The Washington Post editorial board is still drinking the conservative Kool-Aid when it comes to Social Security. In an editorial on Friday, the Post came out against Congressman John Larson’s Social Security 2100 Act, an eminently reasonable bill to boost retirees’ benefits and keep the system solvent for the next 75 years – co-sponsored by more than 200 House Democrats.
The Post argues that the nation essentially cannot afford to give seniors – two thirds of whom rely on Social Security for at least half of their income – a modest pay raise. The editorial board goes on to argue that providing retirees a modest financial boost would divert revenue from programs for children, who are more likely to be poor than seniors. This is a standard conservative ploy to pit the generations against each other, even though Social Security is a contract between the generations that has provided financial security for millions of Americans of all ages. In fact, 4 million children received Social Security benefits in 2018.
The Post editorial is so wrong-headed that we thought it worth breaking it down piece-by-piece.
“Social Security is not broken — and does not require a radical overhaul.”
We agree. But Congressman Larson’s bill does not represent a “radical overhaul.” It provides for a modest expansion of benefits and strengthens Social Security’s finances. A radical overhaul would entail slashing benefits, raising the retirement age to 70, and privatizing Social Security – all of which have been proposed by conservative ‘entitlement reformers.’
“The poverty rate for elderly Americans in 2017 was 9.2 percent.”
That’s true, but without Social Security, some 40% of seniors would slip into poverty. Beneficiaries living above the poverty line are not exactly flush with cash. The average retirement benefit is $1,461 per month – or slightly less than $18,000 a year. Millions of seniors are struggling to make ends meet, forced to choose between paying for groceries, prescription drugs, or utility bills. Retirees on fixed incomes cannot afford the kind of benefit cuts that the Post embraces.
“Consumers’ confidence in the adequacy of future retirement income is at a 20-year high.”
That confidence may be misplaced. Americans’ retirement savings are at historic lows. Pensions – a foundation of the 20th century middle class – are disappearing. Less than half of workers have an employer-provided retirement plan, and 401Ks are subject to the volatility of the stock market (see the 2008 financial crash). If anything, future retirees will have a harder time saving for old age than today’s seniors.
“Social Security spending is a major factor in the United States’ structural budget problem.”
Actually, it’s not. Social Security is – and always has been – self-funded by workers’ payroll contributions, with the surplus in a trust fund invested in treasury bonds. The program is a separate from general revenue and does not contribute a penny to the debt.
“Laudably, [Congressman Larson’s] plan tackles two important goals: long-term solvency and the lingering problem of old-age poverty. Less laudably, it does so while diverting scarce resources toward a vast majority of Social Security recipients who are not only not poor but, in many cases, perfectly comfortable.
Well, sorry, but that’s how social insurance works. Everyone pays in and everyone gets a benefit. However, the benefit structure is progressive, so that the poorest beneficiaries get the highest percentage benefit and the wealthier get less.
We are all for making the overall tax system more progressive than it already is, including by taxing high earners, as the Social Security 2100 Act would do. You can tap “the rich” only so many times, however.
Really? Asking the wealthy to pay into Social Security at the same rate as everyone else is not “tapping the rich.” It’s simply fair. If the wealthy contribute, they receive their earned benefits like everyone else. But high earners stop contributing to Social Security on all wages above $132,900 per year. In fact, millionaires stopped paying into Social Security for the entire year last Monday – President’s Day. President Trump, if he actually pays taxes and earns as much as he claims, would have finished contributing on January 1st. Congressman Larson’s bill would reimpose payroll taxes after $400,000 in income, gradually eliminating the wage cap altogether.
“[Instead of increasing Social Security revenue], the priority should be to use the money for children, who are almost twice as likely to be poor as senior citizens.”
With this argument, the Post employs a time-honored trick by conservatives to divide the generations. Can’t a just and equitable nation – the wealthiest on earth – provide a safety net for children and seniors? It’s telling that the Post editorial does not even mention the Trump/GOP tax cuts, which gave away more than $2 trillion in federal revenues to billionaires and big corporations. That’s $2 trillion in lost revenue, some of which could have been used to expand help for the poor and vulnerable, including children. (Incidentally, the Post’s parent company, Amazon, paid zero dollars in federal taxes last year.) If we have our priorities straight, we can afford to fund children’s programs and preserve seniors’ retirement security.
“The [Progressive Price Indexing] plan would retain Social Security’s current benefit formula for the 30 percent of workers with the lowest lifetime earnings, while reducing the growth rate of initial benefits for the top 70 percent.”
Here, the Post endorses a conservative proposal known as Progressive Price Indexing – hatched more than fifteen years ago by a member of George W. Bush’s Social Security advisory commission. (Note: President Bush tried – and failed – to privatize Social Security in 2005.) Even the libertarian CATO Institute found fault with Progressive Price Indexing:
“[The proposal would] slow the growth in future Social Security benefits for middle and upper-income retirees by changing the benefit formula from wage indexing to price indexing. Critics charge that such a change will weaken Social Security’s foundations while hitting the middle class hardest.” – CATO Institute, 5/23/05
Indeed. Why cut benefits for the top 70% of wage earners? That’s more than two-thirds of all beneficiaries! Many members of this 70% cannot afford a benefit cut. Some are already struggling to get by. As retirees, they are susceptible to the vagaries of old age – chronic illness, disability, and the loss of the ability to live independently. If their benefits are cut, they may not be able to afford prescription drugs, groceries, transportation and elder care – including assisted living and home- and-community-based care.
What’s more, these 70% worked hard and paid into Social Security for most of their lives. The scheme the Post embraces would break the link between lifetime earnings and benefits. That bond defines Social Security as a social insurance program that is fair across the generations.
Fortunately, the public at large does not support the Post’s conclusions. Poll after poll shows that voters across party lines want to see Social Security expanded, not cut. Large majorities support lifting the payroll wage cap so that the wealthy pay their fair share. Congressman Larson’s bill does both, while maintaining Social Security’ financial stability through the end of the century. Unlike the Washington Post, most Americans have refused to drink the Kool-Aid. Advocates for boosting Social Security are on the move, and the public is solidly behind them.