Defending Social Security — A Survival Imperative

by Carol Van Strum

Attacks on Social Security promote several huge misconceptions. For one thing, they present Social Security benefits as a drain on government funds for other programs. This is patently untrue. Social Security funds are paid by wage earners into a special trust fund, and all benefits are paid from that trust fund. Money paid in by wage earners is therefore held in trust for their later needs; use of that money to fund any other government endeavor effectively constitutes embezzlement.

Further, attackers portray the Social Security program as solely a retirement benefits program, and therefore solely a “senior” issue. This is a dangerous fallacy. The Social Security program is much more than a retirement fund; it also provides insurance against disability and death. Replacing its functions would cost far more money than people currently invest in such insurance. Also, Social Security does not terminate coverage when you are no longer a “good risk,” whereas if you are self-employed, you can pay into a private disability policy for years without ever making a claim, only to see your “investment” disappear overnight when the insurer suddenly cancels the policy.

Those who would eliminate or privatize Social Security need to answer some crucial questions about the consequences of such proposals. Below are examples of its provisions and questions we need to ask — over and over — of those who would weaken or eliminate Social Security:

SURVIVOR’S BENEFITS

Social Security is a multi-faceted program: it’s not just an investment/trust fund for retirement benefits. What you pay in via your FICA (Federal Insurance Contributions Act) taxes goes into several programs: one of them is a kind of life insurance program.

If you die “fully insured,” then a small death benefit is paid. In addition, surviving members of your immediate family may be entitled to benefits from your wage earner’s record. Your children — including children you have adopted and even step-children under certain conditions — will be entitled to a monthly benefit until each child turns 18 (19 if the child doesn’t complete high school until age 19). A child who becomes disabled before age 22 may be entitled to disabled adult child benefits — for as long as the child is disabled or until he/she marries (entitlement to benefits continues if the disabled child marries another disabled person). Your surviving spouse may be entitled to a parent’s benefits as long as she/he is caring for a child (yours) under 16.

What your dependents receive depends on how much you paid in; you can see how much the monthly amounts would be by reviewing the earnings report Social Security mails to you annually.

Check your earnings report, see how much your dependents would receive. Now figure out how much life insurance you’d have to buy — and your spouse would have to invest — to yield the same amount of monthly income. Quite a bit of money, isn’t it? Social Security’s trust fund is a safer investment than most. Don’t agree? Then figure out which state and municipal pension funds are in BETTER shape, and see how corporate pension funds are doing. Not the ones for upper upper management, but for the majority of employees.

• Without Social Security benefits, what would become of the children?

• Without those benefits,where will workers find the money to pay premiums for $1,000,000 (or more) in life insurance policies?

• Without Social Security benefits, what about the workers whose health problems render them “uninsurable by private insurers?”

• Why does the GOP want to remove those benefits and place struggling families under even greater stress?

DISABILITY BENEFITS

If you become disabled and qualify for a “Family Max” amount, then you and your dependents (up to age 18 or 19) will receive benefits for the duration of your disability.

As you age and reach your 40s and 50s, the likelihood of your becoming sufficiently disabled to meet Social Security criteria goes up. This is especially true today and will become moreso, as chronic disabling diseases like Parkinson’s, Alzheimer’s, MS, cancer, diabetes, and other environmentally-caused disorders have already reached epidemic proportions. Even if you are are healthy, eat well, and exercise regularly, you can be seriously injured and disabled for 12 months or longer by a motor vehicle accident. The truth is that injury and sickness can happen to anybody, and do happen — at younger and younger ages. Ask your local pharmacy or health department how many functionally disabled people live in your area. You could be one of them very soon. Social Security provides benefits, including Medicare, to those disabled by disease as well as by injuries or birth defects.

• How many workers can afford to pay for a comparable private program of benefits?

• Without Social Security benefits, how many workers could afford a private disability policy that will pay benefits to their children until they are 18 or 19? How many private policies pay benefits to the disabled parent until he/she reaches retirement age?

• How, then, can anyone justify eliminating Social Security disability benefits?

• Why would anyone want to eliminate such benefits and risk ending up on the streets and hungry when there is a program IN PLACE that will help them survive?

