Yves here. This post starts by stressing the importance of Social Security disability benefits and then goes on to focus on how the fact that real wage growth has been stagnant or negative is undermining the program.
I’d like to dwell on the Social Security disability benefits issue. I understand is hard to get through the approval hoops, even if you clearly qualify, to the degree that a friend who works in construction (disability-prone line of work) maintains that applicants are assured to be denied the first time, that they then need to hire a lawyer who works for a cut of the benefits. I have no idea if this pattern is somewhat, generally, or universally true, but the fact that Social Security imposes hurdles to restrict access to disability benefits. Yes, some of this is no doubt necessary to prevent fraud, but some of it looks to operate the way most insurance schemes do: to try to deny legitimate claims to reduce payouts.
Now what happens to this picture when Long Covid and other Covid-related increases in poor health (witness the rise in formerly rare cancers, which looks to be due to T-cell depletion) leads to a big increase in disability payouts? Will the fall in lifespans be enough of an offset from the vantage of Social Security finances?
By Lynn Parramore, Senior Research Analyst, Institute for New Economic Thinking. Originally published at the Institute for New Economic Thinking Website
Social Security is your future. And that future could come sooner than you think.
Conversations about the program often pit younger workers against retirees, but Social Security is really an intergenerational compact that boosts the well-being of Americans of all ages — that’s one of the reasons the program is so cherished.
One in five Americans receives a Social Security benefit today, and about one in three of these aren’t retired. Social Security protects young workers and their families if they become disabled, and it provides benefits to the survivors of deceased workers, including their kids. Studies show that a 20-year-old worker has a one in three chance of qualifying for disability benefits before reaching retirement age.
Today’s seniors rely on Social Security for most of their income – and younger generations without traditional pensions will need the program even more. The situation is dire: we already know that the total wealth of Millennials is lower than that of their parents and grandparents at the same age. Social Security protects the health and dignity of younger folks down the road – it’s the only guaranteed source of retirement income that isn’t subject to the vagaries of investment risk or financial market fluctuations.
Yet threats to the program are coming fast and furious, from calls to cut benefits by changing how cost-of-living adjustments are calculated to schemes to raise the retirement age (which already happened in 1983 under Reagan).
There’s one threat that gets far less attention, which has been impacting American workers since the 1970s: wages that just don’t keep up, despite increased productivity. Social Security was designed for wages that rise with inflation – but that’s not happening. In an interview with the Institute for New Economic Thinking, Eric Laursen, author of The People’s Pension: The Struggle to Defend Social Security Since Reagan, breaks down how the program works, why wage stagnation represents a mounting threat, and what can be done to strengthen and update the program for the 21stcentury.
Lynn Parramore: Social Security has been America’s most successful retirement program for the last 87 years. Yet the public is constantly hearing that the program is going to “run out of money.” Is that actually true? Can Social Security actually go bankrupt?
Eric Laursen: No, and the word bankrupt is just about a complete misnomer when it comes to Social Security. The program is funded by contributions that participants and their employers make through their paychecks. It’s also backed by a Trust Fund which is accumulated over time.
That Trust Fund is dwindling now, and it’s expected to run out of money in the early 2030s. But Social Security can’t actually go bankrupt. If the situation arises where there is not enough money either in the Trust Fund or coming through from contributions to fund current benefits, then those benefits can’t be paid, perhaps as much as 25%. In that case, Congress would be faced with a choice to either cut benefits or increase contributions.
There’s a lot of pressure from people who want to cut Social Security to do it now rather than waiting for that point in the future, because at that point, Congress would be under a lot of pressure to make good on what people have been promised.
LP: About these predictions that the Trust Fund will run out of money — does anybody really know what will be happening in 2030? Economists, after all, are actually very bad at making predictions (most didn’t see the 2007-8 crash coming, for example). We don’t actually know for certain there will be a shortfall, do we?
EL: That’s absolutely correct. Although you’d be surprised how much certainty economists assume when they make their predictions!
LP: Can you explain how the payroll tax works and how the amount of earnings that are subject to this tax makes a big difference in the whole equation? The press often doesn’t do a very good job of making it clear.
