Will Social Security survive in its old age?

August 26, 2010

Elizabeth Schulte explains how the government's retirement program was the product of struggle--and how some politicians have been trying to shred it ever since.

THE DEMOCRATS used the 75th anniversary of the founding of Social Security this month as an occasion to throw a scare into voters about the threat of a Republican victory in November.

"We have an obligation to keep that promise, to safeguard Social Security for our seniors, people with disabilities and all Americans--today, tomorrow and forever," President Barack Obama declared. Some congressional Republicans, said Obama, are "pushing to make privatizing Social Security a key part of their legislative agenda if they win a majority in Congress this fall."

The Social Security program is, for millions of elderly and disabled people, the only thing standing between them and utter poverty.

And make no mistake about it, the Republicans have had this federal program in their sights for years--from Ronald Reagan, who favored making the program "voluntary" and suggested workers who could prove they could provide for their retirement years should be able to opt out of Social Security deductions from their paychecks, to George W. Bush, who bragged in 2005 that he was going the use his "political capital" to get Social Security privatized.

Ohio Social Security recipients attend a 75th anniversary celebration of the popular program
Ohio Social Security recipients attend a 75th anniversary celebration of the popular program

But if the Democrats want to see everyone who is threatening to shred Social Security, they'll need a mirror.

MEET THE National Commission on Fiscal Responsibility and Reform, a bipartisan panel that is supposed to announce recommendations for reducing the federal deficit in December and send proposals to Congress for a vote.

Although its meetings are secret, according to media reports, the commission--stacked with politicians with longstanding ties to Wall Street and Corporate America, not to mention plenty of executives from Wall Street and Corporate America as well--will put forward cuts to the Social Security program that could be devastating.

The commission was appointed by Obama and includes Erskine Bowles, a former chief of staff in the Clinton White House and currently on the board of Morgan Stanley and General Motors--both companies whose heads didn't think twice about taking federal bailout money from the Obama administration.

Bowles, however, thinks the government is spending way too much when it comes to the rest of us. "All of our revenue is completely consumed by entitlements," Bowles told a meeting of North Carolina bankers in March. "We're going to mess with Medicare, Medicaid and Social Security because if you take those off the table, you can't get there."

Bowles' Republican co-chair is Alan Simpson, the former Wyoming senator and potty-mouthed wing-nut. Simpson likes to rant about people milking the system, which may explain why he recently called Social Security "a milk cow with 310 million tits."

Other commission members include David Cotes, CEO of the defense contract Honeywell and a member of the Business Roundtable, an association of CEOs that promotes things like...privatizing Social Security.

The commission's executive director, Bruce Reed, is head of the pro-business Democratic Leadership Council, an organization that strives to distance the party from its liberal pro-labor image. Under Bill Clinton, Reed helped develop government policies on welfare, education and crime. The Clinton administration promised to "end welfare as we know it"--and it did, kicking million of poor people from the rolls.

The proposals likely to come from Obama's commission bear the same marks. For example, one cost-saving measure to be proposed, according to reports, is raising the retirement age to 70 years old (currently, in order to receive full Social Security retirement benefits, you must be 67 years old, if you were born in 1960 or later).

Supporters of increasing the retirement age claim their proposal only makes sense since life expectancy has increased, and therefore people can work longer. But this wrong-headed argument only underscores the economic inequality at the heart of working--and growing old--in the U.S. As New York Times columnist Paul Krugman pointed out, the claim about life expectancy and retirement age is:

only true for affluent, white-collar workers--the people who need Social Security least.

I'm not just talking about the fact that it's a lot easier to imagine working until you're 70 if you have a comfortable office job than if you're engaged in manual labor. America is becoming an increasingly unequal society--and the growing disparities extend to matters of life and death. Life expectancy at age 65 has risen a lot at the top of the income distribution, but much less for lower-income workers.

No matter how politicians paint it, Social Security is about a contract between the U.S. government and workers and their families. While it is far from what they deserve after a lifetime of working, the Social Security program is the promise that the government will honor an obligation to workers when they are no longer able to work.

Today's deficit commission isn't the first government body to try to reverse this promise.

In the early 1980s, the Reagan administration set up a commission to reduce the deficit, chaired by Alan Greenspan. It raised Social Security payroll taxes and lowered benefits by adjusting the program's cost-of-living increases.

