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Attacking the Social Safety Net

November 5, 2012

Sooner or later, all discussions of budget balancing and debt reduction eventually arrive at a discussion of how to address the rising costs of Social Security, Medicare and Medicaid. These programs were instituted to care for the needs of the most vulnerable members of our society – the elderly and poor, including many children. They are dependent on these programs for medical care in the cases of Medicare and Medicaid, and retirement or disability income in the case of Social Security. While Social Security was not initially designed to provide for a worker’s entire income during retirement, the demise of many pension and other retirement plans leaves many with little more than Social Security to live on in their retirement years.

Social Security and Medicare have been funded since their inception by a payroll tax on employers and workers as a percentage of their pay. There is no cap on the income taxed for Medicare, but there is a limit to the amount of one’s income that is taxed for Social Security. The rapid increase in the costs of medical care, along with increased life expectancy for people in our country, have combined to create a situation where the programs may need to face changes in order to maintain current benefit levels for all participants. Raising or eliminating the cap on wages subject to the Social Security payroll tax would go a long way towards extending the program’s fiscal viability many years beyond current projections. Social Security is not currently a budget busting program to begin with, having run surpluses for most of its existence. Further raising the retirement age for Social Security eligibility or otherwise reducing benefits paid to its recipients is neither necessary nor would it treat recipients with the respect and compassion they deserve for the years of work and tax dollars they have contributed. Raising the retirement age would affect those most dependent on the program more severely than those who are more financially secure.

Raising the payroll tax associated with Medicare, along with efforts to control the costs of health care in general could achieve similar results for that program. Some proposals have been put forth to raise the eligibility age for Medicare as well. This would definitely be detrimental to the health and well-being of increasing numbers of elderly people who would then have to obtain private health insurance at a time they could least afford it. A budget proposed by Republican Vice Presidential nominee Paul Ryan and passed by the House of Representatives would start giving vouchers to future seniors to help them purchase such insurance on the private market. Most studies of this approach have concluded that it would dramatically increase out-of-pocket health care costs for most seniors, as the vouchers would not increase fast enough to keep up with the inflation in medical costs. Again, this would cut costs to the federal government by cutting benefits to many who can least afford to pay for it.

Likewise, proposals are being put forth to reduce the costs associated with the Medicaid program by giving block grants to the states to administer under the assumption that they would then be able to spend the money more efficiently than under the current system. The Medicaid program is designed to meet the health care needs of the working poor, children and some of the elderly, particularly those in need of long-term care such as nursing homes. As health care costs continue to rise while wages do not, cutting benefits in this manner would result in more people doing without needed medical care. This is not the direction we should be moving in as a society.

After the election, there will again be increased pressure for legislators and the Administration to meet budget deficit and debt reduction goals. Taking the easy way out by simply reducing costs associated with the social safety net without regard to the effects of such methods on the welfare of those in need. Turning back the clock to the bad old days before the New Deal would be a Raw Deal to cast numbers of Americans and would only serve to benefit most those who need it least. The situation reminds me of when President George W. Bush wanted to privatize Social Security by turning it into a sort of modified 401k plan that would leave us all that the vagaries of how the stock market was faring when it came time to retire.

Lowering taxes is fine, as long as doing so does not negatively impact much larger segments of the population than it benefits. These proposals would do just that. Additional sources of revenue, not merely budget cuts, must be explored in detail to come up with solutions that are not only fair but also compassionate to those who are less fortunate in our society. This includes examining how we tax different sorts of income differently than others. Why, for instance, is wage and salary income subject to different taxes and different tax rates than capital gains are? This is one example of why folks like Mitt Romney are able to legally pay lower tax rates than the rest of us, while at the same time claiming they pay more taxes than we do. They do, but only because they can afford to do so and still increase their share of the national wealth while ours declines.

Such attacks are not new. They never seem to go away. Ever since Reagan, the general trend has been to decrease the tax burden on the wealthy by making others either pay more or do without the hard-earned benefits their work deserves. Providing fewer benefits would be a move exactly the opposite of what a compassionate society has as a goal. Single-payer universal health care would be a step in the right direction, but not these proposals. The people salivating the most over the thought of privatizing Social Security, Medicare and Medicaid are the ones who would stand to gain the most – the insurance and pharmaceutical industries and Wall Street types who would have all that extra money in the market to make fees off – not the vast majority of us.

Some seem to me intent on morphing the social safety net into something like screen doors on a submarine. Sure, they keep out the sharks, but do nothing to save the occupants from drowning. For that, they need to buy themselves scuba gear and an endless supply of air tanks. I hope people will keep these thoughts in mind as Congress goes back into session and begins anew its debate on our futures.

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5 Comments
  1. These greedy bastards never get enough! They read the bible and the only scriptures they see pertain to sluggards, not to the Luke 16 pertaining to the rich man! We must keep resisting their greedy ways! A perfect example of what I’m talking about is Romney, an arrogant uncaring politician with a family of six men all willing to send poor folks to war while being to AFRAID(important) to go themselves and then no having concern about the casualties of war. Those that belittle people that are floundering because of the decisions of these vultures to rape the companies ( Exam.Sensata) that employed these people in search of filthy lucre! God will not be mocked, vegeance is His and He will repay!

