The Social SecurityMedicare Crisis Is Really a Choice – Between the Middle Class and the Wealthy

Richard Eskow

The word for today is “choice,” not “crisis.”

It’s time to stop saying the country “can’t afford” Medicare, Social Security, or other programs that benefit the middle class. If I told my mother that I “can’t mow the lawn” or “I can’t do all that homework” when I was a kid, she’d say: “Don’t say you can’t. Say you don’t want to.” (The outcome of these exchanges was inevitable. Hello, lawnmower …)

Now we’re told there’s a “crisis” and we can no longer afford the middle-class American dream. The truth is the opposite: Our long-term problems aren’t caused by the middle class, but by politicians who choose to sacrifice the middle class for wealthy interests.

All this talk about a “debt crisis” is a way for politicians to avoid telling the truth: They’d rather say they “have to” sacrifice the middle class than admit they’re making a choice.

“It Needs to Happen”

A comment today from Sen. Tom Coburn reflects the ‘crisis mentality’ masking today’s choices. Sen. Coburn reportedly withdrew from the “Gang of Six” Senators trying to craft a budget-cutting deal. According to a report in the National Journal, Coburn said the Senators “can’t bridge the gap between what actually needs to happen and what people will allow to happen.”

The Journal described the “gang” as “the group most likely to produce a bipartisan deal that combined deficit reduction and tax changes that would allow a rise in the nation’s debt ceiling.” So that, we’re told, is what “needs to happen.” But is it?

First, note the choice of words: “tax changes” rather than “tax increases.” Tax increases for the wealthy are off the table, but they don’t want to admit that. And “deficit reduction” is being used here as a euphemism for “spending cuts.” We’re in an artificially-generated crisis brought on by tax cuts and two wars. Their tax “changes” would hurt the already-damaged middle class even more by taking away tax deductions for health insurance, mortgages, children, and other breaks they desperately need right now.

Last week’s reports from the trustees for Medicare and Social Security were a perfect illustration of how the game’s being played: First, create a problem by serving the privileged few. Then use that problem to explain why we can’t afford financial security for the middle class. Then do it again. Unless this cycle is broken, it will become a death spiral for the American dream.

It didn’t have to be this way. It still doesn’t. These changes don’t “need to happen” at all.

Social Security Spin

Make no mistake: Despite what you may have read, cuts to Social Security and Medicare are still very much on the table. They’re just likely to be disguised as artificial “ceilings,” “triggers,” or other gimmicks designed to protect politicians from accountability.

Social Security’s projected long-term shortfall isn’t caused by baby boomers entering retirement. Social Security has a $2.6 trillion trust fund because planners have known about the baby boom for many years (not an impressive achievement, since the last one was born in 1964).

The main reasons for the long-term shortfall are stagnating wages for most Americans, and the fact that the wealthiest Americans capture far more of our national income than at any time in modern history.[1] That’s because politicians made choices - about deregulation, banking, government investment, trade, and other key issues.

A bipartisan commission led by Alan Greenspan restructured Social Security during Reagan’s Presidency. It solved its financial problems, which were very real then – or it should have. But even the crusty old libertarian Greenspan didn’t realize that the rich were about to hijack so much more of the nation’s income, or that wage growth for everyone else would flatten so badly. Social Security is funded by a payroll tax that cuts off at a specified level (currently just above $106,000). But these changes – the result of political choices - mean it’s too low to keep the program going indefinitely.

Social Security’s long-term projections are slightly less favorable under the latest report. One reason is that they’re now expecting people to live about six months longer. As Dean Baker points out, longer lives are a good thing. As Baker also points out, the change is trivial as far as government deficits are concerned.

But it’s also important to remember that life expectancy isn’t fair or democratic: People with more money have much longer lives, and white people live longer than African Americans. Those who want to cut Social Security benefits because “people are living longer” are just creating another way for middle- and lower-income Americans to lose and wealthier people to win.

Social Security’s long-term finances are out of balance because politicians made choices. Now we have another choice: ask the wealthy to pay their fair share, or cut benefits for people who didn’t cause the problem and can’t afford to pay for the solution.

Medicare: Tougher Choices

As for Medicare – well, Medicare’s The Big One. In the long run, all other government spending pales in comparison. Exploding health care costs are tomorrow’s biggest problem.

They’re today’s problem, too: Middle-class families are struggling under the weight of exploding health care costs. Even those lucky enough to have employer health benefits are paying more of these costs out of their own pockets.

These costs are devastating for working Americans. Out-of-pocket health expenses for a family of four with insurance have more than doubled in ten years, from over $9,000 in 2002 to more than $19,000 in 2011. They went up more than $1,000 last year alone.

And remember: Those “tax changes” we hear about could cause these out-of-pocket costs to jump by twenty or thirty percent overnight.

The same health costs that are crushing American family budgets today will swamp the Federal budget in a few short decades. But Republicans aren’t proposing to control these costs for Medicare. The budget passed by the House simply shifts them onto the backs of the elderly. Nobody’s willing to have the discussion we we urgently need, about ways to eliminate inefficiencies, bad incentives, and excessive healthcare profits.

We’ll face a tough set of choices. But the longer we wait and let ourselves be distracted by false arguments about vouchers or benefit caps, the tougher it will get.

Jobs + Growth = Healthier Entitlements

Both Social Security and Medicare took a financial hit because of unemployment, too. Right-wingers are using the increased and ongoing deficits in these programs as damning evidence that we can no longer afford financial security for middle-class Americans in their retirement years.

But unemployment didn’t happen in a vacuum, either. Politicians made a choice to block more government investment in jobs and economic growth so that those tax cuts for the wealthy could be preserved.

The middle class has already endured years of record-high unemployment, wage stagnation, and sluggish growth because politicians chose to protect tax cuts for the rich, rather than investing in a thriving middle-class America. Now it’s being asked to sacrifice its senior years for the same reason.

An honest debate

Dave Johnson points out that today’s deficit scare talk looks a lot like other manufactured debt crises, such as Canada’s in 1993. Rather than letting politicians scare us, we should demand they give us an honest debate. If some of them would rather keep taxes low for the wealthy, and would sacrifice the middle class to do it, let them say so.

If other politicians – in the Democratic Party or elsewhere – recognize what’s happening and disagree with it, they should say that too. They should stop being coy and start leveling with the public, even if it temporarily makes unpopular and necessary “bipartisanship” a little more difficult. The public will thank them for it.

Wealthy Americans and corporations have enormous political influence. That means it’s easier for politicians to say “We can’t afford today’s Social Security and Medicare” than it is to raise taxes on the wealthy and move away from our dependence on for-profit healthcare. But every time they say that somebody should hit ‘em with Mom’s words:

“Don’t say we can’t. Say you don’t want to.”
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[1] See, for example, Bivens, L. Josh.

This post was produced as part of the Strengthen Social Security campaign.

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