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Dec 09 2012

Hands off Social Security and Medicare!

One of the astonishing things about the so-called ‘fiscal cliff’ negotiations is how many politicians and people in the media talk of raising the marginal income tax rates on the highest earners by a small amount as a quid pro quo for raising the retirement age for Social Security (currently 67 for those born in 1960 and later) and the eligibility age for Medicare (currently 65). They seem to treat those as if they were somehow equal-valued chips in a game.

They are not. The tax rate hike has an impact on a very small number of people who will hardly feel it while the raising of the ages has a huge and seriously harmful effect on a vast number of people. There is no way in which the two are even comparable.

The trouble is that the people who think so are those with cushy, well-paying jobs, in air-conditioned and heated offices with good health benefits. For them working a couple of extra years before being able to retire may not be a problem and in fact they may well want to continue working even though they don’t need to because their work is easy and enjoyable. But as I wrote in a post over two years ago that examined the arguments presented in favor of raising the ages, the view looks quite different for those who do hard, physical, soul-killing work and for whom finding private health insurance for a couple of extra years after they reach the eligibility age of 65 could be a huge, even ruinous, burden. Furthermore, forcing older people to work more years reduces the number of available jobs for young people entering the workforce. This Tom Tomorrow cartoon from a few years ago is even more apropos now.

And it is not as if Social Security benefits are extravagant. The current average benefit is just $1,230 per month or $14,760 per year which is below the poverty threshold of $15,130 for a couple. For someone born in 1950 currently earning the median income of around $50,000, their benefit on retiring at the age of 66 would be around $1,540 per month. The maximum payout is $2,750 per month, given to very high-income earners, those earning over $190,00 or so and fall in the top 5% of wage earners.

I think that the retirement ages when you can get full Social Security benefits and Medicare are too high now. Under no circumstances should they be raised even higher. We can reduce health care costs by going to a single-payer system, and the Social Security trust fund can easily be made solvent into the foreseeable future by eliminating the salary cap (which is currently $110,100) on payroll taxes.

Gutting Social Security and Medicare has long been the dream of the oligarchy, and the Democrats, as one arm of the oligarchy, cannot be trusted to be stalwart defenders of those programs. If Barack Obama and the Democrats make any noises whatsoever about touching those two programs, they need to be met with a barrage of angry protests. Because they will sell us out in a heartbeat if they think they can get away with it.

4 comments

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  1. 1
    sailor1031

    An important point is that SS is wholly funded by its own funding mechanism – a completely separate tax levy. So SS shouldn’t even be up for discussion. It currently is not in the red and simple adjustments to its funding could make it a non-issue. Someting that pisses me off is that the republicans persist in calling SS an “entitlement” as if to say this is something you get for nothing from the fed. government. Bullshit – people have paid into this all their working lives!! Medicare is partly funded by its own tax too! The real issue is the enormous amount of totally unnecessary expenditure on “defense” – as if some other country is about to attack the USA!! Ha! This must be addressed. I say let sequestration happen and let defense take its share of the cuts. Then we can talk again…..noting that of the big three programs only defense is fully funded from general revenues. Perhaps we should have a voluntary, separate levy just for defense and let repubs contribute all they want from their larger than average resources.

    I well remember Ronnie Reagan’s 600 ship navy and the colossal increase in spending to build it. Most of those ships never saw a day of operational service and are either now slowly rotting away on the west coast and in Virginia or have already gone to the breaker’s yard. What an incredible waste. Those resources could have been used to provide useful goods and services and infrastructure. And yet the republicans want to repeat the nonsense. Every dollar spent unnecessarily on defense is a dollar denied to some worhwhile purpose. Every person employed in a pampered, unneeded defense company is a person denied to a socially worthwhile function.

  2. 2
    Mano Singham

    I hate the word ‘entitlements’ too, and try to avoid it as much as possible.

  3. 3
    coragyps

    I agree that the salary cap is absurd, and I benefit from it! I’m one of those that works in an air-conditioned and heated lab, but every day I interact with other sixty-somethings that drive trucks, work as oilfield laborers, or what have you. Delbert is one of them – he’s been working since he dropped out of eighth grade about 1962. He’s tired! But, his macular degeneration be damned, he’ll likely wait ’till he’s 66 to hang it up. And then insurance will probably gobble up what check he gets – his wife has survived two different cancers in the last ten years, and I expect their premiums for Medicare Supplemental will be outrageous.

    And I’m betting that you are correct on a sellout on SS and Medicare. Where’s Eugene V. Debs when you need him?

  4. 4
    Ollie Nanyes

    First of all, Social Security and Medicare are completely separate issues and shouldn’t really be discussed together (I am talking about politicians and pundits treating them as being like the same thing). Next: Medicare does need some sort of adjusting as currently people take out far more than they put into it, even when one considers Medicare funding as a type of annuity (you start getting benefits long after starting to pay for them; hence interest should be considered). So in a sense, it really is an entitlement as it stands right now.

    To fix it: it would be best to fund Medicare better and put everyone on it, thereby adding healthier people to the pool…or perhaps even LOWERING the age of being eligible.

    The point about the situations of the person working in a climate controlled office versus, say, a construction worker are well taken as is the fact that life expectancy (in terms of years past 65 one is expected to live) has diverged between the economic classes.

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