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  2. Chris Baulman permalink

    My assertion is that it’s not just how you spend your income that affects the environment, it’s also the impact of the job you do to get that income … AND whatever the job, the amount of income has an impact too.

    We can think of jobs which produce little if any real value, but have a great and unsustainable environmental impact.

    Next, a receptionist in a damaging industry contributes less to its damage by working in that industry than does the top executive. The amount they each earn is a reasonable measure of the damage they create since their “productivity” is recognized in the income they are paid.

    To take the thinking a step further, compare a squatter in the third world who has no income to speak of and little or no access to infrastructure, and a social worker in the first world. The social worker earns their much higher income by working on a positive activity, but in an economy which generates its wealth by relying on the unsustainable levels of consumption.

    Environmental scientists warn us that first world people are way out of balance with nature, especially in regard to their demands as consumers. Our personal impact on the environment is not just in consumption but in our demand for an unsustainable economy to generate sufficient wealth for income levels that are also unsustainable. In the first world, whatever job we do, our income levels depend on overconsumption by others and regardless of whether we ourselves use our income to consume.

    While footprint calculators make some adjustments for different countries,they assign a country impact to all its residents, regardless of whether they rely more heavily on an unsustainable economy to generate a high income, or less heavily for a low income.

    Now let’s locate the social worker and the squatter in the same low impact third world country. Having no income, squatters would easily be able to tick the right boxes on the footprint calculator. Let’s say the social worker is a strong environmentalist and can tick the right boxes too.

    If the social worker’s income is derived either from an unsustainable source (say the country depends on aid from Australia), surely the social worker’s footprint must be significantly different to the squatter with no income?

    Every job has some environmental impact, but at what level does a job start to upset the balance? (homeostasis).

    At this critical stage in our development, many environmentalists, scientists and economists are warning that the average first worlder will need to reduce their consumption by 80% to be sustainable.

    This also confirms that perhaps 80% of the economic activity on which we currently depend to generate the levels of income we demand is unsustainable, whatever job we do or whatever we spend our income on.

    Advances in technology could reduce the negative impacts of such consumerism, but to believe in that we would need to also believe that people would not take every opportunity technology created to simply ramp up their consumption – like solar electricity reducing dependence on power stations, but leading to greater demand for home air conditioning, new panels, storage tanks, computer hardware … more mining/chemicals/transport/etc..

    To reduce personal consumption AS WELL AS dependence on the consumerism of others, average first world income would have to reduce by 80% – probably to less than $A250 per week.

    If creating and spending around $250 per week is something like a sustainable level of economic activity, income generation above this should be counted as having a per dollar negative impact on the environment.

    If we see $250 per person as being the maximum sustainable income, one person or country taking higher income than that will come to be seen as robbing others of their chance to have a sustainable share in what they need from the earth. The result of such behavior used to be war with bows and arrows – war today is a much bigger threat for the environment.

    For a number of reasons it can be tempting to imagine that the impact of an unsustainable income level might be offset by donating excess income to a good cause, like the starving millions. But if we are going to really understand the solutions for sustainability we must accept that we cannot save the environment (or the poor) by damaging the earth with income from an unsustainable economy.

    If $250 is anything like the figure, one obvious reform we need to face is land reform so that people can have a realistic way forward. Without land reform there is no way we can escape the fact that we are locked into dependence on higher incomes simply to meet our housing needs. (see http://bit.ly/dcQMGo)

    The figure of $250 is a ball park one for people living in developed countries like Australia, but it recognizes that people everywhere have a right to live a sustainable and happy life and will demand their rights as soon as they can. It means that everyone has a right to the means, whether from a sustainable level of income with which to buy what they need, or by having access to their birthrights of air, water, land and sunlight for food, shelter and community whereby they can provide for themselves directly from the earth.

    From global warming it is now clear that we in the first world have seriously compromised the birthright of access to clean air. The operations of our first world economies to provide the income levels we first world individuals demand from those economies means that the poor especially are denied access to their natural birthright. They cannot pay to avoid the consequences, eg to move home in the face of flooding, drought or war.

    I make this case to open up the question of income. I want any income included in footprint calculations and to say that the impact of income increases in proportion to income.

    Chris Baulman
    @landrights4all

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  3. robwal48 permalink

    I would have liked to see you include loans to the general fund from the Social Security fund, and how that affects Social Security solvency. I understand those loans are represented as government bonds in the SS fund.

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    • Frank Miller permalink

      From what I understand we have a huge surplus in the Social Security fund at the moment but the right keeps wanting to get their hands on it mostly to cover higher cola’s for them.

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  4. Frank Miller permalink

    This can’t happen. Like you say many people for different reasons. Mine was the big recession hit me so hard I lost all my savings. Take away or reduce people’s benefits and you’ll have a homeless people everywhere and I mean everywhere. This is the worst possible program for the right to try and mess with right now! This is just a sickening thought. There is one solution and we must use it and that’s to eliminate all the tax loopholes for the elle riche. Make the 1% take the hit. Becomes a huge problem for a country when that small of a percentage of people control all the money.

    Liked by 1 person

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