EL. Sure. The payroll tax is a 6.2 percent tax on employees and 6.2 percent for employers that is used to fund Social Security. The way the system works is a little bit convoluted, but essentially, that money goes to purchase Treasury bills, which go into the Trust Fund. Those Treasury bills are liquidated in order to pay benefits. The result is that Social Security is not like any other social benefit program in that it’s completely self-funded. It belongs to the people who put the money in. The Treasury can use the money it gets from those Treasury bills to do other things, but ultimately, those are obligations to the people who contribute to the program.
There are definitely alternatives to cutting Social Security if the Trust Fund runs out of money. For example, you could simply raise the payroll tax to some extent. This is used to scare people by critics of the system because people think “wait, raising taxes is always bad.” But the fact is that Social Security taxes have been raised repeatedly in the decades when the system was being expanded and improved in the ‘50s and ‘60s, for example, with no complaint about it. In fact, people polled consistently answer yes to the question, “Would you be willing to pay more in payroll taxes in order to keep your present Social Security level?”
It’s a myth that taxes are the third rail somehow. The importance of Social Security to people today is huge. It’s the one part of the old age benefit picture that has remained stable over the last 40 years. Employer-based pension systems have disintegrated and 401(k) plans have proved to be inadequate. People depend on Social Security more and more. Raising the payroll tax is a viable thing if it’s done in a gradual way.
LP: Isn’t that how the program was intended to work in the first place?
EL: Yes. The way the system works is that the contributions you make to Social Security only go up to a certain level of income. So if you’re making $147,000 a year—going up to $162,200 in 2023—up to that amount you pay payroll tax on your income. One of the reasons that the Trust Fund money is dwindling is that so much income of upper-income people is now above that amount. There’s a lot of income in this country that doesn’t get taxed for payroll. Some of the proposals we’ve seen from people on the Democratic side would address that.
The real reason for the shortfall doesn’t have to do with lower birth rates or life expectancies, which is what is usually discussed in the media and on the right as being the culprits. Those changes were actually pretty well understood and anticipated 40 years ago, which is the last time the program was updated in a major way. The real culprit is wage stagnation.Wages have not kept up at all with the pace they had prior to the early 1980s. This was not anticipated. The result is a system that is not bringing in money the way it formerly had.
LP: There are reports that President Biden is suggesting not only raising the cap but changing the measure of inflation to something called the CPI-E. Why is the program’s inflationary tether important and which measure do you think should be used?
EL: The CPI is what’s used to calculate increases in benefits every year. This past year we had a very big increase in benefits because the CPI jumped a lot. That was important to protect retirees from the impact of inflation.
The CPI-E is a measure developed back in the ‘80s, I believe, and it is geared particularly towards the basket of goods and services that the elderly – people over the age of 62 – use to a greater extent, like medical care and housing. The idea is to apply that to Social Security rather than the standard CPI.
On the right, there is another measure called the chained CPI, which they have been pushing. The chained CPI is designed to provide a more accurate read of inflation by more aggressively applying substitutions to the basket of goods and services. So if the price of beef is going up, the idea is that people will switch to eating chicken, so you factor that into the CPI. That slows the growth of the CPI, so it slows the growth of benefits in terms of how inflation is seen to impact elder benefits. There’s been a tug of war. The right wants chained CPI, which would slow the growth of Social Security benefits, while people on the progressive side want the CPI-E.
I’m in favor of the CPI-E. It’s a more accurate reflection of how inflation impacts the elderly. If we want to have a Social Security benefit that addresses their needs, that’s the most direct way to do it.
LP: I’m a Gen Xer born in 1970, which means that when Ronald Reagan was in office, two years of my Social Security benefits were taken away on the advice of the Greenspan Commission before I was old enough to vote. The age at which Social Security benefits could be collected was raised on people born after 1960 from 65 to 67. What’s your assessment of the economic and political aspects of that move? Was it necessary?
EL: I address this in my book, The People’s Pension. There’s a lot of murkiness surrounding it because not everyone’s motives were 100% clear when the Social Security amendments of 1983 were passed, which were proposed initially by the Greenspan Commission and then enacted by Congress.
The reality is that it was not necessary to institute this sort of phased raising of the retirement age at the time. It resulted in Social Security building up a larger Trust Fund, but it wasn’t the thing that saved the system back in 1983, a time when it really was in trouble. The truth is that as a result of the raising of the retirement age, the lifetime benefits which people will receive were eroded. Put simply, the change in the retirement age lowers the amount of money you’re going to get from Social Security after you retire. In the early ‘80s, Social Security, on average, replaced about 42% of the final salary or compensation for workers who were retiring. That’s down to about 32%.
