Why Social Security Should Be A Major Campaign Issue In Midterms
People should always be cautious about embracing conspiracy theories. But, conspiracies do exist in the world, and the one to cut Social Security is right there for those who care to look.
The basic story is straightforward. President Obama has appointed a deficit commissionto find ways to address the long-term budget deficit projected for the country. Shortly after the commission was appointed, the two co-chairs, Erskine Bowles and former Wyoming Senator Alan Simpson, both announced that they intended to put Social Security front and center on their list of targets.
This decision is perverse for many reasons. First, all the projections show that the program is fully solvent long into the future. According to the most recent projections from the Social Security trustees report, it can pay full benefits through the year 2037 with no changes whatsoever, and could still pay more than three quarters of scheduled benefits long after that date. Even if we waited twenty years, the program could be kept fully solvent for many more decades with changes no larger than those put in pace in the decade of the 80s.
Second, the near retirees for whom the commission would look to cut benefits are likely to be hugely dependent on Social Security. Few workers in their late 40s or 50s have traditional defined benefit pensions. Most accumulated little in 401(k)s and saw much of what they did save wiped out with the recent stock market plunge.
More importantly, this group has seen their home equity destroyed with the collapse of the housing bubble. This is the main source of saving for the vast majority of families. As a result, the typical family headed by someone between the ages of 55 and 64 has just $170,000 in net worth.
This is just about enough to pay off the mortgage of the typical home, leaving nothing other than Social Security as a source of retirement income. For workers age 45-54 the median net worth is $80,000, roughly enough to pay off half of the mortgage on a typical home.
It is also worth noting that many older workers will not have the option to work later in life to offset cuts in benefits. Older workers often find it difficult to get hired by businesses that don’t want someone driving up their health insurance costs. In addition, almost half of older workers have jobs that are either physically demanding or that involve difficult work conditions. Many of these workers would face serious problem working until age 70.
These are the sorts of issues that would be raised in a public debate over cutting Social Security and/or raising the retirement age, along with the fact that workers have already paid for their benefits. Unfortunately, these issues are not being debated. Even as the election season heats up, the deficit commission is operating in the backrooms. Their plan is to drop their report after the election and have a lame duck Congress—including those voted out of office—decide whether our parents will be able to enjoy a decent standard of living in retirement.
Social Security should be front and center in the congressional election this fall. Those who support cuts should get up and make their case, as should the opponents of such cuts. Then the public could decide which route it wants the country to go. This is supposed to be why we have elections.
Of course the public does not have to allow this charade. They can demand that candidates give their position on cutting Social Security. It’s actually a very simple yes or no question that even a member of Congress should be able to answer.
Dean Baker is co-director of the Center for Economic and Policy Research in Washington, DC.He received his Ph.D. in economics from the University of Michigan and is the author of several books, his latest being Taking Economics Seriously (MIT Press) which thinks through what we might gain if we took the ideological blinders off of basic economic principles