Thursday, Aug 23, 2012, 11:33 am
What Social Security Crisis?
I speculated last week that Paul Ryan’s emergence may actually push this election cycle’s discourse leftward. Nothing is guaranteed, but progressives have the chance to win a debate about the social safety net and Obama has every incentive to position himself as the foil to Republican austerity.
Recent polls confirm that the Romney-Ryan Medicare plan is deeply unpopular in key swing states with aging populations – Ohio, Wisconsin, and Florida, among them. The debate over Medicare overstates the severity of the crisis, but few doubt there is a problem. We overpay for services compared to other industrialized nations. The solution, however, is more in the direction of expanding the subscriber pool by instituting universal healthcare than privatizing the system absolutely.
The other half of the “entitlement crisis” is a complete fantasy. Social Security, now celebrating its 77th year, isn’t in dire straits and can be easily sustained. The grouping of Social Security and Medicare together serves the interest of those neoliberals on both sides of the aisle who would like to drastically overhaul the former.
Jeff Madrick, a fellow at the Roosevelt Institute, has a useful piece extolling the successes of the social security–which 60 percent of elderly people depend on for more than half their income–and explaining how its “crisis” is overstated. No surprise the actual solvency problem lies in inequality and a lack of redistribution, not big government:
Tax revenues are reduced because incomes have stagnated for so many. Due to an earnings cap above which taxes are not collected, now about $110,000 a year, combined with the rapid rise of incomes for high-end earners, some 17 percent of aggregate earnings are not covered by the payroll tax. In 1980, only 10 percent were not covered.
Raise this cap and the solvency woes are over. This reveals a basic truth about the “tough kitchen table choices” workers are being asked to understand–they’re political decisions being masked as technocratic necessities.