LP: That’s a big difference.
EL: A very big difference. Social Security was never designed to be a total pension for everybody, although there’s a strong argument now for turning it into one. It was supposed to give you a critical mass so that you could supplement that with a private pension and private savings and come up with something comparable to what you were making before you retired. It doesn’t do that anymore, and the increase in the retirement age is one of the things that has created that situation, so it would be a very good thing if that could be reversed or simply held in place.
I understand your frustration, that this is not something you were able to weigh in on even though you were alive at the time. It also affects people who are retired now. It was done as a way to assuage major critics of the system of the time. It really isn’t something that had to be done.
LP: How worried should younger generations today be that something like this could happen again? What can they do to protect their futures?
EL: I have to come down on the side of saying they should be worried. The reason has nothing to do with the economics or fiscal viability of the system. It has to do with politics.
Social Security is in need of being improved and updated for the 21st century. It has been 40 years since any significant improvements or tweaks were made to the program. But the fact that there has been this constant pressure from the right, from the Republican Party and some Democrats, to cut benefits and to “save the program” – which really means cutting it back to the point where it would not be very useful at all – has kept people who support the system in Washington on the defensive for a good 40 years now. So the whole political energy has been around trying to play defense against these efforts to cut it, rather than to try to improve it. That’s the real danger for people in their 20s and 30s.
The reality is that it’s the stagnation in wages that has been the real problem for the program.
We’re going through a period right now in which there is a tight labor market and wages have been going up in some sectors, but that’s very much tied to the pandemic and the economic repercussions from that, and it’s not going to last unless there are changes made to some of the conditions in which the labor market operates – there we’re talking about offshoring of industries, the conditions for labor organizing, and so on.
If you really wanted to save Social Security and make sure that it was around for you, the thing to do is not to worry about the structure of the program, but to push for an economy that provides good jobs, good pay, that increases over time. That’s what we really need. So this is not a problem that younger people should think of as something happening down the road. It’s closely tied to the problem they have right now – that this economy doesn’t produce well-paying jobs. That’s something that arguably was engineered back in the ‘70s and ‘80s, right around the time that Social Security started to be neglected. That’s the real threat to younger people.
The interesting thing about this is that when people on the right and the center-right of the Democratic Party try and sell Social Security “reform,” which generally means cutting it, one of the tricks they have is to say, well, of course, we’re not going to touch the benefits of current retirees – they’ll be protected. The problem is that current retirees still do fairly well under the program, despite the erosion in benefits. It’s younger people who are really going to depend on Social Security. They are the ones that need the program to be improved.
LP: Dare we use the word “expanded”?
EL: Exactly.
LP: Many people may assume that the threats to Social Security come from the right and the Republican Party. How do you assess Biden’s history on this issue?
EL: You have to remember that Biden and most of the other leaders in Washington think like politicians. They’re concerned first and foremost to get themselves reelected and they’re very sensitive to how far they can push things. Biden, in the ‘80s and ‘90s, was a vociferous supporter of “reforming” Social Security – freezing entitlements, cutting back on benefits in order to “save the system.” Many people in the Democratic leadership at the time thought the same way. That was the popular thing. “Reforming” Social Security has always been a peculiarly Washington obsession. The trick has always been to come up with a critical mass of Republicans plus enough center-right Democrats to push it through.
These days it’s not as popular a thing. Mitch McConnell, for example, has so far ruled out doing anything to Social Security over the next couple of years because he knows it’s a political loser. It won’t fly right now. But it’s always there in the background. And I should point out that this last election was very revealing. It’s sometimes thought that the real Trump-y members of Congress and the Republicans from that side of the party are less enthusiastic about cutting Social Security – that they’re friendlier towards entitlements as long as they go to their kind of people. But in fact, some of the most radical proposals for Social Security in this past election came from some of the most far-right people in the party – the ones who are closest to Trump.
LP: The ones who claim to be populists.
EL: Exactly. You’ve got people like Senator Ron Johnson [R-WI] who is literally saying Social Security should not be self-financed anymore. He says it should be thrown into the pot along with every other federal expenditure and hashed out every single year. Now, you can’t run a retirement program that way because there’s no certainty. But that doesn’t seem to make any difference to him.
