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Social Security: A Promise to All Generations
Issue Brief - June 2010
For nearly 75 years, Social Security has operated as a family insurance program that serves and benefits individuals of all ages. In addition to being a retirement program, Social Security provides a substantial safety net for more than 53 million Americans, including retirees, the disabled, children and families.
Social Security provides vital life insurance and disability insurance protection for millions of Americans, particularly children and their families. In fact, more than 6.5 million children under age 18, or nearly 9% of all children in the United States, benefit from Social Security, as dependants of workers who have died or become disabled, or as family members in households where an adult relies on Social Security. Of the 6.5 million children in families that received Social Security, fully 1.3 million were lifted out of poverty by Social Security income.
Social Security -
A Comprehensive Family Insurance Program
According to a recent study, over 2.4 million grandparents are now raising their grandchildren in the United States.iv In these instances, Social Security works to ensure that America’s children are kept safe and secure by providing a source of income for older Americans who are raising their grandchildren. While these children themselves are not directly receiving Social Security, they do directly benefit from the program because of the higher family income the grandparent is receiving due to the Social Security payment. In fact, it is estimated that 44% of older Americans, including such grandparents, would be considered poor by federal standards if they did not receive these necessary and critical Social Security benefits.
Average 2010 Social Security Benefit
All Retired Workers………………………….. $1,164
Aged Couple, Both Receiving Benefits…..…… $1,892
Disabled Worker………………………………. $1,064
Disabled worker with a spouse and child……… $1,803
Widow or widower…………………………..… $1,123
Young widow or widower with two children…. $2,391
Source: Social Security Administration, 2010
Americans Favor Strengthening Social Security
Americans agree that Social Security should be strengthened – not cut – so that it may continue to support generations for years to come. In fact, when given the choice between cutting taxes and government spending or strengthening Social Security in response to the economic crisis and large deficit, two in three Americans (66%), including 73 percent of African Americans, 67 percent of Hispanics, and 66 percent of whites, support strengthening Social Security over cutting its benefits. Americans are willing to pay for stronger Social Security benefits. Additionally, when asked their preference between raising taxes on workers or reducing benefits, nearly three in four Americans (71%) said they prefer raising taxes to reducing benefits.vii It is clear that the impact of today’s economic situation on the retirement security of current retirees, which saw the crumbling of 401(k) values and dramatic bursting of the housing bubble, has prompted more and more of today’s working generation to turn towards – not away from – embracing Social Security as a critical part of their retirement security.
Social Security & the Fiscal Commission
In February, President Obama signed an Executive Order creating the National Commission on Fiscal Responsibility and Reform (“Commission”). The Executive Order directs the commission to recommend how to reduce the annual deficits to 3% of the national economy by 2015. Although Commission members have declined to expressly say what options they are definitely considering to meet this charge, Social Security has been the predominant target for debate at the Commission’s past two meetings. Additionally, Commission Co-Chair Alan Simpson has never been shy about his agenda to cut Social Security. When asked whether Social Security was on the proverbial table for consideration by the Commission, Simpson excitedly said, “You bet. That’s what the hell this is all about.” It should be noted that during his tenure as Senator, Simpson supported President Bush’s 2005 efforts to privatize Social Security by turning part of the program into millions of individual investment accounts, which by now would have lost 20% of their value. Not to mention that diverting the funds into private accounts would have resulted in benefit cuts to Social Security beneficiaries.
The Commission must vote on a final report containing a set of recommendations no later than December 1, 2010. This report must be approved by 14 of its 18 members for it to be adopted by the Commission.
Social Security Myths & Rhetoric – What’s Going On?
Today, support for Social Security continues to grow, with large majorities of Americans (88%) saying that Social Security is more important than ever. Notwithstanding this continued overwhelming support, last round’s privatizers are gearing up again to dismantle Social Security, this time deploying scare tactics and spin to fool people into believing that Social Security as on the verge of bankruptcy and in need of drastic cuts or complete elimination. These efforts are targeted towards our youth, with misinformation deliberately designed to make them think that Social Security will not be there for them when they retire – so why should they support it now?
Now’s the time to tell your friends and neighbors: “Don’t believe the hype.” Social Security is on schedule to deliver full, guaranteed benefits until at least 2037. Even after 2037, the program can continue to pay more than 75% of promised benefits through 2083. Social Security’s long-term solvency can be resolved by relatively modest adjustments and without cutting benefits. For instance, if Congress would simply let the Bush tax cuts expire for the wealthiest Americans – those with annual incomes over $350,000 – the revenue produced would put Social Security in balance for the full 75 years. Likewise, if all earned income above $106,800 annually were subject to Social Security contributions but did not count toward benefits, Social Security’s projected long-term deficit would be completely eliminated. If the higher income counted toward Social Security benefits, about 95 percent of the shortfall would be absolved.
