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Friday, November 3, 2023

With Shutdown Averted, Is Social Security Safe? Nope!

Taxing the rich is the best way to preserve Social Security and Medicare 


Let’s talk Social Security. The government shutdown was averted (temporarily), so that’s a good thing, right? Trump is promising not to touch it. Benefits are not threatened, right?

Wrong. Social Security has a bullseye on its back. As descendants of the New Deal leaders who created it, we recognize the warning signs, and need to shout the alarm.

The right-wing hard-liners who fired House Speaker Kevin McCarthy—without a  replacement in sight—are determined to balance the budget by reducing spending. The word “revenues” is an obscenity to them. And defense spending is sacred and untouchable.

But even if they completely eliminated every single non-defense discretionary program—from food stamps to the FBI to border protection—it wouldn’t be enough. It would add up to about $900 billion, or about 15% of total federal spending, which would fall far short of balancing the budget. So their deficit-cutting zeal must inevitably turn to what is called mandatory spending, most prominently the largest government program of all, Social Security.

Republican presidential candidates are increasingly emboldened to touch this deadly “third rail” of American politics. Nikki Haley mocked other candidates for promising not to touch Social Security. Ron DeSantis wants to “revamp” it. Mike Pence wants to privatize it, turning it over to Wall Street and adding trillions to the national debt—to replace the New Deal with a “better deal.”

And although former President Donald Trump now swears he would never harm a hair on Social Security’s head, his history renders such assurances hollow. He has previously suggested that a second Trump term would mean cuts to Social Security and Medicare

Let’s not forget that his hugest unachieved social policy goal at the end of his presidency was the complete termination of Social Security’s principal funding source, the payroll tax.

Former Speaker McCarthy proposes a national commission to examine ways to cut Social Security. The 175 members of the House Republican Study Committee have released their proposed budget for fiscal 2024, which would cut benefits by one-third, essentially transforming Social Security from an earned insurance benefit into a subsistence-level welfare benefit.

Previous threats have included plans to sunset all mandatory spending every five years (brainchild of Senate GOP campaign chair Rick Scott), or even every single year (proposed by Wisconsin Sen. Ron Johnson).

It’s true that Social Security will start having solvency problems by 2034 (according to the Social Security Administration), with retirees taking out more than current workers are putting in. To this, there are obviously only two solutions—cutting payout or increasing revenues. The Republicans in their budget acknowledge this, but they absolutely reject any whiff of the latter (here at 87-88).

For a sustainable Social Security—the most popular government program in America—taking revenues off the table is two things: 1) insanity, and 2) unshakeable Republican orthodoxy.

As Oliver Wendell Holmes counselled, revenues—i.e., taxes—“are the price we pay for civilized society.” And to fund our civilization, it’s obvious that those with the most money should pay their fair share. Americans are shocked that billionaires like Jeff Bezos and Elon Musk can get away with paying zero in federal income taxes.

Let’s not forget that during FDR’s New Deal, which rescued the nation from the Great Depression and grew the great American middle class as never before, the tax rate on the richest Americans was 90%, up from 25% under previous Republican administrations, which produced nothing but a do-nothing government, the Gilded Age, and the Depression.

So let’s make the rich pay more of their fair share for Social Security. Let’s start with eliminating the cap on earnings that are subject to the payroll tax. Currently, earnings over $160,200 are totally exempt from payroll taxes. 

That means that the CEO making $10 million stops paying the 6.2% payroll tax after the first week of the year, while his janitor pays 6.2% for the entire year. That’s an outrageous affront to ordinary working people throughout America.

Democrats in Congress are brimming with proposals to guarantee Social Security’s solvency for generations, without cutting benefits one iota. Nearly 200 House Democrats recently introduced a bill called Social Security 2100: A Sacred Trust, which would extend solvency for more than 40 yearsexpand benefits for most recipients, and even cut taxes for 23 million beneficiaries

It would fund this by imposing the 6.2% payroll tax on earned income above $400,000 (honoring Biden’s promise not to raise taxes on anyone with income under that level), and similarly taxing investment income above that level.