LP: So Sen. Ron Johnson wants to remove the very aspect of the program that makes it work so well – the part that guarantees people can depend on that check coming year after year.
EL: Yes. And that’s why the fact that it’s a self-financing program is so important. There is an element of mutual aid to Social Security that is in its DNA. It’s people of a wide range of generations supporting each other because they know that at a certain point they will be the recipient rather than the payer. Once you destroy that element of social solidarity, the program is just like any other welfare program. And of course, the history of those over the last 40 or 50 years in this country is that they get cut.
LP: How do you rate the Biden Administration on Social Security now?
EL: It’s fairly positive. This goes back to 2016 when the election was looming, and Bernie Sanders was pushing very, very hard, and a number of progressives in Congress were pushing very hard for a platform that would improve the program. Obama, in his last year as president, got behind them. Hillary Clinton got behind them. That was a big opportunity that was lost when Trump won the presidency because there would have been some momentum for that. That all died under Trump. This year there are proposals again in Congress to improve Social Security. It won’t be easy to do in the Congress that’s about to take its seat, but the Biden administration has been, at least in a general way, positive towards it. But we’re not going to see a lot of progress tomorrow.
LP: What would you do to make sure that Social Security is protected and remains strong? Does it need to be modernized in some ways to keep it effective?
EL: There are a number of things that can be done. One is to raise the cap. More of income beyond the $147,000 threshold needs to be taxed for payroll tax purposes. Another thing that can be done is passing the Social Security Expansion Act that Sanders, Elizabeth Warren, and others have backed. There is a special minimum benefit for Social Security recipients that’s aimed at keeping people who have really low incomes during their lifetimes above the poverty level, and that needs to be improved. That’s not asking a lot. It should be done.
You can also change the rules for wealthy people. One of the differences between now and 40 years ago is that people in the really high income brackets get much more of their income from investments, stock options, and other business holdings than they do from salaries and wages. We need to figure out a formula for applying the payroll tax to at least some of that investment income – like capital gains and so forth. Definitely, the CPI-E needs to be instituted. There should be an expansion of benefits across the board for Social Security benefits. We need the CPI-E at a base level that’s more reasonable. Another thing I think is important: one of the changes that happened in ’83 that was really bad was that Social Security survivor benefits were ended for children of deceased or disabled workers above the age of 18. It used to be that you could get those until 22 and they would help you to go to college. That was abolished. It would be a very good thing if that could be reinstated so that more people have some level of security to pursue higher education.
LP: If there’s one thing you could get the public to understand right now about Social Security, what would it be?
EL: I’ll make it two things. First, Social Security is not something you can consider in isolation. It gets back to what I said about how if you have good pay with steady increases, then you can have a healthy Social Security system in a fiscal sense. Without that, you can make all the cuts you want, you can tweak it any way you want to make benefits more moderate, and the system will still deteriorate. You must have a good economy, and that includes everything from encouraging the development of industries that generate those kinds of jobs. It means not making it harder for unions to organize so they can push for higher wages. Social Security is closely tied up in that aspect of the economy.
Second, keep in mind that Social Security belongs to you as a working person who is contributing to it. It doesn’t belong to the politicians, although they make decisions about it. It belongs to you and I think that there needs to be a sort of consciousness among people of this so that when they discuss it or make their views known to politicians, the politicians understand in Washington that this is something that is not theirs to play with.
31 comments
Comments are closed.
“If the situation arises where there is not enough money either in the Trust Fund or coming through from contributions to fund current benefits, then those benefits can’t be paid, perhaps as much as 25%. In that case, Congress would be faced with a choice to either cut benefits or increase contributions.”
No no no no no! Congress can simply allocate more money to the Trust Fund–like it does every year with the government employees trust fund and military retirement trust funds and the Medicare Part B and D trust funds. The “choice” between cutting benefits or increasing taxers is a completely false dichotomy!
The best way to fix Social Security would be to make it the ONLY retirement program for elected politicians and government employees.
Why do a third of Social Security retirees continue to work? Simple. Benefits are so low for many working class people that they need to keep working.
In addition, all political contributions should be taxed at 50% and the tax should be deposited into the Social Security Fund.
