On guard for Social Security!

By Will Parry

Back in February, in an editorial of 1,800 words entitled “The Truth About the Deficit,” The New York Times sounded this ominous note:
“And then there is Social Security. What is needed is a combination of benefit cuts and tax increases that preserve the program’s essential nature.”

The phrase “benefit cuts and tax increases” sums up in five words the objectives of an array of powerful political actors, including billionaire Peter Peterson, who has been pouring his wealth into campaigns to destroy Social Security for a quarter century.

The talk about “preserving the program’s essential nature” is sheer window-dressing. It is the last thing the enemies of Social Security are concerned with.

Today’s reality is that the millions subsisting on Social Security cannot afford benefit cuts. And any increase in the regressive Social Security payroll tax would shift the crushing weight of the deficit still more onto the workers from whose paychecks that tax is regularly deducted.

Charged with bearing responsibility for the budget deficit, Social Security, with $2.5 trillion in the trust funds, is funded farther into the future than any other government program. The Congressional Budget Office says Social Security, as it stands today, can make its scheduled payments in full through 2043.

Far from “preserving its essential nature,” benefit cuts and tax increases substantial enough to address the budget deficit would totally emasculate Social Security.

Any long-range shortfall in Social Security funding could be addressed by simply abolishing the arbitrary $106,800 cap above which income is not subject to the 8.2% payroll tax. The cap enables the wealthy to amass billions of dollars tax free, even as fry cooks and steelworkers are taxed for every cent of their wages.

Shamefully, stories in the mainstream media reinforce the falsehoods about Social Security funding – that it is in trouble, and that it is responsible for the deficit. And they rarely if ever mention the option of abolishing the arbitrary cap on taxable earnings.

President Obama’s preoccupation with reducing the federal deficit is deeply troubling. Congress defeated a proposal for a statutory commission, but Obama has set up an appointed bipartisan 18-member commission, charged with considering everything that might reduce the deficit, including spending cuts, new taxes, and changes in Medicaid, Medicare and Social Security.

Obama named former Senator Alan Simpson (R-WY) and former Clinton Chief of Staff Erskine Bowles to co-chair the panel. Simpson is a real fox in the henhouse. He compiled a rotten Senate voting record, has propagated the “greedy geezer” lie about the nation’s elderly, and wants to cut Social Security benefits by changing the statistical formula used to calculate the annual cost-of-living adjustments.

Nor is Bowles a champion of Social Security’s integrity. Bloomberg News quotes him as saying that entitlement programs such as Social Security will turn the nation into a “second-rate power” if their costs aren’t reduced.

“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 said in a speech to North Carolina bankers. “All of our revenues are completely consumed by entitlements.”

Both Simpson and Bowles have said they would consider recommending a value-added tax, one of the most egregiously regressive ways to raise revenue.

Forty national organizations have written every member of Congress expressing “strong opposition” to any deficit-reduction commission “that would override the normal legislative process.”

Look for a bruising political battle, rivaling that over health care reform, throughout 2010 and into next year. And the stakes are every bit as big.