The Clinton administration also set up several commissions, which tried unsuccessfully to push privatization of Social Security. Erskine Bowles reportedly worked behind closed doors with Newt Gingrich in 1997 on a plan to privatize the program and raise the retirement age.

SOCIAL SECURITY came into existence 75 years ago as part of the Franklin Delano Roosevelt administration response to the Great Depression--and the mounting pressure to provide for workers and their families.

Despite the fairy-tale view of FDR as someone who enacted programs like Social Security because of his liberal, pro-worker principles, the Roosevelt administration was forced to intervene and rein in some of the excesses of business in the face of the possibility of total economic collapse.

So while Roosevelt campaigned in 1932 on a platform of balancing the budget by cutting "reckless federal spending," by 1935, his administration saw the necessity of passing a series of reforms to provide for unemployed workers and elderly.

Despite a wing of the business and political establishment that decried many New Deal policies as a "Bolshevik plot," the president did get help from a section of business leaders, including General Electric's Gerard Swope and Walter Teagle of Standard Oil of New Jersey, who suggested the government model their plan on the insurance and benefits used by private businesses.

Contrary to the idea that the New Deal coalition was made up of labor leaders and community organizers and the like, the New Deal capitalists were a bloc of capital-intensive industries, investment banks and commercial banks that sought foreign investment.

The 1935 Social Security Act was inspired by "welfare capitalism" programs established in the 1920s by some of the country's leading corporations, with the idea that bosses, not workers or their unions, knew best how to provide for their workers.

The Roosevelt administration tried to navigate between Corporate America's refusal to be taxed for government subsidies and the popular demands on government to begin providing for the poor.

Thus, the Social Security Act granted unemployment compensation, disability pay and old-age pensions--and for the first time, the U.S. government, however reluctantly, admitted it had a responsibility to its workers.

But the program would be financed by a regressive payroll tax and wouldn't require the wealthy to pay a dime. And the law carefully avoided threatening the economic status quo. As Edwin Witte, one of the architects of Social Security, promised: "Only to a very minor degree does it modify the distribution of wealth, and it does not alter the fundamentals of our capitalistic economy. Nor does it relieve the individual of primary responsibility for his own support and that of his dependents."

As Alan Dawley writes in Struggles for Justice: Social Responsibility and the Liberal State:

Artfully crafted to minimize conservative opposition, the Social Security Act exempted many of the groups that needed help the most. To placate Southern planters, agri-businessmen and economic conservatives in general, it denied protection to farmworkers, domestics and casual laborers, the very people whose low wages and irregular employment made them among the poorest in the land. Likewise, instead of setting a minimum national unemployment benefit, the system bowed to low-wage regions and allowed state officials to set the dollar level of unemployment checks.

Social Security came about as part of a second wave of FDR's New Deal reforms in 1935, including the National Labor Relations Act (NLRA), which guaranteed workers' right to organize.

None of this would have come to be were it not for the workers' upheavals that came before it. This included several bitter and hard-fought strikes in 1934--the Auto Lite workers in Toledo, Ohio; waterfront workers on the West Coast; textile workers in the South; and Teamsters in Minneapolis.

Even though they didn't all end victoriously, these struggles and others like it created the political climate that forced Roosevelt's hand. In his book The Democrats: A Critical History, Lance Selfa quotes Rep. William Connery, speaking in support of the NLRA, who warned, "You have seen strikes in Toledo, you have seen Minneapolis, you have seen San Francisco...but you have not yet seen the gates of hell opened, and this is what is going to happen from now on."

Despite the reluctance with which the Democratic administration finally enacted benefits for the old and disabled, Social Security's passage helped secure the labor movement's support for the Democratic Party from that point on. FDR won the next election in 1936 in a landslide.

Since that time, Republicans and some Democrats have tried renege on the social contract that the government made with the elderly and disabled. They've tried to trade in the promise of government responsibility for providing aid to poor and disabled, and replace it with "personal responsibility."

With pensions and retirement benefits under attack in the few places where they do exist, Bowles and Simpson and the rest of the deficit commission have a lot of nerve going after Social Security.

It took an upheaval of the working-class movement to bring Social Security into existence--and the program needs workers' action to keep it from being destroyed.

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