Crises often create opportunities to push for unpopular and regressive reforms that would otherwise be met with more skepticism by the public and their elected representatives. The latest showdown over the budget sequester—the $85 billion in across-the-board cuts set to take effect on March 1 unless Congress can pass an alternative—is no exception.
As part of the ongoing discussions to prevent the sequester and reach the elusive “grand bargain,” cuts to Social Security benefits are very much on the table. This, despite the fact that 70 percent of the population is opposed to any such cuts.
It’s no secret that the Republican Party has long had its eyes on Social Security. In his 2005 State of the Union address, sandwiched between defenses of the occupation of Iraq and other criminal activity, President George W. Bush proposed privatizing Social Security. The outcry against the plan, which would have effectively turned the program into an array of 401(k) plans, was so deafening that efforts to advance the proposal in Congress ultimately went nowhere.
Fellow Hoyas might also recall seeing washed-up presidential candidate Newt Gingrich deliver a speech in Gaston Hall last spring to a similar effect. What’s different this time is that the attack on Social Security, while not as egregious as outright privatization, isn’t coming from Republicans. Instead it comes directly from the Obama White House.
The maneuver is a bit more subtle. The White House favors changing the way inflation is calculated in order to reduce Social Security benefits. More specifically, the proposal, known as the “chained consumer price index,” or “chained CPI,” changes the formula used to calculate cost of living adjustments that determine how much one’s benefits increase over time. Whichever way proponents ultimately choose to spin it, the implementation of chained CPI would mean a cut in Social Security benefits.
These cuts are not marginal. As the AARP has shown, chained CPI could mean tens of thousands of dollars in benefit cuts for beneficiaries over time. The organization estimated that a 92-year-old who’s been on Social Security for 30 years would lose over 8 percent of his or her benefits. Indeed, as is often the case when social programs are slashed, this move would overwhelmingly affect the poor and the elderly, that is, those others who rely on Social Security for a large chunk of their income.
Austerity is always nasty. In the end, it boils down to class warfare—forcing working class people to pick up the tab for a national debt problem for which they bear little responsibility. Instead of cutting off the multi-trillion dollar lifeline extended to Wall Street, maybe reconsidering the fiscal implications of foreign military operations, or closing corporate tax loopholes, Republicans and their apparent accomplice in the White House have turned to the most vulnerable because they make a much easier target.
But there’s something particularly disingenuous about all of this. Social Security doesn’t actually contribute to the national deficit or debt. In fact, as of FY 2011, the Social Security Trust Fund is running a $68 billion surplus. By law, that is the only entity that can fund Social Security benefits, and it remains entirely distinct from the federal government’s General Fund—the one running the deficit. The Social Security Trust Fund will face a shortfall, but not until 2033. By that time, it should be appropriate to discuss strengthening the program so that it can continue to pay out benefits to everyone who contributes.
But as it stands today, to suggest that Social Security contributes to the national deficit is simply inaccurate. It’s a myth that has long been perpetuated by the American right, finally transformed into a legitimate policy option after years of lobbying and billions in foundation money to back it up. This makes it all the more upsetting that the White House is apparently on board.
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