Children Under Age 18 in Families that Receive Social Security: January 2005
(Universe: 6.5 million)
Source: Figure prepared by the Congressional Research Service based on analysis of U.S.
Census Bureau Survey of Income and Program Participation (SIPP) 2004 Panel data.
How to Respond When Someone Says…
“Social Security is burying our children in mountains of debt!”
· Social Security has not added a single cent to the federal budget deficit. The federal government doesn’t fund Social Security – American workers do. Think about it: Social Security is funded directly by payroll contributions divided equally between workers and their employers. As such, it has its own dedicated source of revenue and it is fully financed for years to come. Today’s youth are falling behind their parents’ generation due to a decline in quality, American jobs and a failure to adopt policies that help young families balance their roles as workers and parents.
“Social Security is a burden to our youth.”
· While the highly privileged may be fortunate enough to already be setting reserves aside for their retirement, the fact remains that the vast majority of today’s youth and their families are struggling as a result of high unemployment, stagnant wages and a shift from traditional pensions to 401(k) plans. These are the folks who will likely need strong retirement, disability and survivorship protections as they grow and raise families of their own. Moreover, younger workers already face a higher normal retirement age of 67. We ought to be talking more about preserving and strengthening the program for young and old alike, instead of
pushing for cuts to the benefits of future generations.
“The baby boomers are going to bankrupt the program!”
· Social Security has run a surplus since the early 1980s in anticipation of the Baby Boomer retirement. Thus, the savings in the trust fund are already there to meet this increased demand.
“The Fiscal Commission has said that everything is on the table for consideration. It’s only fair for Social Security be included.”
· So far, everything has not been on the Commission’s table of consideration. In fact, many potential sources of revenue have been conveniently absent from the discussion: Where is the discussion about reducing the deficit by levying afinancial transaction tax against Wall Street? Likewise, where is the discussion about closing tax loopholes and other tax advantages for wealthy corporations and individuals?
Did you know… that Social Security is the nation’s largest disability program? It’s true! Almost 8 million disabled workers receive monthly Social Security benefits. Included among those are thousands of wounded U.S. soldiers.
Did you know…that Social Security is the nation’s most effective anti-poverty program? It’s true! Without the safety net of Social Security, at least 44 percent of those age 65 and over would live below the poverty line.
Did you know…that Social Security provides for children of those who have died in military service to our country? It’s true! As of September 2006, an estimated 12,290 children were receiving payments as dependants of deceased service members who had been on active duty in the Gulf War period (extending from August 2, 1990 to date). These children are eligible to receive Social Security in addition to veterans’ compensation.Did you know…that Social Security was the first one the scene to provide benefits for the children and widowed spouses of people who were killed by terrorists on September 11, 2001? It’s true! Social Security is paying monthly benefits to 2,377 children and 853 widowed spouses of people killed in the terrorist attack and to 642 individuals disabled during the attacks.
Additional Resources on Social Security & the Fiscal Commission
· For more information on Social Security and retiree issues, please visit:
http://www.retiredamericans.org/
· For more background information on the Fiscal Commission, please visit:
http://www.retiredamericans.org/ht/a/GetDocumentAction/i/15868
· Fiscal Commission’s website: http://www.fiscalcommission.gov/
· National Academy of Social Insurance: http://ww.nasi.org/
· Social Security Matters: http://www.socialsecuritymatters.org/
Social Security Works: http://socialsecurity-works.org
United States Social Security Administration. April 2010.
See: www.retiredamericans.org
A BRIEF HISTORY OF ATTACKS ON SOCIAL SECURITY
The National Commission on Fiscal Responsibility and Reform set up by President Obama claims both that reducing the projected federal deficit should be a major national objective and that Social Security should be considered as one potential source of relief either through reducing benefits or enhancing revenues or some of both.
But this commentary is about ideology. It is to remind readers that the same attacks on Social Security have been going on -- in different guises – for at least four decades. The stagflation of the 1970s, precipitated by the oil crisis of 1973-74, provided long term, ideological critics of social insurance an opportunity to argue that such programs -- retirement, survivors' insurance, Medicare, disability coverage, and unemployment insurance are not financially solvent.
What is crucial to understand is how devious and misleading such lines of argument are. This strategic ploy is obvious in the case of Social Security pensions. Currently, Social Security is not suffering worrisome fiscal imbalances. The worry of the worriers is about 2035 or 2042 when, according to forecasts of the actuaries and CBO, there might well be some shortfall in revenues against predicted claims. To the extent the worriers worry about 2016, they must focus on an aspect of the program never before considered in history -- whether payments from the general fund to the trust funds for interest payments are in excess of payments from the trust funds to the general fund for the purchase of bonds. But why go decades into the future or invent a new concern when the deficit in the nearer term is the issue at hand?
