I think you've strung together a series of half-truths here, so that by
the time you get to the end of your argument, there isn't much there.
Let me try to correct them.
1. Social Security expenditures will exceed revenue in 2017. According
to the latest (2008) Trust Fund Report, however, every obligation can
be paid through 2041. I don't know whether they're still using such
conservative calculations, but for a while, the they telescoped the
arrival of the year when they couldn't pay what was owed by predicting
an average GDP growth rate of 1.7%. If we have an average growth rate of
1.7% for next 33 years, that's a much bigger catastrophe than the
prospect that in 2041, social security won't be adequately funded.
2. Social Security is a disguised anti-poverty program, which is the
only way we can have a sustained anti-poverty program in this country.
It provides 50% of the income for 65% of its recipients; 90%+ of the
income of 33% of its recipients; and 100% of the income for 20% of its
recipients. You say that social security is a kind of self-help
program for the middle-class, when what we should do is simply to pay
the poor. First, it's not accurate to say that it is redistributive
among the middle-class (by which I assume you mean the current ceiling
of $102,00) because though it is regressive in its revenue collection,
it is fairly progressive in its distribution (earnings at the ceiling
get about 21% of their annual salary, while the take-up rate for poor
workers--people who are not "middle-class" by any stretch of the
imagination--is about 42%). Second, (and I think you must know this), if
we did just pay the poor, that program would last the microsecond until
some conservative politician came along to denounce the program for
"just paying the poor." In short, paying social security to people who
earn $102,000 and up is the ransom to the affluent that must be paid in
order for poor workers to have a source of income in their old age.
3. You say that social security exists to boost current government
revenues. This has more than just a tinge of the longstanding
conservative argument that government programs exist solely to help the
government, which seems like a pretty cramped reading of the functions
of social welfare (help the poor, increase aggregate demand, partially
mitigate inequality, distinguish between the worthy and unworthy poor,
showcase the government as caring, nurture political linkages with
recipients, pacify the electorate, etc). If you want to insist that
governmental institution-building belongs on this list, sure--it
probably does. But to argue that this is social security's sole or
primary function is to look at it through a very narrow aperture.
Joel Blau
David B. Shemano wrote:
Doug Henwood writes:
At some point in time, if we continue on our present path, ss
expenditures will exceed ss taxes. At this point, general tax
revenues are supposed to start paying ss expenditures (i.e. pay
those T-bills the SSA is supposedly holding). This, tautologically,
means that the Congress will have to reduce or eliminate non-ss
expenditures that would have been funded in the absence of the ss
obligation, unless Congress is willing to raise non-ss taxes.
On the other hand, if all the dire predictions about SS's bankruptcy
don't come to pass - and I think they won't - then there won't be much
of a problem, will there?
As long as the present level of ss taxation exceeds ss expenditures, then
everything will be hunky-dory. My understanding is expenditures will exceed
revenues starting in 2017, at which point Congress will have to make explicit
choices.
I am all for "insurance against poverty," whatever that means.
Using government money to keep people from being poor. That's not
complicated, is it?
SS, as presently consituted, is generally neither insurance nor linked to
poverty. Insurance implies a pooling of assets to guard against events that
will likely not happen and be catastrophic for an individual when it does
happen. If lifespans were 65, I suppose we could characterize SS as insurance
against the improbability of living past 65, but since lifespans are edging
closer to 80, payments for reaching 65 are not insurance. And benefits are not
linked to poverty or means tested, as you know, which is why the program
retains its popularity with the middle class (they are willing to prepay
retirement funds for themselves, but not others).
I don't believe that is what social security as presently
constituted is. It is simply a scheme to increase present
government revenues to pay for present government expenditures.
Easy for you to say. For most elderly people, SS is about all they've
got.
As constituted SS is a redistribution from the middle class to the middle
class, with the elderly poor benefiting. I would prefer that we eliminate the
redistributuion from the middle to the middle, and simply pay the poor.
However, if we did that, which would slash SS taxes, the government would lose
the benefit of the surplius -- that is the heart of the political matter. That
is why I say something is going to occur when expenditures exceed taxes --
without the ability to spend the surplus, SS will become a drag on other
spending, and Congress is not going to like that.
David Shemano
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