By Dave Lindorff
Boomers have the power to remake Social Security Medicare ( by ThisCantBeHappening!)
With Republicans now in control of both houses of Congress, the current president already on record as supported cuts in Social Security and Medicare, and all signs pointing to the likelihood that the 2016 election could bring us either a neo-liberal or a neo-conservative president, and an increasingly Republican-dominated Congress, it's time for an aggressive mass movement built around defending and expanding both those critical public funding programs.
The first step is getting out the truth that Social Security is not broke or doomed, but simply needs to be better funded by ending the free pass given to the wealthy. Simply eliminating the cap on income subject to the FICA tax, currently set at the first $118,500 of earned income, would make the system fully able to pay all promised benefits for the next century or more. Extending the tax to cover unearned income -- basically capital gains (a tax that only impacts the wealthy) would allow for an expansion of benefits.
There is today $2.8 trillion in the Social Security Trust Fund, a fund that was created by a compromise reform reached by President Ronald Reagan and a Democratic Congress led by House Speaker Tip O'Neill back in 1983. The idea at the time was to have Baby Boomers and their employers pay more into the system ahead of the time they would be retiring, when their numbers would place a burden on current workers (the Boomers' kids and grandkids), since the system has always since its inception financed current retirees' benefits through current workers' FICA payroll tax payments. (The reform also raised the full retirement gradually from 65 to 66 and later to 67 for people born after 1964.)
That advance funding of Boomer retiree benefits is now starting to be tapped but that is what was supposed to happen to it, a point the doom-sayers and political scare-mongers fail to mention. It turns out, though, that the advance funding was not large enough for several reasons. One, very positive, is that people are living longer than projected because of improved nutrition and medical advances. Another is that a series of recessions and market collapses, especially during the "lost decade" of 2000-2010, caused in large part by corrupt investment banks in 2001 and by Wall Street's mega-banks turned casinos in 2007-9, cut severely into FICA contributions, as well as into workers' personal savings and net worth.
Right-wing and corporate propaganda to the effect that the Trust Fund is smoke and mirrors or just "IOU" scrips, is absurd. It's true that Washington politicians promptly borrowed FICA tax revenues as soon as they came in the door to allow them to fund things like endless wars and Pentagon war-profiteers without raising taxes, but that debt is every bit as real as the federal debt held by investors in the form of treasury bills and notes. It will be covered, whether by rolling it over into new debt or by raising taxes.
In any event, as has been often pointed out, even were the fund to be exhausted in 2033 or 2034 because of inaction by Congress to boost revenue for Social Security, the system would, at the current FICA tax rate of 6.2% for employee and employer, still be able to fund 77-78% of promised benefits out into the distant future beyond the time when the last Baby Boomer has moved off to some Woodstock in the sky.
More importantly, there is no way that will happen. Why? Because the Baby Boom generation, in retirement, will constitute not just the largest block of elderly voters in the nation's history (almost 78 million people!), but also will represent the largest elderly bloc proportionately, in history, fully 1.5 times as large a segment of the electorate as the already powerful current senior vote.
If the US is still even remotely a democracy in the 2030s, there is no way Congress would allow such a large, high-voting group of people to have their benefits cut. And this is not, as right wing critics try to claim, a war between generations. Fighting to improve Social Security and to expand Medicare to all is to benefit people of all ages. After all, what child or grandchild complains about the size of a grandparent's Social Security check, and what grandparent wants to short change a child or grandchild? And expanding Medicare helps everyone.
And that brings us to the challenge we now face. The corporations that increasingly run Washington (thanks in no small part to the machinations of the right-wing majority of the Supreme Court and its Citizens United decision), but also to the ossification of the two political parties which now are both beholden primarily to big business, know that the Boomer generation, once all at retirement age, will be a colossal force in defense of Social Security and Medicare, and that they will also be demanding an expansion of those programs, making them both more generous and also broader in reach. And employers hate Social Security because they hate having to pay that 6.2% FICA tax on every worker's wages. That's why pro-business groups like the Heritage Foundation and the US Chamber of Commerce and their allies in the Republican and Democratic parties are becoming increasingly shrill in their denunciations of both programs, and in their scare stories about how both programs are facing financial crisis and need to be cut back allegedly in order to "save" them. These pro-capitalist groups and lobbyists know that the best way to prevent future expansion of these programs is to kill off the programs early, so that instead of expanding them, the public would have to try to create them anew -- a much bigger challenge.
That means we Americans, old and young, need to organize and fight like hell now to defend both programs, and to demand that they be expanded.
Doing so makes sense for many reasons. Besides the basic moral one that a nation should provide health care to all, and should protect its elderly and assure them a comfortable old age, making retirement more attractive would lead to people leaving their jobs earlier, opening up opportunities for younger workers. Want evidence? Just look at the current recession, where the lowest unemployment rate is among older workers, who are clinging to their jobs because they cannot afford to quit and depend on Social Security's meager benefits.
In much of Europe, particularly in the the north -- Germany, France, Belgium, Netherlands, Denmark and the Scandinavian countries -- national pension systems provide people with benefits that replace 60 percent or more of final working income, allowing them to retire without taking a hit in their living standard (lower-income workers actually get even more in retirement and may actually see their living standards rise when they retire). Compare this to the US, where the replacement rate is only about 37% of working income in retirement. And actually the difference between retirement in Europe and retirement in the US is even more dramatic because the European countries all have excellent national health programs that make health care essentially free. This means retirees in those countries have no medical costs to pay for. In the US, in contrast, retirees have Medicare premiums for doctors taken out of their Social Security checks, have to pay privately for costly Medi-gap premiums to cover the health care costs not funded by Medicare, and also have to buy prescription drug plans. By the time they're done paying for health care or health insurance, and all the co-pays, deductibles and non-covered care costs, most US retirees who depend on Social Security for at least half of their income (that would be 90% of us), are living at subsistence levels.
Clearly it doesn't have to be that way. Germany's and Scandinavia's populations are "grayer" than ours, yet they not only fund far more generous retirement programs for their elderly. They have higher living standards than we do, and manage to also compete better on world markets, actually producing goods that are sold overseas, instead of just shipping jobs abroad.
And that brings us to Medicare.