheme is operationally more inefficient than Social Security. 401(ks) are notoriously bad for hidden fees, scheme manager grifting by unconscionable lags in moving funds from one fund to another (at best, abusing the float, at worst, stealing by gaming the marks), and limited/poor investment alternatives, particularly overpriced, dodgy performance one like target date funds.
So you are promoting making Wall Street richer, Nicely done.
“There are a hell of a lot of billionaires in the United States now, but if they all gave up all their benefits, it really wouldn’t make a whole lot of difference in terms of Social Security’s fiscal situation.”
This is SO disingenuous it’s infuriating. But stick with billionaires for a moment. Bill Gates qualifies for Medicare, as does Warren Buffett. Who pays for their Medicare Part A? My students earning minimum wage. This is indefensible. Perhaps we could have a Presidential Medal recognizing those wealthy people who voluntarily cut themselves off from mulcting the young? Status matters more than money to that crowd.
Second: minimum household wealth required to be in the 1% is about 10,000,000. Quite a few more households than a few billionaires. With about 123MM households, this corresponds to about 1.2million households in the top 1%. Because older people are wealthier, we can be sure that an over represented number of these households are receiving social security.
They don’t need the money. The young people being taxed to support them do. If we take the max SS payment, $3800, and assume that 40% of the 1% are receiving that amount of benefits monthly, that would be about 500,000 households getting about 1.9Billion monthly, 23 billion annually. That might be only 1.5% of the total annual expenditure in 2023of 1.4Trillion, but it would help extend the date when benefits get cut for everybody, including the poor elderly who really need the money, by a year or two.
Let’s do it.
Let’s not do it. I’m not sure you read the whole interview, Thomas Schmidt, because your argument for means-testing was addressed, as follows:
“EL: Right. The other problem is more fundamentally political. Talking about means-testing is something that sounds good and sounds fair, but Social Security is a social insurance program. The idea is that everybody pays in and everybody gets benefits. In a modest way, it’s part of the glue of our society.
LP: Like everybody pays taxes to support public schools, and you can send your kids no matter what your income is.
EL: Yes. It’s one of the more egalitarian things in a less and less egalitarian society. The problem is that if you means-test Social Security, then upper-income people no longer have any stake in it. Social Security effectively becomes a welfare program. And welfare programs in this country get cut.
LP: And stigmatized.
EL: Exactly. If you can means-test it for people in the top 5%, then what’s to stop you from means-testing it for people in the top 10% a few years later? Or the top 15%? On and on it goes, because essentially, politicians can always look at the remaining population that gets it and say, well, they don’t really need this, or they don’t really need this much. That’s how the cycle works.
It’s really about attacking the whole idea of social insurance. The idea that you are entitled to something simply because you have been a working person is a problem philosophically for Republicans. That’s why they love means-testing. Nikki Haley started talking about this maybe three or four months ago when it was looking like her profile was growing. She was assiduously courting the billionaire class. You had Ken Langone of Home Depot talking enthusiastically about her, and he was coupling that very specifically with her stand on Social Security, saying, hey, I’m a billionaire. It’s ridiculous that I get benefits, etc. Haley knew her audience very well.
When you start talking about the deficit, and you start talking about means-testing Social Security, you’re going to appeal to the billionaire class and a good part of the Washington policy-making and pundit community.”
Yes, this is the old tired Jay Gould argument about hiring one half of the working class to kill the other half which is what you are advocating in a more diplomatic way. Also, the sleight of hand usage in drawing attention to ‘rich billionaires’ not deserving Medicare and SS falls flat. You are basically pitting one group of society against the other. If you have a better suggestion to make besides ‘market’ solutions like your 401a then please make them.
I have been applying for disability via SSDI for years now, and my experience suggests that disability fraud via the Social Security Administration (SSA) is nearly impossible. Administrative law judges and the SSA’s lawyers are very thorough, and fraudulent applications will be stamped out. If you have the ability to successfully trick the SSA in granting your fraudulent disability, you would be better served using that ability to defraud somebody within the sprawling DoD and the Military Industrial Complex, with its multi-trillion dollar budget.
Another notable problem of SSDI is it shares numerous similarities to commercial insurance. Finance and insurance really only “work” (i.e. funnel money to those who already have money) by exploitation of the poor and laborers. Nevertheless, the complexity of SSDI is deliberately diabolical in part because the SSA absolutely does not want to misappropriate money to those lazy and fraudulently disabled individuals. If only the rest of the federal government would have employees like those at the SSA who fastidiously account for where money goes.
Did you hire a lawyer to push your case, or handle it yourself? I’ve heard it’s fantastically difficult to get approved. I’m sorry to read of your problem.
My late brother had brain cancer and got turned down twice for SSDI, the third time was a charm after he hired a lawyer.
Initially, I took care of the SSDI application myself. As the appeals go higher and higher, the legal processes become increasingly Kafkaesque. By the time I got to the federal district court level, I had the wherewithal to write a petition to the court, but I realized I needed a disability lawyer, particularly one with experience at the federal level. Disability cases almost always end at the federal district court level or the appeals circuit court level, before being remanded to the lower court to fix things. The Supreme Court pretty much never hears disability cases.
This process is diabolically (and perhaps deliberately) complex. No mortal can navigate the byzantine structure. In KLG’s post earlier today about science and power, I make a comment about the nature of my medical problems in regards to Long Covid.
Thanks for the perspective. I hope I never need it.
Six offices, Five cities, four levels of appeals, three years, two states, and finally one disability lawyer. This is not including at least a decade of personal medical records and retesting and re-examination of everything by the government including my hearing twice. Meaning four doctors as well.
Disability fraud my posterior.
Though Laursen mentioned SS is popular, he certainly knows the SSA is also efficient with comparatively low administrative costs. The combination of an efficient government agency with popular support is what the 1% despises because the people might begin to posit the dangerous idea that government should have an even bigger role improving society; M4A for example.
Privatizing SS has appeal among the wealthy. Of course, wealthy individuals are often associated with the companies they created. They deserve some credit even though they are reluctant to admit that the technology, like computers and everything in an iPhone, was created by government funding and planning; not them.
Other wealthy types in finance like private equity and hedge funds are parasitic, employing few people compared to how much wealth they suck out of the economy.
SS is the mother of all cash flows. Tens of $billions are withdrawn from paychecks each month and tens of $billions are paid out to beneficiaries; $1.4T per year.
Private corporations would love to put themselves in the middle of this transaction. No doubt, extracting generous fees for themselves, as well as persuading some workers to invest their funds into the stock market, with more fees attached, of course. This sort of cash flow would also place a floor below the stock market which, no doubt, will benefit the wealthy more than anyone else.