Thursday, July 28, 2016

Saving Social Security

This, 2016, is the year I officially became a retiree. I rather like it ... I still get up fairly early on most days, but it's because I want to, not because I have to. It's nice to be able to plan travel on short notice, without worrying about work schedules or the number of vacation hours I have available. And I enjoy having the time to do the things I enjoy doing, like reading and working in the yard and my garden (when it's not too beastly hot, anyway).

Of course, there are downsides to all this, as my fellow retirees will understand. Navigating the rocky shoals of affordable health care* is one, and worrying about our long-term cash flow is another. I've been retired for about three and a half months now, and we're still getting used to the idea of adjusting our lifestyle to our reduced circumstances under the watchful eye of our financial advisor, but at least we're paying the bills and eating regularly, haven't gotten sick, and the mortgage company hasn't put us out in the street. Yet. My military pension, 401k, and our investments are all supporting us so far, at least until the next time Congress does something stupid ... like screwing around with the last part of our financial net - Social Security.

Here's what the 2016 GOP Platform has to say on that topic:

"We reject the old maxim that Social Security is the “Third Rail” of American politics, deadly for anyone who would change it. The Democratic Party still treats it that way, even though everyone knows that its current course will lead to a financial and social disaster. Younger Americans have lost all faith in the program and expect little return for what they are paying into it. As the party of America’s future, we accept the responsibility to preserve and modernize a system of retirement security forged in an old industrial era beyond the memory of most Americans. Current retirees and those close to retirement can be assured of their benefits. Of the many reforms being proposed, all options should be considered to preserve Social Security. As Republicans, we oppose tax increases and believe in the power of markets to create wealth and to help secure the future of our Social Security system. Saving Social Security is more than a challenge. It is our moral obligation to those who trusted in the government’s word."**

And here's what the 2016 Democratic Platform has to say about Social Security:

Democrats are proud to be the party that created Social Security, one of the nation’s most successful and effective programs. Without Social Security, nearly half of America’s seniors would be living in poverty. Social Security is more than just a retirement program. It also provides important life insurance to young survivors of deceased workers and provides disability insurance protection. We will fight every effort to cut, privatize, or weaken Social Security, including attempts to raise the retirement age, diminish benefits by cutting cost-of-living adjustments, or reducing earned benefits. Democrats will expand Social Security so that every American can retire with dignity and respect, including women who are widowed or took time out of the workforce to care for their children, aging parents, or ailing family members. The Democratic Party recognizes that the way Social Security cost-of- living adjustments are calculated may not always reflect the spending patterns of seniors, particularly the disproportionate amount they spend on health care expenses. We are committed to exploring alternatives that could better and more equitably serve seniors.

We will make sure Social Security’s guaranteed benefits continue for generations to come by asking those at the top to pay more, and will achieve this goal by taxing some of the income of people above $250,000. The Democratic Party is also committed to providing all necessary financial support for the Social Security Administration so that it can provide timely benefits and high-quality service for those it serves. Our plan contrasts starkly with Donald Trump. He has referred to Social Security as a “Ponzi scheme” and has called for privatizing it as well as increasing the retirement age.***

I have problems with how both parties are approaching the problems of Social Security and the needs of the aging population.

The GOP position contains a number of scary words, such as "preserve and modernize" and "we ... believe in the power of markets to create wealth." These are not policy prescriptions, and are merely boilerplate political blather ... although you might want to consider just how much wealth have those markets have created for you before you trust in their power to protect you in your old age ... Agnes and I and millions of other Americans still haven't recovered from the financial bath we took in the market collapse of 2008.

And I suggest that references to the "old industrial era" in which the Social Security system was created have no bearing whatsoever on the issue. Social Security was created in order to provide a safety net for all working people, particularly those in the lower working classes whose salaries didn't provide enough income to save or to invest for a time when they could no longer work ... a concern as valid today as it was in the 1930s. Here's what President Franklin Roosevelt said at the signing of the Social Security Act in 1935 -

"We can never insure one hundred percent of the population against one hundred percent of the hazards and vicissitudes of life, but we have tried to frame a law which will give some measure of protection to the average citizen and to his family against the loss of a job and against poverty-ridden old age."

The Democratic platform contains the same political boilerplate, but focuses more on what the party won't do to fix the underlying problems, and mentions only one policy prescription - raising revenue by taxing part of incomes over $250,000.

There's no doubt that the Social Security trust fund is in trouble and that some sort of action needs to be taken ... you can read the Trustee's Report Summary yourself to get the bad news. There are a number of reasons for this, and the biggest is demographic: the population is getting older, more people are retiring, and fewer young people are entering the workforce to pay the taxes to keep it going.

But the picture is not all bleak - there are a lot of things the federal government can do to shore up the Social Security program, not all of them popular or, in the current environment, politically doable. This Motley Fool article provides a good summary of what we might be able to do with sufficient political will and a heretofore unseen willingness of Republicans and Democrats to work together and make hard choices.

Social Security is one of the best programs the federal government ever devised to help Real People, particularly those at the bottom of the economic pile. It's not the "social disaster" painted by the GOP, but an important part of the lives of millions of people. It needs to be fixed, but the fixes need to be economically sound, not driven by political theories, and take into account how critical the program is to so many people.

In politics as in medicine, the Hippocratic Oath needs to apply: "First, do no harm." ††

Have a good day. More thoughts tomorrow.


* We'll talk about this in another post.

** Republican Platform 2016, undated, pp 24-25.

*** 2016 Democratic Party Platform, July 21, 2016, page 6.

† There's a lot of misinformation out there about Social Security, a number of which are addressed in a two-part web presentation, "Myths and Misconceptions about Social Security, which you can read at the Social Security website here and here.

†† Yes, I know that's not what the Hippocratic Oath actually says, but it's what it implies when you squint and cock your head to one side.


Margaret (Peggy or Peg too) said...

I will work until I die I fear.

John Hill said...

No soc sec for me for another 6 years.

eViL pOp TaRt said...

Are they going to pull the rug out from under retirees or near-retirees. It's a lot of blather covering them doing what they please.

Mike said...

"...a concern as valid today as it was in the 1930s."

I'm afraid for more and more people it will be just like the 1930's.