Many want to keep working but age discrimination is rampant. Raising the contribution limits seems to make so much sense. Joe Biden said that 500,000 per year is a middle class income. So why did the democrats when they control both houses do nothing about raising the contribution limit? Shouldn’t middle class PMC people be paying into social security? And is funding a war with Russia, a country that spends one twelfth of what we do on war, really more important that social security? Americans overwhelmingly favor social security, we have brilliant economists and political scientists explaining the problems that need to be addressed and somehow nothing gets done. The political class and both parties are simply refusing to do what the citizens want. We need campaign finance reform and a third party and rank choice voting. And we will not get it because our PMC political class will be paid to block any reform. As Joe Biden said, Ïf a medicare for all bill crosses my desk I will veto it…..” But he will pay as much as it takes to back the Ukrainian oligarchs against the Russian oligarchs. You gotta wonder why?
‘Once you destroy that element of social solidarity the program is just like any other welfare program. And of course, the history of those over the last 40 or 50 years in this country is that they get cut.’
Standing in line, first come-first served is an act of social solidarity, and it’s being dismantled by the market. When I was much younger I thought being treated by the market as an ‘individual’ was special and I was ‘special’ because of it. Now I see it as a threat. We don’t often get the chance to physically stand shoulder to shoulder with others in our community, where the playing field is even or at least looks that way. There was a time when ‘cutting the line’ would have gotten you an angry rebuke and forced removal by those who had stood and waited their turn.
Soon my credit union will make it impossible to stand in line. I’ll be invited to have a seat in a waiting area and picked off by someone who will tell me when it’s my turn, then escorted into a cubicle by a ‘financial services sales person’ to have an opportunistic chat about my bank balances… when what I wanted was to quickly deposit some small checks with a cashier that is no longer available to serve me and get on with my day.
It’s also why we’re leaving that credit union for one where it’s still possible to talk (briefly!) to a cashier instead of a “banker”.
Urgent care here is no longer first come-first served. No walk-ins, reservations preferred or be prepared regardless of need to wait, possibly for hours, until they can work a ‘walk-in’ into their schedule. ‘Oh, is it an escalating problem then?’ Perhaps you’d best go the emergency room, where they’re are going to charge a lot more to attend to your medical need.
There will be ‘reservations’ people, and there will be ‘walk-ins’ for which there are many other labels, and everything about this market trend erodes ‘social solidarity’. As a rule, individuals have very little power to affect change in a system.
SS isn’t a welfare program. Welfare programs serve everybody, including those that never contributed.
SS is a mandated saving/pensions plan.
I would say “mandated social insurance plan”.
Hard to argue with Gen X and younger trepidation about social security when it’s described as an intergenerational compact. We haven’t fared too well with those so far and as a late Xer, I can’t say that I see much reason to expect anything but being shafted by my elders in terms of broad economic policy and action.
What about investing some of the Trust Funds in higher yielding instruments?
No I don’t mean stocks. The article says T bills. These are 52 weeks or less and currently yield over 4% vs .05% last year. So the fund should be growing faster now.
If inflation persists as many believe, rates will remain over 4%. However, the Fed’s goal is to reduce inflation back near 2%. Wall Street’s goal is to reduce interest rates. So the inflection point in the future offers a chance to extend maturities at higher rates to the benefit of the fund and its recipients.
Has anyone heard this option discussed previously?
We always have the opportunity to extend SS higher rates in terms of bond yields. The choice to match SS contributions to current bond yields is utterly voluntary – bonds in the trust fund can be set at whatever % needed to ensure sufficient funds at maturity, even absurdly high if so desired. See Kelton’s The Deficit Myth. Voila!, instant “sustainability”.
Treasury securities purchased by the Social Security Trust funds are a special kind that is used only for that purpose. They may or not pay the same interest as the ones that are available to the public.
I haven’t heard of the option to use longer maturity securities, but I think it’s a a good idea. Life insurance companies and pensions have for a long time purchased bonds of various maturities to match their expected need for payouts. Traditionally the bonds were their main, core investments.
“This goes back to 2016 when the election was looming, and Bernie Sanders was pushing very, very hard, and a number of progressives in Congress were pushing very hard for a platform that would improve the program. Obama, in his last year as president, got behind them.”
8 years in office and Obama was behind SS improvements in his last year – right.
