By John Burbank
If you only read the headlines, you might think that by not reaching an agreement to cut the nation’s deficit, the congressional “supercommittee” was a colossal failure. But in fact, their failure was our success. We dodged a bullet that would have decreased economic security and increased personal misery.
One ploy some members of the supercommittee wanted to consider: a reduction in the cost-of-living adjustment for Social Security. Over time, that would have amounted to a $1,000 annual cut for an 86-year-old — equivalent to one entire month’s worth of benefits. Sen. Maria Cantwell spoke out against that idea, urging the supercommittee to put that notion into the circular file. We’re fortunate they did just that.
Unlike the bailouts given to the big banks that wrecked our economy, America’s workers actually earn their Social Security benefits, whether they make the minimum wage — $8.67 an hour here in Washington — or $51 an hour. All workers pay in, and all workers are covered.
And thanks to those worker contributions, Social Security now has an accumulated surplus of $2.7 trillion (that’s trillion with a “t”!). That money goes back to workers when they retire, or if they become disabled and are unable to work; their spouses and children receive Social Security benefits if they die. It is a universal social insurance program.
More than 1 million people in Washington directly receive Social Security benefits. Pinch those checks, and Washington citizens have less money for everyday purchases. That means fewer retail sales, fewer retail jobs, less tax money for public services, higher public tuition at Everett Community College, and more economic stagnation.
Another proposal was to cut Medicare and raise the age of eligibility — just when more and more elderly employed and unemployed workers don’t have health coverage.
Medicare is also largely funded through a payroll tax on workers. When you hit 65, you can get that earned benefit back, in the form of health care until you die. If we cut Medicare now, that means more deaths, more untreated diseases, more uncompensated care at the emergency room, higher overall health care costs, shorter life spans for workers and retirees, and a lot more premature deaths. We would actually increase health costs and human misery at the same time!
Cutting Social Security and Medicare means less dignity and security for workers and families, and higher health care costs for seniors. So was it a failure that Sen. Patty Murray stepped away from the supercommittee with no agreement to cut Social Security and Medicare? No, it was a triumph of common sense. Those “automatic cuts” that take place without the supercommittee agreement aren’t coming until 2013.
That means that decision-making and responsibility returns to Congress (where it belongs) and not a supercommittee that would have usurped Congress’ constitutional duty to make spending and taxing decisions. It means we have a whole year of sunshine to determine what components of federal services need bolstering and which could be curtailed, and how to equitably finance our country. And it means Social Security and Medicare are protected, for the time being, from the ravages of both Republicans and Democrats doing the bidding of Wall Street.
Speaking of Wall Street, where are we going to get the money to fund public priorities like education, infrastructure and health care? Here’s an idea: right now hedge fund managers, those very same people who drove the economy over the brink into this great recession, pay only 15 percent in income taxes. And they pay close to zero for Social Security. Using Social Security and Medicare as a foil, deficit reduction now is all about the financial community waging class war against 99 percent of Americans.
These 21st century robber barons aren’t the top 1 percent; they are the top one-tenth of 1 percent. They make millions and even billions, yet pay proportionately far less in taxes than most middle-class Americans, whether you are making $45,000 or $145,000. So what if these global gamblers paid income tax rates just like that of ordinary Americans? That alone would bring in $20 billion in the next seven years.
Murray was absolutely right to say no deal when it comes to cuts in Social Security and Medicare. There can be no deal if millionaires and billionaires remain just amused spectators. They have got to participate in rebuilding America, the country that enabled them to gain such great wealth.
Our senators, Patty Murray and Maria Cantwell, held firm. That’s a Thanksgiving present for which we can all be truly grateful.
John Burbank is executive director of the Economic Opportunity Institute (www.eoionline.org). His email address is email@example.com.