Saving and improving Social Security: The Communist Partys solution

The following is adapted from a report delivered at the Socialist Scholars Conference in New York City on April 14.

Marx’s observation that the task of a movement goes beyond mere interpretation of events was never more apt than when it comes to the struggle to defend – and improve – the Social Security system.

Let there be no mistake: We are involved in a battle against a very determined ruling class and a well-heeled gang of right-wing ideologues who have a clear objective – to destroy Social Security by any means necessary, with an appeal to self-interest being one of their main ideological weapons. In a word, the Social Security wars are “class warfare” in the purest sense of the term.

Unfortunately, we cannot say the same of our side. While we may be determined, we certainly are not well-heeled. And if we have a clear objective of saving Social Security, we do not have a common analysis of the threat and the solutions. All too many have accepted what has become conventional wisdom – that the trust funds will go belly-up sometime down the road and the Old Age, Survivors and Disability Insurance (OASDI) Trust Funds are being liquidated, even as we speak, thus adding confusion to an already confusing situation.

We have the facts on our side. And we have reason and logic on our side. But none-the-less, the outcome is in doubt, as those who have always opposed Social Security – or security of any kind, for that matter – sense a new opportunity, now that one of their own has taken up residence at 1600 Pennsylvania Avenue in Washington.

The trouble is, sweet reason and logic are not enough when the future of Social Security hangs in the balance. It wasn’t in the ‘30s, when it took a powerful mass movement to force Congress to pass the Social Security Act. And that goes double in spades in today’s world. So the question becomes, “How?”

With all its attributes, Social Security suffers from two major shortcomings. Number one: on average its benefits are too low, and number two: the wrong people pay the freight.

The Communist Party is among those who count the fact that Social Security has reduced poverty among seniors to 10 percent as one of its most important accomplishments. But with all of that, more than 20 percent of seniors have incomes below 150 percent of poverty.

And it gets worse: 45 percent of senior women have incomes below 150 percent of poverty as do more than 40 percent of senior African Americans and Latinos. Small wonder, then, that seniors in the bottom income quintile get twice as much of their income from public assistance agencies than from private pensions and income from assets.

Therefore our first proposal: That benefits for all categories under the Old Age, Survivors and Disability Insurance Act be increased by an average of 50 percent, with the increase apportioned in such a manner that no beneficiary shall have an income of less than 150 percent of poverty.

Had this proposal been in effect in 2001, the minimum Social Security benefit would have been $1,100 a month and total OASDI payments to beneficiaries would have been $658.4 billion rather than $438.9 billion.

Our second proposal is that since payroll taxes are inherently regressive, the first $10,000 of wage and salary income should be exempted from FICA, at a cost of another $91 billion. We justify that demand with one statistic: In 1999, 73 percent of all taxpayers paid more in Social Security payroll taxes than in federal income taxes.

So yes, we’re talking about big bucks, and two questions arise “Where – and how – are you going to get it?” Our answer to the “where” part, first.

Simply put, our approach to getting money to finance an increase in Social Security spending might be called the Willie Sutton strategy. When asked why he robbed banks, Sutton replied, “Because that’s where the money is.” And so, too, with our proposals: “We’ll take it from them that has.”

For starters, we’d axe the cap on the amount of wages and income subject to Social Security taxes, so that CEOs would pay that tax on all their income, not just the first $89,900. That will provide some $93 billion. Then we’d tax all unearned income, thus adding $124 billion more to the pot.

Currently, the federal government subsidizes private pension plans with tax breaks worth $90 billion. It’s only fair to give a matching contribution to the social security system. Finally, we have the surplus in the OASDI trust funds that amounted to $163.1 billion in 2001. And we would have even more were the minimum wage – or wages in general – increased. Add it up and we get $375 billion, or about 86 percent of OASDI payments in 2001.

Now for the “how” part – but first a brief historical digression. Think back to 1934: A nation deep in the throes of the Great Depression. Confidence in the old institutions shaken as the traditional sources of economic security – assets, labor, family, and charity, had all failed in one degree or another. Radical demands and proposals for action were springing like weeds from the soil of the nation’s discontent: Huey Long and his “Every Man a King” movement; Upton Sinclair running for governor of California in 1934 under the slogan, “End Poverty in California;” The Townsend Plan, Technocracy and organizations like Ham & Eggs, some of which had memberships ranging in the hundreds of thousands. Although differing in specifics, each demanded government action in behalf of the victims of the Great Depression.

But it was legislation introduced by Rep. Ernest Lundeen of Minnesota in January 1935 that finally propelled the issue of social security onto the congressional agenda. In its four sections written on two sides of a letter-size sheet of paper, HR-2827 provided for “the establishment of unemployment, old age, and social insurance” that would pay a benefit of at least $10 per week. Lundeen’s plan would be financed by an appropriation from “all funds in the Treasury of the United States,” with the further proviso that, if additional funds were needed, they would come from taxes levied on “inheritances, gifts and individual and corporation incomes [in excess of] $5,000 a year.” Although it did not pass, the Lundeen Bill still stands as a model of progressive policymaking and laid the basis for the Social Security Act.