One of the first things Obama did in his first term was appoint Erskine Bowles and Alan Simpson to head the “cat food ” commission who advised cuts to social security by changing the CPI. The tea party voted against it because they wanted even more cuts. During the Clinton administration Erskine Bowles was secretly working with Newt Gingerich to cut social security however the Monica Lewinski debacle prevented the follow through. Now Biden has appointed Andrew Biggs, a long time advocate of privatization of social security and benefit cuts to the board overseeing the Social Security program. The establishment obviously wants to kill social security and many democrats and republicans are ready and willing to screw the people.
“If the situation arises where there is not enough money either in the Trust Fund or coming through from contributions to fund current benefits, then those benefits can’t be paid, perhaps as much as 25%. In that case, Congress would be faced with a choice to either cut benefits or increase contributions.”
Been hearing this all my life. Yet somehow 5T materializes to ‘ease’ the financial markets at will, 34B is handed off to Ukraine like a buck dropped in a hat. Sick of these lies.
Ah, earthling, these are “noble” lies, carefully constructed for your benefit and peace of mind by the political class who we hire, at election time, to do our thinking for us. Policy decisions are presumed to be beyond the capacity of “the people” and must be determined by the best and brightest.
Rest assured, however as, in the event of economic catastrophe or a nuclear “exchange” (does that term not sound much nicer and far more friendly than “war”?) you will quite safe under your portfolio.
we need all just stay in our lanes…
Indeed, SI, the right crowd and no crowding.
All, merely an answer of knowing one’s place in the grand and great scheme of things.
Maybe I’m showing my (math) ignorance here, but I keep wondering when the actuarial shift in life expectancy from the pandemic will improve SS finances, at least on the retirement account side. With a 2 year drop just in the first 3 years of the pandemic (so far!) won’t this reality help with the solvency by itself? Especially if the trend continues?
The pandemic is likely improving finances for pensions everywhere considering the higher impact among 60s and older people. I believe 2022 has hit people hard in their 50s also.
And of course as mentioned, the disability part of SS is in a lot of trouble and likely to need a lot more support especially with long covid.
By its description, Social Security sounds like CPP (Canada Pension Plan) up here, and we’ve had similar to-ing and fro-ing about its funding and whether the age when you can collect ought to be moved from 65 to 67 (it was planned to be moved by the former Harper regime, but those plans were shelved by the Trudeau government).
The way these arguments are framed are unfortunately a sort of nonsense, as well articulated by Warren Mosler. The sovereign currency issuer does not (can not) “save” in its currency of issue, for which it more accurately acts as a “scorekeeper” (marking balances up and down at the central bank). The real issue is whether or not the society has the real resources to allocate to the needs of pensioners, along with the political will to allocate them.
The whole “funding” discussion is a red herring — a holdover from gold standard era thinking that has no operational meaning in a fiat currency regime. Along with the fallacious “household budget analogy” it is among the most persistent and pernicious tropes preventing clear analysis and setting of priorities in the pursuit of public purpose.
But of course there is much political hay to be made by manipulating the shibboleths which hold sway over the groundlings. So it goes …
It’s certainly a real business model for veteran’s benefits. There’s a company in Gainesville, FL that’s been taking a cut in exchange for getting VA benefits approved for years now, and they wanted to fully digitize it and get into it for SS disability as well.
I’m less than a year from the finish line when I get repatriated with gotten gains. For the life of me I can’t see where any wherewithal is coming from in the future of McNothing work as I pull up the ladder below me perhaps?
Fund fact: the first recipient of a SS payment got $22.54 in 1940. Using CGV, that is about 2/3rds of an ounce in 1940 or around $1200 @ current spot. Not too far from reality in what a SS check would be.
Regarding Social Security (SS), when someone younger says “thanks baby boomers for wrecking SS”, ask them to list some politicians we could have voted for (in the last 40 years) that would have strengthened SS.
Perhaps the biggest threat to Social Security are the Koch and other family foundations funding Libertarian “think tanks” and operatives that are tasked to dismantle any and all “socialistic” government programs and laws.
The book “Democracy in Chains” is one scary eye opener
One of the first things Obama did in his first term was appoint Erskine Bowles and Alan Simpson to head the “cat food ” commission who advised cuts to social security by changing the CPI. The tea party voted against it because they wanted even more cuts. During the Clinton administration Erskine Bowles was secretly working with Newt Gingerich to cut social security however the Monica Lewinski debacle prevented the follow through. Now Biden has appointed Andrew Biggs, a long time advocate of privatization of social security and benefit cuts to the board overseeing the Social Security program. The establishment obviously wants to kill social security and many democrats and republicans are ready and willing to screw the people.
