This week Sen. Elizabeth Warren of Massachusetts gave an important speech on the floor of the United State Senate. Said Sen. Warren, “the conversation about retirement and Social Security benefits is not just a conversation about math. At its core, this is a conversation about our values.”
Sen. Warren knows her values. She knows her math, too. As co-author of “The Two-Income Trap: Why Middle-Class Mothers and Fathers Are Going Broke,” Warren helped document a phenomenon that most Americans had observed but few had fully recognized: Typical two-earner middle-class families today can’t maintain the standard of living which single-earner middle-class households enjoyed in the 1950s and 1960s.
Why? Because real wages have fallen, mortgages are more expensive, education costs have skyrocketed, and out-of-pocket health care costs have risen dramatically for families with employer-based insurance.
Economics writer Jeff Madrick summarized the book’s findings succinctly, writing that “typical families often cannot afford the high-quality education, health care, and neighborhoods required to be middle class today … Ms. Warren and (co-author Amelia) Tyagi (Warren’s daughter) have shown how little attention the nation and our government have paid to the way Americans really live.”
That would appear to be Sen. Warren’s mission: to help our government pay more attention to the way Americans really live – and too often lose – in today’s unjust and unsustainable economy.
Sen. Warren’s speech should be seen in that context. She correctly placed the debate about Social Security in the context of a broader “retirement crisis” for the American middle class. The erosion of private pension plans, together with the lost earning power experienced by most Americans, means that Social Security is the main source of retirement income for most seniors in this country.
As Sen. Warren notes, the current formula used to calculate cost of living increases fails to adequately cover the actual expenses faced by most retired Americans. And yet there is a “bipartisan” plan afoot in Washington to lower, rather than increase, that calculation.
The “way that Americans really live” is slipping away from most middle-class families, from the cradle to the grave. It begins with a loss of social mobility in childhood, as education cuts and rising costs eat away at opportunities to get ahead; it continues with a savings crisis in their working years, as they’re forced to borrow more to keep from falling behind during a time of declining real wages; and it ends with the retirement crisis Sen. Warren described so vividly.
As Warren rightly observes, “we should be talking about expanding Social Security benefits – not cutting them.” With those words Sen. Warren joins a small but growing cadre of American leaders committed to building, rather than cutting, that vital program. She paid tribute to her colleagues in that group by name, citing Sens. Tom Harkin (D-Iowa), Mark Begich (D-Alaska), and Bernie Sanders (I-Vt.).
Some of us are old enough to remember the America that Sen. Warren evoked this week:
“A generation ago, middle-class families were able to put away enough money during their working years to make it through their later years with dignity. On average, they saved about 11% of their take home pay while working. Many paid off their homes, got rid of all their debts, and retired with strong pensions from their employers. And where pensions, savings, and investments fell short, they could rely on Social Security to make up the difference.”
Our economic fundamentals remain strong. We can be that nation again, and Sen. Warren deserves thanks for reminding us.
When it comes to retirement, Americans once relied on the system that policymakers described as a “three-legged stool.” One leg was the private pension system, which once guaranteed fixed retirement income for millions of Americans; another leg was private savings, back when the middle class earned enough to make savings accounts more practical than they are today; and the third leg was Social Security.
For many Americans, Social Security is the only leg that’s left. Cutting that would leave them without a leg to stand on. As Warren said, “Two-thirds of seniors rely on it for the majority of their income in retirement, and for 14 million seniors – 14 million – this is the safety net that keeps them out of poverty.”
And thanks to the misdeeds of Wall Street – one segment of the economy that isn’t being asked to “sacrifice” – older Americans are also being victimized by foreclosures and underwater homes finances. As Sen. Warren noted, “According to AARP, in 2012, one out of every seven older homeowners was paying down a mortgage that was higher than the value of their house.
Anyone who follows the misleading and misguided arguments being used to attack Social Security will take special pleasure in Sen. Warren’s choice words for the editors of The Washington Post, who have been on a particular vendetta against that program for years. Said Sen. Warren:
“Just this morning, the Washington Post ran an editorial mocking the idea of a looming retirement crisis. To make sure no one missed the point, they even put the words ‘retirement crisis’ in quotation marks. No retirement crisis? Tell that to the millions of Americans who are facing retirement without a pension. Tell that to the millions of Americans who have nothing to fall back on except Social Security … Make no mistake: This is a crisis.”
Sen. Warren’s speech was important for a number of reasons. One that wasn’t the most important, at least for the moment, was the speculation about a presidential run. The next presidential election year ends with a “6.” Last we looked, the current year ends with a “3.”
Before a party picks a candidate it should decide what it stands for. It should tell voters what it thinks is worth fighting for. That’s been an open question for the Democratic Party for two decades now. Leaders like Elizabeth Warren are articulating beliefs and goals that Democrats should be proud to embrace.
For too long Democratic leaders have left the beleaguered middle-class without a champion. Leaders like Elizabeth Warren are showing them what a champion looks like – and the battles a champion chooses to fight. Elizabeth Warren is speaking for those generations whose prospects are being lost to lost educational opportunity, stagnant wages – and, yes, a very real retirement crisis. Speeches like these help point the way to a renewed set of American values.
If that keeps happening, the math – electoral, as well as economic – is bound to follow.