We pay for Social Security insurance

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By Rep. Raúl M. Grijalva

It’s no secret that Republicans have worked for the better part of the last decade to cut Social Security and Medicare. The party’s roadmaps, plans, and bills all point in the same direction: smaller, privatized Social Security benefits for American retirees and the dismantling of the Medicare guarantee.

Republican House Majority Leader Eric Cantor has said of Social Security, “We’re going to have to come to grips with the fact that these programs cannot exist if we want America to be what we want America to be.”

“Cannot exist.” That’s not tinkering around the edges, that’s radical government. The question is why should we agree to it.

The latest justification – repeated like a mantra to make it sink in – is deficit reduction. So is cutting Social Security and dismantling Medicare the answer to putting our country back on track? Are these programs really the financial elephant in the room, as Republicans claim?

Let’s get our terms clear. Social Security is insurance you pay for through taxes when you work so that you’re protected when you don’t work. It’s humane, it functions very well, and law has always prohibited the program from contributing to the deficit. Any talk of shrinking Social Security to “save money” is flawed from the start. Social Security is not part of the national budget in the same way as, say, military spending – it’s paid for through a dedicated payroll tax distinct from general budgeting.

Even if Social Security opponents call their suggestions a “simple change,” such as to how benefits are calculated, the aim is to convince voters that Social Security needs to be ended, whether in one fell swoop or by a thousand tiny cuts. The next time a Republican talks about just trying to help, remember what Majority Leader Cantor said.

Voters overwhelmingly support Social Security in every public opinion poll, but that hasn’t stopped the drumbeat in all its forms. For instance, some have suggested that Social Security benefits should be based on a chained consumer price index (CPI) rather than a standard CPI. The chained CPI assumes that when the price of one item rises, people buy something else. In other words, if this change goes into effect, Social Security benefits would no longer fully reflect the rising prices of popular goods.

What would this mean for the average Social Security recipient, raking in a whopping $13,000 a year? Projected annual cuts for a typical retiree would be about $560 a year by age 75, $984 a year by age 85 and $1,400 a year by age 95.

For those that aren’t struggling to survive on $1,150 per month, that may not sound like much. But taking money out of the hands of people that will spend it is blocking our economic recovery. The less money our Social Security recipients – including 9 million veterans – are able to spend, the less money goes to the businesses that create jobs. If you don’t believe me, ask them.

What about Medicare? A July 18 Kaiser Foundation study found that “raising Medicare’s eligibility [age] to 67 in 2014 would generate an estimated $5.7 billion in net savings to the federal government, but also result in an estimated net increase of $3.7 billion in out-of-pocket costs for 65-and 66-year-olds, and $4.5 billion in employer retiree health-care costs.”

The study found that of the estimated 5 million 65- and 66-year-olds affected, about two thirds would pay an average of $2,200 more for health care in 2014 than if they were covered under Medicare. What does this mean? The federal budget saves $5.7 billion, while everyone else pays an additional $8.2 billion. Millions of 65- and 66-year-olds pay thousands more for the same coverage.

If that weren’t enough, we should remember that Medicare is highly cost-effective. As Mark Miller of the Reuters Money blog – hardly a Democratic partisan platform – wrote Aug. 25, “Medicare delivers far more healthcare for the buck than private insurance; the notion that we can cut costs through privatization just doesn’t hold water.” He’s right.

Cutting Social Security benefits and raising the Medicare eligibility age will do much more harm than good. The campaign to wipe them out is ideological, not economic. When you get down to it, opponents describe them as “welfare,” and they oppose “welfare” in all its forms. The rest is details.

The real elephant in the room is a lack of jobs. Our policies should employ more teachers, firefighters, nurses, and police in communities across the nation. We should improve highways, waterways, bridges, and rails, train an updated workforce, and put Americans to work creating the green infrastructure that we need to stay competitive.

The sooner we can all stop wasting time on the argument that cuts to Social Security and Medicare are the answer, the better.

Rep. Raúl M. Grijalva is an Arizona Democtrat and co-chair of the Congressional Progressive Caucus.


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