Another consideration is that most private long-term disability policies actually require recipients to apply for Social Security disability benefits, and to repay the private policy benefits out of any retroactive Social Security disability benefits they receive. Therefore, premiums for private policies will inevitably skyrocket if Social Security disability benefits are eliminated; fewer employers would then pay those inflated premiums for even fewer employees, and buying your own private coverage would be even more prohibitive than it is today. Even short-term disability would likely result in more homelessness and dissolution of families.

• Is this the outcome the GOP intends to promote and support — more children living under bridges and in abandoned cars?

• What are the GOP’s reasons for wishing to destroy families?

• What are their their reasons for denying disabled people medical treatment and support that can improve their conditions enough to return to work (if there are any jobs left, that is)?

IMPROVEMENTS NEEDED

The system is far better and more economical than private insurance, but it’s not perfect. One major weakness in Social Security is Medicare. The disabled/retired (at full retirement age) worker gets Medicare, although the disabled worker cannot receive Medicare until 29 or 30 months after the date the disability is determined to start. You still have to pay ever-increasing premiums for Medicare, but again, out there in private insurance world, unless you’re getting group coverage through your employer, you’ll likely pay four or more times the premiums, if you can find coverage at all. Or it’ll be through a high-risk pool, have a huge deductible, and may not pay for the care you need (which is also a problem with Medicare).

FUNDING AND SOLVENCY QUESTIONS

The Social Security trust funds are administered by a board of trustees consisting of the U.S. Secretary of the Treasury, the Secretary of Labor, the Secretary of Health & Human Services, the Commissioner of Social Security, and two trustees appointed by the President to represent the public. As of the date of the 2010 trust fund annual report, no public trustees had been appointed. In other words, the public had no voice and no input on the board, and all decisions were made with one-third of the mandated membership absent.

According to the 2010 annual report of the Social Security Board, some 53 million Americans received benefits during 2009; this figure includes 36 million retired workers and their dependents, six million survivors of deceased workers, and ten million disabled workers. Some 156 million workers paid into the trust fund that year: total expenditures were $686 billion, and revenue totaled $807 billion.

As the annual report makes clear, the greatest drain on Social Security is in benefits for disabled workers, which is already in effective overdraft, as the following tables illustrate:

OASI: Old Age & Survivors Insurance trust fund
DI: Disability Insurance trust fund
OASDI: OASI and DI combined
HI: Hospital Insurance trust fund (Medicare)

Source: 2010 Status of the Social Security and Medicare Programs, August 5, 2010

Obviously, positive action is needed to increase the income of the trust funds and take further measures to control medical costs. As the annual report indicates, there is time to make needed policy changes well before Social Security trust funds are exhausted. Privatization is not the answer: indeed, to get an idea of how privatization would work, one need only look at the record of too-big-to-fail companies that have drained their employees’ retirement funds to pay company gambling debts (e.g., Enron). Allowing the government to draw on current or future Social Security funds to pay for its war debts and other blunders would be equally disastrous.

Absent massive public opposition, the strong likelihood is that these disasters will happen, however. Following publication of the 2010 annual report, President Obama appointed and the Senate confirmed the two ‘public’ representative trustees on the Social Security Board. One of the two is Charles Blauhaus, former head of industry lobbying groups for privatization and an architect of George Bush’s failed attempt to privatize Social Security in 2004; Blauhaus’s book on Social Security reform is enthusiastically endorsed by none other than Karl Rove.

Obama’s other appointee is Robert Reischauer, whose qualification as ‘public’ representative seems to be his presidency of the Urban Institute following Robert McNamara. There is no record of either of Obama’s alleged public representatives ever having received or needed Social Security benefits, nor ever having represented anyone else needing such benefits. Indeed, Blauhaus’s explicit agenda has long been to promote corporate interest in robbing the Social Security trust funds of all the money held there.

Social Security is in fact the only government program designed and operated successfully to provide financial and medical security to its own population. Certainly, changes are needed to meet a changing population and changing economy.

One of the most obvious changes needed — the massive elephant in the room ignored by all — would be universal health care, which would instantly reduce health care costs and therefore eliminate the largest of Social Security’s looming deficits. Proposals to pay for universal health care through taxes on unhealthy products like soda were endorsed by President Obama himself until outraged industry voices drowned out the idea.

Necessary changes require common sense and informed public involvement, not industry-promoted privatization or embezzlement of funds placed in trust for all of our own and our children’s needs.

To tell President Obama to keep his Social Security Promise, click here.