Just have to add that social security stabilizes the economy by providing funds that are usually spent each month. Also helps address Americans’ poor savings habits by forcing contributions into an annuity. It also takes a bit of a burden off of kids having to support their elderly parents. Overall hard to see how the average person would support cutting social security.
>>>I’d like to dwell on the Social Security disability benefits issue.
Three years, 6? Denials, 6 offices, 5 cities, 2 states, 1 attorney, and a court hearing. I had a stack of records going back decades, a desk with phone and desktop to manage everything, three separate doctors of my own willing to write letters and extra documents, and most importantly a family able to emotionally and financially support me. I also find writing and calling easy to do, can speak and understand bureaucratese, and able to be extremely polite when dealing with bureaucratic BS.
I could give more personal details, but I should mention all the people, many of whom live on the streets, who denied benefits, often because of lack of records and for doing any amount of paid work. That means being denied because of lack of medical records or because they found out about your babysitting.
Not only is the process of applying for SSDI designed to design to make them all fail, it is a convoluted process involving separate county, state, and federal agencies, it is underfunded and therefore understaffed. It’s still bloated, inefficient, and expensive. The whole Byzantine system does have to be funded, staffed, and managed. I also found it annoying that I sometimes understood the system better than the clerks working in it.
It is an extremely effective gatekeeper supposedly designed to prevent fraud (you know, the lazy moochers destroying America /s). The employees are well trained on that. It has a gotcha mentality meant to stop what the Victorians would call the Undeserving Poor. It does have not a mentality meant to help what the Victorians would call the Deserving Poor. The stories I have heard of abusive visits by the case workers in some counties are infuriating. But in California, it is Los Angeles County and not the Bay Area that has those power hungry creeps.
And of course, not only are the requirements, such not having more than $2000 in savings (a requirement whose amount hasn’t changed in over twenty years), the cost of living increases never, ever match inflation and are mostly gobbled up the increase in Medicare premiums. And this has the closest connection to the post. One cannot afford housing on what social security pays and if on SSDI, one cannot make more than $940 gross per month. IIRC, making more than $1200 gross means automatically being disqualified. (This is a little simplified) An apartment costs $2000 at a minimum. Rooms are maybe $1000. Then there is everything else like food. IIRC, the average SSDI payment is less than $1200 per month with SSA a little more. They don’t have limits for the social security retirement, but the amounts paid are only slightly less inadequate.
Every time I hear about having cuts of any kind because we supposedly can’t afford housing the old, the disabled, or children, but we can afford the ever more expensive security state and the multiple wars we are involved in, or about fraud and corruption in Social Security, Medicare, and Medicaid without mentioning Wells Fargo and all its friends… it makes ill. It used to make me angry, but grifters gotta grift. I just accept as the new normal.
Also, do keep in mind that each state has it own separate benefits that may be higher than the federal floor, with states like California being relatively generous and relaxed in its requirements. (Relaxed and generous compared to many, perhaps most other states, especially the whole South.)
Honestly, the whole system forces people to economic with the fact especially as they constantly tighten the rules, requiring evermore detailed information such as the amount of cash in your wallet and the income and assets of all your housemates. I guess since many people who live as a couple often don’t report it. It often means that they would be over the very, very, very low income and asset limits for any help. Even food stamps and even if you have children. So, I am supposed to ask personal questions from any housemates to give to the government.
Byzantine, inadequate, difficult to get, easy to get disqualified afterwards, sometimes rude or incompetent. And I thank God for it. Now, if only they would be as thorough with the financial institutions or members of Congress (or the whole state assembly, senate, and the governor). Let’s comb through their and their families lives like California does to its own citizens.
Superb comment, JBird.
Right on the gist of it all.
DW
The resistance to lifting the income cap on contributions comes from employers. Remember they match the employees contribution. Businesses hate paying into social security and medicare.
US policy is to have all the old folks die of Covid to save Social Security for the young-uns…
I think the policy is to have people die, period, to save money.
It’s a shame the government is eager to bail out private union pension plans but drags its feet over Social Security’s problems.