Issue Page

Why Social Security?

Scott Laczay — Fri, 07 Dec 2007 16:53:05 -0500

Every worker yearns for a dignified retirement after decades of labor. But for too many, this hope is a fading dream. Low wages and high costs make it difficult to save, corporate pensions are being eliminated and Social Security is under attack from conservatives. Backed by Wall Street financial houses, President Bush started his second term by trying to privatize Social Security. Privatization is the centerpiece of the conservative “ownership society,” which essentially shifts risk from society as a whole to individuals.

Americans took a good look at the program—and rejected it. A broad coalition formed in 2005 to dig for the facts, crystallize the message and carry that message to the American people. The attack on Social Security was turned back. But we have a long way to go before all Americans can count on dignified rest after years of hard work.

The Challenge

Scott Laczay — Fri, 07 Dec 2007 16:53:04 -0500

Social Security is designed as the bedrock—a minimum payment, adjusted for inflation, that lasts as long as you live. Half of all workers now have no pension at all other than Social Security. The program is currently in surplus but it is projected—under very cautious estimates—to fall short around the year 2052. The situation is not as dire as conservatives sometimes pretend. The Congressional Budget Office calculates that applying the payroll tax to all income – it now only applies to the first $90,000 earned—would entirely eliminate any shortfall.

Few companies provide pensions anymore. Among those that do, many have failed to set aside sufficient funds to pay what they owe. The remainder that offer any retirement plan at all do so in the form of 401(k) plans, in which the company matches a portion of funds that workers take out of their paychecks. These plans are good as far as they go, but they provide a smaller benefit. They also shift investment risk to the worker — at a time when deregulated financial markets and conservative reticence to prevent fraudulent behavior has increased that risk to an unprecedented level.

At the same time, personal savings are way down. Stagnant wages, rising gas and home heating prices, higher health insurance premiums, increased tuition costs and rising debt have left more families living paycheck to paycheck. In 2005, Americans actually spent more than they earned—something that last occurred during the Great Depression. Needless to say, few Americans are saving enough to provide for a secure retirement.

The disappearance of pensions and personal savings only heightens the importance and necessity of protecting Social Security.

Conservative Failure

Scott Laczay — Fri, 07 Dec 2007 16:53:03 -0500

In an economic environment that is already perilous for working families, the right wants to increase individual risk and decrease shared security. Under a privatized Social Security, there would be no guaranteed level or duration of income and no protection against inflation. Instead of everyone contributing to a program that secures benefits for all, each would be on their own.

Conservatives argue that Social Security provides a low return, and individuals should take responsibility for their own savings. Some will win; some will lose. But two things are certain if Social Security is privatized: everyone will pay more management fees to Wall Street firms, and more senior citizens will live in poverty. The projected Social Security shortfall will even increase. The most secure leg of retirement will be sawed off.

For conservatives, the very success of Social Security makes it a target. They hope to create more "investors" and more conservatives. They want people focused on the health of Wall Street, not the strength of our economy and our government. At the same time, conservatives have done nothing to counter the corporate rollback of pensions. They’ve refused to crack down on executives who provide themselves with luxurious pension plans even while plundering those of their workers.

Converting guaranteed pension benefits into 401(k) matches allows corporations to slip workers a backdoor pay cut. In the end, the ownership society turns retirement policy on its head—corporations get the security and individuals are left with the risk.

Progressive Solution

Scott Laczay — Fri, 07 Dec 2007 16:53:02 -0500

Progressives need to take a broad and bold approach to preserving and enhancing Social Security in order to ensure a secure retirement for all Americans.

Make the economy work. Most importantly, progressives must champion economic policies that benefit the many and not simply the few. With full employment and rising wages, Social Security’s projected shortfall can be reduced, and Americans will be able to save more and demand better retirement benefits from employers. A universal health care system would reduce the health care burden on individual families and protect seniors against soaring drug and medical costs. Improved energy policies can help Americans save more by sparing them from rapidly-rising gas and home heating prices.

Strengthen Social Security. Progressives must work to protect Social Security from future assaults. Our number one priority must be to guarantee that all American workers have access to the retirement benefits that they have earned over the course of their working lives.

Hold each generation accountable for funding Social Security. Progressives must embrace generational responsibility and advocate for increased national savings. As the baby boomers begin to retire, progressives must advance a vision for increasing national savings now to provide for future retirements. Tax cuts for the wealthy and out-of-control government spending have set the clock back on national savings.

Help Americans save. Progressives should also champion new ideas to help with personal savings. Congress has tried to help with tax deductions for retirement accounts, but this mostly helps the affluent at the top of the pay scale. These benefits should be consolidated into one tax-free savings account, in which the government provides a partial match for the savings of low-income workers (who don’t benefit from the Bush tax breaks).

Elevator Speech

Scott Laczay — Fri, 07 Dec 2007 16:53:01 -0500

Americans want and deserve a dignified retirement at the end of a lifetime of work. FDR created Social Security as a guaranteed program that we all pay into during our working years and we all withdraw from when we retire. George Bush’s ownership society would end that deal by creating private risk accounts. That may suit the rich who can afford the risk and those lucky enough to place the right bets, but it breaks the historic bargain we’ve had in this country that if you work hard during your productive years you can retire in dignity.

We can strengthen Social Security. Just require that all workers pay the same rate on their income and lift the cap that protects income over $90,000 a year and that solves any projected shortfall. An economy that grows jobs at home rather than sending them overseas, and pays decent wages, means a larger pool of contributors to the Social Security trust fund. We can require companies to keep the promises they make to employees on pensions – and mandate that the shop floor be treated like the top floor when it comes to health care and retirement benefits. We can and should encourage working people to save.

America is a rich country. There simply is no reason for American workers to live their final years in poverty. Surely the measure of a country is how they treat the vulnerable in the dawn of life and the elderly in the dusk of life. We should hold ourselves to that measure. We need to make sure people earn enough to save.