The political right has predictably pounced on the recently-released Social Security Trustees report to call for “entitlement reform” – code for cutting the program. Once again, they are using projections about Social Security’s long-term finances to justify raising the retirement age, reducing COLAs, and cutting benefits. This should not come as a surprise. In the wake of the Trump/GOP tax giveaway to billionaires and big corporations, prominent Republicans all but said that future retirees would be asked to pay the price.
“We need to generate economic growth which generates revenue while reducing spending. That will mean instituting structural changes to Social Security and Medicare for the future.” – Senator Marco Rubio (R-FL)
“We’re going to have to get back … at entitlement reform, which is how you tackle the debt and the deficit.” – Speaker Paul Ryan (R-WI)
“If we’re going to do something about spending and debt, we have to get faster growth in the economy, which I hope tax reform will achieve. I think there is support… here for entitlement reform.” – Senator John Thune (R-SD)
These statements imply two blatant falsehoods: 1) that the tax scam will benefit working Americans and unleash unprecedented economic growth; 2) that Social Security and other “entitlements” do not produce economic stimulus and must be cut to reduce deficits and debt.
First, there already is overwhelming evidence that the Trump/GOP tax cuts for fat cats are not cascading (or even trickling) down to most American workers. Instead of significantly raising wages or hiring more workers, America’s largest corporations are spending the lion’s share of their tax windfalls on stock buybacks and dividend increases. This further enriches corporations and their shareholders, but doesn’t do much for working families.
While the tax cuts clearly fail to ‘lift all boats,’ Social Security provides significant stimulus to the nation’s economy, accruing to the benefit of all Americans. In 2014 (the most recent year for which these statistics are available) Social Security contributed $1.6 trillion in economic stimulus nationally – and the program generates billions in additional economic activity in all 50 states. This includes each of the states which some of the program’s most ardent “reformers” represent.
Let’s look at Social Security’s economic impact on Florida (Marco Rubio), Wisconsin (Paul Ryan), and South Dakota (John Thune):
FLORIDA
Benefits Paid (2014) Economic Stimulus
$62,291,340,000 $122.5 billion
WISCONSIN
Benefits Paid (2014) Economic Stimulus
$17,454,792,000 $31.3 billion
SOUTH DAKOTA
Benefits Paid (2014) Economic Stimulus
$2,306,880,000 $3.8 billion
Even in a less populous state like South Dakota, Social Security is a significant economic catalyst, with nearly $4 billion in impact per year. But “entitlement reformers” conveniently ignore Social Security’s well-documented stimulus to the economy because they’d rather lavish tax cuts on their wealthy and powerful donors – and undermine retirees’ earned benefits instead. In fact, tax expenditures (the amount of tax revenue the federal government forgoes) are the number one contributor to the deficit and debt, while Social Security is self-funded by workers’ payroll contributions and does not add a drop of red ink to the federal budget.
The wisest, most fiscally responsible course for the Congress and the President to take would be to roll back the massive tax breaks for the wealthy and profitable corporations, and instead strengthen and expand Social Security for future generations of retirees. Legislation has already been introduced in Congress to do just that, but has been ignored by the Republican leadership.
As with so many other crucial issues of our time, the future of the program hinges on voters’ determination to elect representatives who will strengthen, not scapegoat Social Security – and appreciate its impressive impact on the economy.