Photo: Social Security Protest at White House
With Republicans now in control of both houses of Congress, the current president already on record as supported cuts in Social Security and Medicare, and all signs pointing to the likelihood that the 2016 election could bring us either a neo-liberal or a neo-conservative president, and an increasingly Republican-dominated Congress, it’s time for an aggressive mass movement built around defending and expanding both those critical public funding programs.
The first step is getting out the truth that Social Security is not broke or doomed, but simply needs to be better funded by ending the free pass given to the wealthy. Simply eliminating the cap on income subject to the FICA tax, currently set at the first $118,500 of earned income, would make the system fully able to pay all promised benefits for the next century or more. Extending the tax to cover unearned income — basically capital gains (a tax that only impacts the wealthy) would allow for an expansion of benefits.
There is today $2.8 trillion in the Social Security Trust Fund, a fund that was created by a compromise reform reached by President Ronald Reagan and a Democratic Congress led by House Speaker Tip O’Neill back in 1983. The idea at the time was to have Baby Boomers and their employers pay more into the system ahead of the time they would be retiring, when their numbers would place a burden on current workers (the Boomers’ kids and grandkids), since the system has always since its inception financed current retirees’ benefits through current workers’ FICA payroll tax payments. (The reform also raised the full retirement gradually from 65 to 66 and later to 67 for people born after 1964.)
That advance funding of Boomer retiree benefits is now starting to be tappedbut that is what was supposed to happen to it, a point the doom-sayers and political scare-mongers fail to mention. It turns out, though, that the advance funding was not large enough for several reasons. One, very positive, is that people are living longer than projected because of improved nutrition and medical advances. Another is that a series of recessions and market collapses, especially during the “lost decade” of 2000-2010, caused in large part by corrupt investment banks in 2001 and by Wall Street’s mega-banks turned casinos in 2007-9, cut severely into FICA contributions, as well as into workers’ personal savings and net worth.
Right-wing and corporate propaganda to the effect that the Trust Fund is smoke and mirrors or just “IOU” scrips, is absurd. It’s true that Washington politicians promptly borrowed FICA tax revenues as soon as they came in the door to allow them to fund things like endless wars and Pentagon war-profiteers without raising taxes, but that debt is every bit as real as the federal debt held by investors in the form of treasury bills and notes. It will be covered, whether by rolling it over into new debt or by raising taxes.
In any event, as has been often pointed out, even were the fund to be exhausted in 2033 or 2034 because of inaction by Congress to boost revenue for Social Security, the system would, at the current FICA tax rate of 6.2% for employee and employer, still be able to fund 77-78% of promised benefits out into the distant future beyond the time when the last Baby Boomer has moved off to some Woodstock in the sky.
More importantly, there is no way that will happen. Why? Because the Baby Boom generation, in retirement, will constitute not just the largest block of elderly voters in the nation’s history (almost 78 million people!), but also will represent the largest elderly bloc proportionately, in history, fully 1.5 times as large a segment of the electorate as the already powerful current senior vote.
If the US is still even remotely a democracy in the 2030s, there is no way Congress would allow such a large, high-voting group of people to have their benefits cut. And this is not, as right wing critics try to claim, a war between generations. Fighting to improve Social Security and to expand Medicare to all is to benefit people of all ages. After all, what child or grandchild complains about the size of a grandparent’s Social Security check, and what grandparent wants to short change a child or grandchild? And expanding Medicare helps everyone.
And that brings us to the challenge we now face. The corporations that increasingly run Washington (thanks in no small part to the machinations of the right-wing majority of the Supreme Court and its Citizens United decision), but also to the ossification of the two political parties which now are both beholden primarily to big business, know that the Boomer generation, once all at retirement age, will be a colossal force in defense of Social Security and Medicare, and that they will also be demanding an expansion of those programs, making them both more generous and also broader in reach. And employers hate Social Security because they hate having to pay that 6.2% FICA tax on every worker’s wages. That’s why pro-business groups like the Heritage Foundation and the US Chamber of Commerce and their allies in the Republican and Democratic parties are becoming increasingly shrill in their denunciations of both programs, and in their scare stories about how both programs are facing financial crisis and need to be cut back allegedly in order to “save” them. These pro-capitalist groups and lobbyists know that the best way to prevent future expansion of these programs is to kill off the programs early, so that instead of expanding them, the public would have to try to create them anew — a much bigger challenge.
That means we Americans, old and young, need to organize and fight like hell now to defend both programs, and to demand that they be expanded.
Doing so makes sense for many reasons. Besides the basic moral one that a nation should provide health care to all, and should protect its elderly and assure them a comfortable old age, making retirement more attractive would lead to people leaving their jobs earlier, opening up opportunities for younger workers. Want evidence? Just look at the current recession, where the lowest unemployment rate is among older workers, who are clinging to their jobs because they cannot afford to quit and depend on Social Security’s meager benefits.
In much of Europe, particularly in the the north — Germany, France, Belgium, Netherlands, Denmark and the Scandinavian countries — national pension systems provide people with benefits that replace 60 percent or more of final working income, allowing them to retire without taking a hit in their living standard (lower-income workers actually get even more in retirement and may actually see their living standards rise when they retire). Compare this to the US, where the replacement rate is only about 37% of working income in retirement. And actually the difference between retirement in Europe and retirement in the US is even more dramatic because the European countries all have excellent national health programs that make health care essentially free. This means retirees in those countries have no medical costs to pay for. In the US, in contrast, retirees have Medicare premiums for doctors taken out of their Social Security checks, have to pay privately for costly Medi-gap premiums to cover the health care costs not funded by Medicare, and also have to buy prescription drug plans. By the time they’re done paying for health care or health insurance, and all the co-pays, deductibles and non-covered care costs, most US retirees who depend on Social Security for at least half of their income (that would be 90% of us), are living at subsistence levels.
