On Social Security, Elizabeth Warren Gets It Mostly Right
Huffington Post reports a recent floor speech where Sen. Elizabeth Warren (D-Mass.) condemned the notion that we ought to be cutting back on Social Security benefits rather than expanding them:
“Sen. Elizabeth Warren (D-Mass.) recently joined the push to increase Social Security benefits, saying the program can be kept solvent for many years with “some modest adjustments.”
“The suggestion that we have become a country where those living in poverty fight each other for a handful of crumbs tossed off the tables of the very wealthy is fundamentally wrong,” Warren said in a Senate floor speech on Monday. “This is about our values, and our values tell us that we don’t build a future by first deciding who among our most vulnerable will be left to starve.”
She added, “We don’t build a future for our children by cutting basic retirement benefits for their grandparents.”
I agree with Warren: It’s morally wrong to cut Social Security benefits when seniors are already struggling and the generations coming behind us will have fewer pensions and lousier savings in their 401(k)s, if they have any savings at all. We are a wealthy nation, but our wealth is being shifted away from the majority and into the pockets of a smaller and smaller slice of upper income earners and rich families. As EPI’s State of Working America reveals, from 1983 (when the last major Social Security reform was enacted) through 2010, the wealth of the bottom 60 percent of Americans actually declined. Even as the nation’s wealth increased by 63 percent, the bottom 60 percent of families were made poorer because a range of policies froze their wages, shipped their jobs overseas, lowered the minimum wage (after adjustment for inflation), and indebted them by raising the price of education.
Further, as much as I agree with Sen. Warren on the merits and understand why she felt the need to push back on the “grandparents vs. grandchildren” framing, I don’t think she went far enough in her argument here—because it is actually the grandchildren who are really the most at risk. Maya MacGuineas and Alan Simpson pretend that if we don’t cut “entitlements” (earned benefits) like Social Security now, we will somehow bankrupt our grandchildren. So their solution is….to cut the grandchildren’s income. Raising the retirement age for the generations coming behind us means cheating them, cutting their benefits when we should be raising taxes now to fund their future benefits. They are the ones who will lose the ability to retire while they can still enjoy it. They are the janitors, cashiers, factory workers, construction workers, and nurses’ aides who will be forced to work even longer in physical jobs or see their benefits cut to levels even closer to poverty. Already, the average benefit is just a little more than the poverty threshold, $14,760 vs. $11,490.
Besides being morally wrong, cutting Social Security is economically incoherent. As EPI has shown repeatedly, retirement insecurity is growing and essentially every “leg of the retirement stool” besides Social Security is failing American workers and retirees. In short, the next generations will need a strong Social Security system more than ever. If they are to have what they need, Social Security must be expanded, not cut back. Its funding must be shored up by scrapping the cap, the arbitrary limit that lets the top earners escape taxation on salaries over $113,700 a year, while the bottom 90 percent pay on every nickel they earn. Additional benefits will require higher payroll taxes, but those taxes will be a fair price for better financial security for the elderly. For some details on this, see Monique Morrissey’s presentation at the National Academy for Social Insurance from earlier this year.