Senator Sheldon Whitehouse (D-R.I.) recently held a hearing on a similar bill sponsored by him and Rep. Brendan Boyle (D-Pa.), called Protecting Social Security for All: Making the Wealthy Pay Their Fair Share, ensuring Social Security’s solvency for 75 years.

Most expansively, there’s a bill by Sens. Warren and Sanders and dozens of other Senate and House members, the Social Security Expansion Act. It would not only extend solvency for more than a century, by setting the threshold for payroll and investment tax at $250,000 of annual income (the wealthiest 7% in America), but would increase benefits for Social Security recipients by an average of $2,400 a year and help reduce the federal deficit by sending some of its investment-tax revenue to the general treasury.

Yet all these simple and sustainable fixes are supported only by Democrats. It makes one wonder: what fundamentally drives Republicans’ single-minded obsession with cutting Social Security? Is it hatred of the program itself—the largest component of federal expenditures, created by the greatest Democratic President ever, amid Republican cries of “socialism”?

Or is it hatred of the notion of raising taxes on anybody, even the most obscenely rich? After all, Republican Presidents from Reagan to Trump have delighted in cutting taxes for the rich, on the thoroughly debunked theory that the money would somehow “trickle down” to ordinary Americans. 

Trump and congressional Republicans have promised more of the same if they regain power. In fact, they blatantly label all taxes as pure theft (here, at p.20). They literally laugh at the notion of taxing the wealthiest Americans, even though voters of all political stripes overwhelmingly support it.

Suffice to say that the two obsessions are conjoined. More tax giveaways to the rich simply mean less revenue, higher deficits, and more justification for taking a meat cleaver to programs that serve and protect ordinary Americans.

Former Speaker McCarthy’s “commission” idea is just another prescription for slashing Social Security benefits, according to Sen. Ron Wyden, Chair of the Senate Committee responsible for Social Security. 

McCarthy himself acknowledged that all the “cutting,” including Social Security, would “make some people uncomfortable.” Indeed, polls show overwhelming opposition to his commission, and only 2% of Republicans support cutting Social Security.

As Republican President Dwight Eisenhower warned, there may be “a tiny splinter group” of politicians who want to mess with Social Security, but “their number is negligible and they are stupid.”

Taxing the 1% to indefinitely assure modest financial security for the 99% is blindingly logical and fair, and overwhelmingly popular. Yet not a single congressional Republican—even ones in districts that Biden won—is willing to support it.

FDR was called a “traitor to his class” when he forced the “economic royalists” and the “over-privileged” to pay their fair share for programs to help ordinary people struggling to get by. He responded that he “welcomed their hatred,” because he knew he was on the right side. Indeed, Social Security passed in 1935 with overwhelming bipartisan support, 372-33 in the House. We could use a bit of that courage and bipartisanship today.

Fortunately, America’s most beloved and beleaguered government program is finally going to get a true champion—an actual Senate-confirmed leader. In the two years since President Biden fired the misbegotten Trump-holdover leadership, the agency has suffered a drastic decline in staffing, funding, and morale. 

Facing daunting challenges both from within and without, Biden’s newly announced nominee, former Maryland Gov. Martin O’Malley, will need every ounce of his legendary administrative acumen, as well as a backbone of steel.

O’Malley should come out with guns blazing—demanding a solid long-term legislative fix, and driving a stake through Republicans’ insistence that President Biden is responsible for the looming solvency crisis.

The $33 trillion national debt is a product of spending by both parties over many decades. The far right’s sudden burn-it-all-down obsession with deficit spending, after four years of happily running up record deficits under a Republican President, is a reckless and hypocritical abdication of the duty to govern and serve the ordinary people of this country. 

It signals tough times ahead for Americans’ favorite government program. Our ancestors who created Social Security 88 years ago would work their butts off to protect and strengthen it.

JAMES ROOSEVELT JR.  is the grandson of President Franklin D. Roosevelt and first lady Eleanor Roosevelt. He is also a former associate commissioner at the Social Security Administration.

HENRY SCOTT WALLACE is an attorney and foundation executive.

JUNE HOPKINS is a professor of History Emerita, Georgia Southern University, Armstrong Campus.

TOMLIN PERKINS COGGESHALL  is the grandson of Labor Secretary Frances Perkins.