Sunday, a New York Times editorial contributed a rare note of good sense on Social Security. The editorial said, correctly, "There is mounting evidence that Social Security, which has become even more important in retirement, needs to be expanded."
This is especially welcome, appearing in the newspaper of record. For decades, the only "acceptable" position was that Social Security was "unsustainable." If Social Security were to continue, benefits would have to be cut. Anyone who argued otherwise--even without calling for expansion--was scorned. The once-great Washington Post sniffed that they were "Social Security denialists."
The conventional wisdom's bias became harder to ignore after Nancy Altman and Eric Kingston founded Social Security Works to inject reality into the discourse. Subsequently, former Senator Tom Harkin introduced a bill to expand Social Security, and Senator Elizabeth Warren brought her immense visibility to the issue when she gave a powerful Senate speech in support. Then, in April last year, nearly every Democratic senator voted for a non-binding budget resolution calling for careful expansion. The idea of expansion had become mainstream.
The negative portrayal of Social Security had not just happened, and was never realistic. Initially, Social Security was portrayed as "one leg of a three-legged stool." Company pensions and personal savings were the others. Now, that metaphor fails. Personal savings are negative, and companies continue to withdraw from pensions. Only Social Security remains.
Why, then, was it Social Security that came under attack? As early as the 1960s, Ronald Reagan was charging that Social Security was bankrupt (it wasn't), that if Medicare were adopted (it was), totalitarian dictatorship would follow immediately (it didn't). He said government was the problem, not the solution, thus rhetorically attacking government itself.
He began his presidency with an energetic strike at Social Security. It caused such huge protest that he publicly promised, implicitly, never again to mount such an attack. He was true to his word, and in 1982, when there was a cash-flow issue, he appointed a bi-partisan commission that proposed what became the 1983 revisions. Ironically, many later commentators have praised Reagan as Social Security's "savior." His commission did seek genuine reform--unlike that of George W. Bush who appointed only members who agreed in advance to undermine Social Security by supporting "private accounts"--but Reagan signed an increase from 65 to 67 in the age for full retirement, which was a huge benefit cut.
Less dramatic than Reagan, but working vigorously behind the scenes were ideologues of fewer charms but vastly more wealth. Koch riches were instrumental in forming the quasi-anarchist Cato Institute. In 1983, Cato's journal published an article by Stuart Butler and Peter Germanis of the far-right Heritage Foundation: "Achieving a 'Leninist' Strategy." They provided an approach to dismantling Social Security and Medicare that has influenced almost all the subsequent discussion that calls for "reform."
They said don't upset the elderly--they vote. Instead, assure them that their benefits were secure, as were those close to retirement. Note that in 2012, all Republican candidates called for reductions in benefits, but not for those 55 and over. The only exception was the candidate most prone to political suicide, Rick Santorum, who wanted all benefits reduced immediately. Currently, all Republican candidates except Trump and Huckabee urge reductions. Democrats Sanders and O'Malley support expansion, while Clinton says only that she will protect the system, and increase benefits for the poor.
Next, Butler and Germanis called for the creation of financial instruments that could be presented as superior to Social Security. Today, such instruments have lost their veneer of superiority. Enron employees notoriously had poured money into 401K plans that became worthless, and the Great Recession destroyed others.
Last was a propaganda campaign to undermine confidence in Social Security and Medicare. Convince the public that they were "unsustainable, " they wrote.
Large financial institutions and the US Chamber of Commerce leaped into the fray. Pete Peterson and his many anti-Social Security organizations such as the Concord Coalition, and the Peterson Foundation, helped to coordinate the opposition and to fund any program that might be useful.
Nevertheless, there were voices of reason. David Langer, an actuary, and the late Robert Eisner, a distinguished economist, demonstrated that the pessimistic forecasts were unlikely to materialize. In 1999, Dean Baker and Mark Weisbrot brought out Social Security: the Phony Crisis, and I published Social Security and its Enemies.
This century has brought more. Several stand out: Nancy Altman's fine study, The Battle for Social Security (2005), and Eric Laursen's magisterial The People's Pension: The struggle to Defend Social Security Since Reagan (2012). In 2015, Altman and Kingson produced the splendid argument, Social Security Works: Why Social Security Isn't Going Broke and How Expanding It Will Help Us all.
Despite good work by other organizations, Social Security Works, the Altman and Kingson organization, was the real catalyst for change. It vigorously contested the poisonous conventional wisdom that had taken root, and contributed enormously by directing the public's attention to fact, not slogans from ideologues.
As for expansion, in my Securing America's Future (2008) I suggested removing the cap on FICA taxes, as already has been done for Medicare, and boosting the economy by exempting the first $20,000 of earnings from FICA taxation (still providing workers credits for those earnings). Very low earners would still have Social Security, but would have no payroll deductions. As Bob Eisner suggested, an inheritance tax (the Republicans' dreaded "death tax") could be designated for the Trust Funds, and interest rates on the bonds that the Trust Funds hold could be increased.
The Trust Funds are political mechanisms, and thus are important as symbols of commitment to the people, but economically, the system could function without them. Remember, as long as we control our currency, and as long as we pay our bills in dollars, we can always have as many dollars as we need, however much that may seem to be counter-intuitive.