The genius of social insurance is that small adjustments add up to huge long-term changes in fiscal balance. But there is precious little discussion among the deficit hawks about this point.
It is ironic -- and infuriating -- to have a debate in 2010 about Social Security when that program had nothing to do with the transformation of the nation's fiscal policy from surplus to deficit since 2000. Two wars, Bush tax cuts, and the fiscal consequences of the economic crash of 2008-9 explain the size of the deficit. Why are we even talking about reducing Social Security at this time? It is not because there is a good rationale, but because of the power behind those groups who want a smaller government- (a government that doesn’t interfere with business and organizations.
ByTed Marmor, Professor Emeritus at Yale University School of Management from Laura Feldman’s National Committee to Preserve Social Security and Medicare update and reprinted in the July 2010 issue of the United Seniors of Maryland.
SOCIAL SECURITY is Not In Crisis or Broke
The Politics of Aging
Presentation for the Alliance for Retired Americans
June18, 2008
Laura Feldman
National Committee to Preserve Social Security and Medicare (www.ncpssm.org)
Politics can be a laughing matter according to Laura Feldman, a Grassroots Manager for the National Committee to Preserve Social Security and Medicare. Politics is a great sport, but one with far reaching and important implications for all Americans. Who are the left and right and what do they believe? To understand what each side of the isle believes is a good way to solidify where YOU stand.
Ms. Feldman pointed out that “no matter how flat the pancake, there are always two sides.”
With a visual demonstration and explanation of the ideologies of both political parties and a walk through the history that brought us to today, Ms Feldman worked to clarify how policies impact where we stand with the two largest and most successful federal programs we have, Social Security and Medicare.
The point was made that the word “entitlement” is being used to raise alarms about affordability and sustainability of the programs that most effect seniors, Social Security, Medicare and Medicaid. These are three very different programs with different forms of financing that are being lumped together. The point was made that they are not the only “entitlements” out there and each is very different from the others. Health care is expensive for everyone, not just seniors and that should be the issue.
Social Security is one of the most successful programs this country has ever had. It was designed to be a safety net that is a guaranteed benefit for workers and their families. It is “social” insurance that is not in crisis. We can and should address the shortfall that is projected to begin in 2047. Privatization of Social Security is a whole other issue.
Medicare has also done exactly what it was intended to do, provide affordable healthcare to those 65 years of age and older. Medicare has actually kept costs down more then the private sector. The rising cost of health care is an issue for all ages, not just seniors.
Ms. Feldman inspired us to look at the coming election as an opportunity to focus on the issues. There are clear differences between the two candidates. “There is no right and wrong, just left and right.” Listen to what each candidate is saying and understand the ideology from which they are coming. Then we must think about what we want not only for ourselves, but for the next generation. Decide what you want and fight for it.
MD/DC Alliance for Retired Americans Position: Social Security: Protect. Preserve. Pass it on.
The MD/DC ARA supports preserving and strengthening the current Social Security system to protect the quality of life for America's retirees and seniors even at a time when America faces other challenges at home and abroad. Our premise is universality: that regardless of income, every person must contribute to the Social Security system, no exceptions.
MD/DC ARA concurs with the recommendations of the Social Security Advisory Board to provide adequate funding for the Social Security Administration to improve its level of service to the public, and to exclude the agency's administrative budget from the arbitrary discretionary spending cap in the federal budget.
MD/DC ARA supports reform by the U.S. Congress of the Social Security Government Pension Offset and Windfall Elimination Provision, which unfairly penalize those who have paid into the system.
Past Opinions
Social Security is Essential to Low and Middle Income Americans
Social Security is an insurance program that beneficiaries pay for, not a welfare/entitlement program. It is a common insurance policy that shares the risks among all beneficiaries to provide guaranteed funds to help with life's misfortunes, such as getting old and/or disabled. Employees and employers and the self-insured pay into it through payroll deducations /or fees.
Current and future retirees, and their families, will need strong Social Security and Medicare systems, access to affordable long-term care, and strong pension systems in order to attain a decent quality of life. However, rising health care and prescription costs, the gyrations of the stock market, above-inflation increases in energy and transportation costs and lower housing values threaten the stability of retirement. Disappearing and decreasing company and organization pensions are putting more holes into the retirement security of many Americans. These pensions are now providing only about 10% of the income of retired Americans.
Further, most employer defined benefit pensions are not indexed to inflation, which means their real value declines over time. A growing number of retirees have income from 401(k) accounts. However such income is subject to market fluctuations and is not guaranteed against inflation as is Social Security with its annual cost of-living adjustment (COLA). The Social Security Trust Fund invests in the safest investment available - U.S. government securities. Those securities are legal obligations of the U.S. to pay principal and interest to the holder of the bonds.
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