The Truth About Social Security “Reform”

by June Zaccone

Source: This cartoon accompanies the text in Save Social Security from Its ‘Saviors‘, 7/2/2022 by Stephanie Kelton

Editors’ Note: Recognizing the critical importance of employment and wages to the availability and level of retirement and disability benefits, the National Jobs for All Network has maintained an intense interest in Social Security since its founding. As we expressed this close tie: “The best insurance for Social Security is full employment at living wages”—NJFAN’s goal. A number of articles in our Uncommon Sense series—“What is Social Security,” “Social Security and Minorities,” “What Really Supports the Elderly”—pertain to the nation’s retirement and disability program. Co-founder, economist June Zaccone has edited NJFAN’s Social Security articles and has maintained close watch on the attacks on the nation’s critical economic security program.  What follows is a summary and distillation of Professor Zaccone’s careful study and a link to the full report on which it is based.

Since the “reform” push began, Democrats have joined Republicans in raising the retirement age for receipt of Social Security benefits and increasing payroll taxes enough to generate massive surpluses in the Social Security Trust Fund. (The Trust Fund rose to a peak of $2.8 trillion in 2017.)  In his Wall Street Journal article (4/2017), Reagan economic advisor and Harvard economics professor Martin Feldstein proposed that later administrations follow the example of the Reagan “reform”: to use Social Security surpluses to “offset deficit increases” in the Federal budget. These deficits resulted from the 2017 Trump tax cuts for the rich [as did the Reagan tax cuts]. When interest on the Trust Fund was eventually tapped, its use was taken as a sign of the final Social Security “crisis” and the consequent imperative to cut retirement benefits.

That major funding for the Democratic Party comes from the financial sector has apparently spurred the party of Franklin Roosevelt toward this perverse “reform”– including privatization. Ironically, the Monica Lewinsky scandal that paralyzed the Clinton Administration saved us from the Democratic Administration’s privatization plan. Another plan to cut benefits—proposed by the Obama Administration—failed when intransigent Republicans refused the Democrat’s proposed “grand bargain”—to cut Social Security and Medicare in return for tax increases and cuts in military spending. Two Social Security advisers to Obama asked whether the Fiscal Responsibility Commission he set up –which was headed by two people intent on cutting Social Security– was “a Social Security death panel.”

This paper describes how very special Social Security is: how current benefits differ from owning private assets, and why many current views about Social Security deficits and the need to cut benefits–are simply wrong.

Contrary to some assertions by members of both Parties and their advisors– Social Security is not in financial crisis; not in demographic crisis; and not unfair to minorities or women. Social Security is too important a program–for too many Americans–to be diminished by misguided proposals for “reform.”

Link to full report: Let’s Not “Reform” Social Security (Except to Raise Benefits), accompanied by this Slide Deck

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