No history of the battles that won passage of the Social Security Act would be complete without a brief mention of the 1936 election and events leading up to it. While President Roosevelt signed the Social Security Act on August 14, 1935, funding necessary for its operation was stymied by a Senate filibuster, making it certain that Social Security would be a major issue in the 1936 battle for the White House.

During the campaign, Alf Landon, Governor of Kansas and GOP presidential candidate, charged that the system, what with its identification numbers, was a step toward totalitarianism. Newspapers that supported Landon claimed that the system would require workers to wear numbered dog tags. In language that the privatizers still use, factory managers warned workers there was no guarantee they would even see their benefits unless Congress decided to make an appropriation for that purpose.

Roosevelt won with 61 percent of the popular vote, which also returned a big New Deal majority in Congress. Landon’s resounding defeat helped make Social Security the sacrosanct program it eventually became, despite a constant drumbeat from the right branding any social welfare program as the first step on the road to Communist totalitarianism.

While the right was rebuffed in 1936, the war of lies and myths continued until, in 1996, when the right wing, with an assist from President Clinton, scored its first major victory in its attack on the Social Security Act with passage of a “welfare reform” that destroyed the Aid to Families With Dependent Children (AFDC) program, replacing it with the Temporary Aid to Needy Families (TANF) program.

With expenditures amounting to only 6.9 percent of GDP, the U.S. Social Security system flunks the test of international comparison with Germany, France and Italy, each of whom spend more than 10 percent of GDP on public pensions.

On the other hand, the U.S. retirement system, that is based on Social Security, private pensions and income from assets, leaves 43 percent of all seniors and more than 80 percent of low-income workers without employment-based private pensions.

Nor will the situation improve. According to Labor Department projections, 18 of the 30 occupations that will grow the fastest between 2000 and 2010 will provide annual incomes of less than $27,000 – a sure-fire guarantee that the number of workers without pensions will continue to grow.

Social Security’s earnings replacement rates – about 40 percent for a worker with average life-time earnings – are also low compared to these countries where rates are 50 percent or higher. And to round out the comparison, other major industrial countries have some form of national health care; the average senior household in the United States incurs out-of-pocket medical expenses amounting to about 21 percent of family income.

All of which brings us to the “how” part – how we can win the fight to preserve and to extend Social Security.

A. Philip Randolph said it best when he said, “You get what you can take, and you keep what you can hold. If you can’t take anything, you won’t get anything. And if you can’t hold anything, you won’t keep anything.”

In the major industrialized countries of Continental Europe and Scandinavia, powerful unions, some led by Communists, others by Socialists, have not only been able to “take,” they have been able to “hold” and, therefore, “keep,” hard-won social gains - and this despite a determined attack by transnational capital aimed at rolling back gains first won under Prussia’s Chancellor Otto von Bismarck in 1889. Nor should we forget the example set by the Soviet Union in the area of social benefits during the Depression of the 1930s, and in Western Europe, especially West Germany, after World War II.

Communists and others on the left see the working class and its organized sector as the foundation upon which to base a movement that can not only defend the Social Security system but will be able to develop the strategy and tactics to make it the primary source of an income that can support a decent standard of living for seniors and other beneficiaries of OASDI.

In the final analysis, the battle will be fought out in the 2002 elections, in the 2004 elections, in the 2006 elections and in the one after that for as long as it takes. And the AFL-CIO, with 13 million members, and organizations like the Alliance of Retired Americans, are the firewall that can guarantee that the 2002 elections will not become a plebiscite in support of privatizing Social Security.

Important as it is – and given the political landscape that is – even a much larger labor movement won’t be able to do the job alone. Therefore the need for coalitions – for reaching out to friends in order to build a broad alliance, as was done in building the movement that won the gains of the New Deal – and that process is already underway.

But numbers alone are not enough. They must be organized and given focus, and that brings to the fore the struggle for unity - for a unity based on racial, gender and generational equality, but also for equality in the search for strategy and tactics, aimed at united action in support of a common program. And the struggle for unity imposes a special responsibility on those of us on the left. Only we can develop the tactics that will result in the creation of a coalition of left and center forces that can win the battle against those who would destroy the Social Security system as we have known it for more that 60 years. And I remind you again: we failed in that regard in 1996 when Congress destroyed the AFDC program, which had been the law of the land since 1935. We dare not fail again.

While true social security – that’s social security spelled with a small “s” – can only come with a socialist transformation of society, we can have more social security in the immediate future if we can strengthen the Social Security system of today.

The author can be reached at fgab708@aol.com