Clearly it doesn’t have to be that way. Germany’s and Scandinavia’s populations are “grayer” than ours, yet they not only fund far more generous retirement programs for their elderly. They have higher living standards than we do, and manage to also compete better on world markets, actually producing goods that are sold overseas, instead of just shipping jobs abroad.
And that brings us to Medicare.
The US stands almost alone in the developed world in not having a national health program of one kind or another. Not incidentally, it also has the most expensive health care in the world, gobbling up almost 18 percent of GDP. No country approaches that level of resources spent on health care for its citizens. The next closest countries, in the 10-11% range, are Norway, Netherlands, Switzerland, Austria, Belgium, Canada, Germany, France, New Zealand and Portugal. These nations devote only two-thirds of what the US does of their national economic activity to health care, yet their health statistics (infant mortality rates, life expectancy, etc.) are if anything better than in this benighted country. And many countries with similarly good health statistics, like Britain, Ireland, Finland, Japan, Spain, Italy, Taiwan, Sweden, Greece, Hungary and Israel, spend a good deal less — in some cases as low as 6-7% of GDP — and they all provide health care to all their citizens, not just some as we do here in the US.
Clearly, Obamacare (the so-called Affordable Care Act), is not the answer, as it costs a fortune and still leaves some 30 million without access to affordable health care.
What is truly outrageous is that the US could easily move to a national health program like what all these above countries have by simply lowering the age for being eligible for Medicare — currently at 65. Now, the Medicare scare-mongers will of course immediately say this would mean higher taxes, and indeed it would. What they don’t say is that it would also eliminate health insurance premiums, for both employers and employees. As things stand, current Medicare costs taxpayers about $585 billion a year. That covers the hospital bills and other expenses for all people over 65, and for the disabled. But private insurance premiums are costing over $960 billion a year, mostly to cover the health costs of middle class Americans under the age of 65, plus the non-Medicare covered health costs of the elderly. Medicaid, a program for the poor, which is also funded by state and federal taxes, already costs another $450 billion a year. If we lowered Medicare eligibility to age zero, all those private premiums and Medicaid costs would be gone — $1.4 trillion a year — taken over by Medicare, so we could all easily afford to pay more in Medicaid payroll taxes (currently 1.2% for employees and employers). By the way, we could also wipe out $100 billion in federally funded Veterans health care, because veterans would all be covered by Medicare. And instead of blowing some 30% of national health care funds on the incredible paperwork required by private insurers, we’d be spending just 1-2% on paperwork under Medicare.
Studies show that at present, 90% of Medicare costs go for care to the 10% of the elderly who are the oldest — people in their 80s and 90s who are at the end of life. It doesn’t actually cost much, in other words, to pay for the health care of people in their early 60s or even in their 70s. It would cost even less to pay for people in their 50s, or 40s or 30s or 20s or teens. In fact, the reality is that the only group of people who have higher medical costs in their young years are women of child-bearing age. So it would actually be very inexpensive to expand Medicare downward to include everyone who isn’t old.
Why don’t we do this, creating what is essentially a Canadian-model health plan (it’s actually called Medicare in Canada, and has been working since the early 1970s, and has been backed by conservative national and provincial governments consistently through most of the intervening years because Canadian’s love it)? The answer is both ideology — conservatives hate the idea — and also control — corporations, while they complain bitterly about their health care costs, love to be the providers of health insurance. Why? Because it creates a kind of indentured servitude, on which workers are afraid to quit, afraid to risk being fired, and afraid to strike if unionized, for fear they and their families might lose their precious medical coverage.
This is a hidden cost of our obscenely expensive health care “system” in the US — a cost that workers in other modern countries don’t face, with their health care funded by the state and financed fully by taxation.
It’s time for us to organize all Americans to demand a public retirement program that will guarantee everyone a secure retirement fully funded by the government, and not dependent upon the whims of the stock and bond markets and the honesty of financial advisors and the profit-seeking investment houses who employ them. And it’s time for us to also demand a national single-payer health system that does away with the profit-sucking insurance industry by making the federal government the sole insurer and the payer, with the awesome power to negotiate reasonable fees for treatment with doctors and hospitals and other providers of health care.
If virtually every other developed country — and many less developed ones — can manage to provide cost-effective health care to all, and to fund retirement programs that people can actually live on, so can we here in the US. It’s not that government cannot do a good job of financing our health care and funding our retirement system — we see that Washington does a very good job of doing that with Medicare for the elderly and the disabled, and with Social Security. It’s that special interests like Wall Street, and right-wing ideologues in Congress and the White House eager to hand everything over to profit-making companies who bribe them, don’t want to let us do it.
That means we have to organize, retake the government, and make it happen. It’s insane that only a handful of people in Congress, like Senators Bernie Sanders (I-VT) and Elizabeth Warren (D-MA) are calling for these things!
Washington needs to be regularly clogged with masses of demonstrators demanding “Medicare for all” and “Real Social Security people can live on.” Furthermore, nobody candidate of either party who opposes single-payer health care and a doubling of Social Security benefits through higher taxes on the rich should receive a single vote in future national elections!