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Social Security Reform
The End of Social Welfare as We Know It
Irwin
Nesoff, DSW, Associate Professor, Kean University
The young Republicans chanting “Hey, hey. Ho, ho. Social Security has got to go,” outside Senator Rick Santorum’s town hall meeting in Philadelphia, tells us more about the goal of Social Security reform than the misinformation put forth by the Bush administration. These young Republicans were telling us why we, as social workers, should be especially concerned about the current efforts to “reform” Social Security. The goal of “reform” is not to correct a crisis, but it is to kill the most successful government social welfare program ever devised.
If the administration is able to put the nail in the coffin of Social
Security, it will bury along with it the short-lived tradition of a legitimate
role for government in providing for the welfare of its citizens. In other
words, we should be afraid, we should be very afraid.
Created as part of the New Deal, Social Security stands out today as the
most successful social welfare program in the U.S. This single program
has lifted millions of elderly workers out of poverty, covering 154 million
working Americans and paying out benefits to 46 million people, 39 million
retirees or their survivors, and 7 million disabled persons. It also pays
benefits to three million children, more children than TANF. In seventy
years, Social Security has never missed a payment. Does
this sound like a system in crisis?
Not Just For Older Workers
The continued success of Social Security is not just an issue for older
workers; it is an issue for women, minorities and for disabled workers.
According to Marty Ford, Director of Legal Advocacy for ARC, “55%
of disabled workers would have incomes less than the federal poverty level
without these benefits.” Julian Bond, Chairperson of the NAACP,
describes Social Security as “vital to African-Americans…
One in five African-American couples relies on Social Security for all
of their retirement income. That is twice as many as for white couples.”
Kim Gandy, President of NOW speaks of the importance of Social Security
to women when she states that “women are far less likely to have
pensions on the job than men do and are, therefore, much more dependent
on Social Security as their only source of retirement income.”
Based upon actuarial projections, the Congressional Budget Office estimates
that the $1.5 trillion surplus in the trust fund and future income are
enough to guarantee full payments to current and future retirees at least
until 2042.
Therefore, the “crisis,” if one even exists, is at least thirty-seven
years into the future. There is no shortage of real crises that this administration
chooses to ignore, such as 43 million Americans without health insurance,
and the estimated 18,000 of these uninsured that die each year due to
lack of access to health care.
Heading For an Iceberg?
In the new conservative world, the federal government should not be providing
social welfare for its citizens. This is not just an attack on Social
Security; it is the opening volley in an all out attack on social welfare.
In January the Associated Press reported on a leaked White House memo
in which a deputy to Karl Rove laid out the strategy and the need to undo
Social Security, stating that the way to ensure success for President
Bush’s plan to undo Social Security is to convince the public that
the system is “heading for an iceberg”. He goes on to call
this effort “one of the most important conservative undertakings
of modern times.”
To replace Social Security’s guaranteed benefits with private accounts
will merely serve to keep low to middle income workers working until they
die. Those unable to work that long will be relegated to living out their
later years in poverty. Most salaried workers will never be able to save
enough in their private retirement accounts to equal the benefits provided
through Social Security. For example, a worker earning $75,000 per year,
saving 6.2% (the amount of the Social Security payroll tax) of their salary
over their working lives of forty years, will save only $186,000. This
total amount may be greater or lower, depending on how wisely it is invested.
If we estimate that this worker will live another twenty years post retirement,
based upon increasing life expectancy, they will collect a mere $9,300
per year or $775 per month (in 2005 dollars), considerably less than they
would from Social Security and significantly below the poverty level.
Equivalent of a Life Insurance and Disability Policy
According to government actuaries, Social Security protection for a 27-year-old
worker, with two children, is the equivalent of a life insurance policy
with a face value of $400,000 and a disability policy valued at $350,000.
The importance of this benefit level is underscored by the National Academy
of Social Insurance estimate that “Social Security is the main source
of life insurance for most families with children.”
The cost of converting Social Security to private accounts, estimated
to be up to $10 trillion, all of which will need to be borrowed, coupled
with the out of control drug costs in the Medicare system, will bring
the federal debt to astronomical levels, forcing painful budget cuts to
domestic programs. This will result in social welfare programs being cut
so severely that they will be done away with, returning us to pre-1937
America.
Historic Dimensions
It took 160 years for the federal government to codify a role in providing
social welfare for its citizens with the passage of the Social Security
Act. If the President’s plan goes through, it will have taken only
seventy-five years for the free marketers to have their way by rolling
back this commitment, and leaving the average working family to fend for
itself in an unregulated market place, where they will be free to sell
their labor to the lowest bidder.