Social Security 2100 - The Fierce Urgency of Now

WM, Social Security, The Fierce Urgency of Now – Social Security 2100: A Sacred Trust, December 7, 2021 

Social Security 2100 is the perfect “school solution''.” I hope that it clears the other body, preferably on a bipartisan basis. However as I mentioned in my 2019 comments, we can not stop because we have made the numbers work.

Too many of the retired and disabled find it hard to make ends meet. The savaging of pension rights has made a decent retirement a rarity, as it is impossible for workers to both save and feed their families. With the pandemic, we find it hard to feed ourselves as prices continue to rise. 

As usual, recently announced Medicare premium increases are cutting into a much needed COLA. As I wrote in my testimony to the Appropriations Labor, Health and Human Services and Education Subcommittee, we needed a COLA last summer. From my testimony:

Even before the pandemic, my SSDI was inadequate for food, medicine, clothing and cable. If I owned a vehicle, there is no way I could maintain it or even buy gas. I have an above average benefit, high enough to be ineligible for SNAP or Medicaid. Many are not so lucky, even on a good day. 

In the last few months, days have not been so good. Were it not for stimulus payments, I would be running out of food as I write this and would not have just bought new clothes, from socks and underwear to a jacket I can wear when the Committee finally asks me to testify in person. As it is, I will need to use the last $600 from my December payment (which should have come through Social Security) to attend my upcoming high school reunion. While I (do) have wifi, I cannot afford cable and a car is still out of reach.

Let me underline a point. In most months, new underwear is not an option, I rely on free bus rides due to the pandemic and subsidies from Ride On and there is never enough money in that last week before the check comes. When it does arrive, the cupboard is bare.

Double underline: food prices are skyrocketing. Part of the problem may be too much money chasing too few goods, but retirees and the disabled find (our)selves between a rock and a hard place. We need a COLA and we need it now. Most of us cannot even afford cola. Because this is a short term emergency due to the Pandemic, it should be funded out of the general fund until the normal process kicks in for next year.

The theory behind social insurance has two pillars. One: accidents of birth and family size must be evened out so that unearned gains and unreasonable burdens are not a feature of retirement, as they once were. 

The second is that, because a main feature of capitalism is the transfer of ownership of the products of labor, with a full return for that labor, social insurance returns what was surrendered during working years. 

This is especially the case for lower wage workers that make it possible for higher wage workers to avoid less profitable activities - like cleaning their own offices or serving business lunches. Social insurance restores what society took from them without just recompense. The value of every minute of their lives, on a personal basis, is equal to the value of those who are “more productive.”

More is needed than simply reinforcing the status quo. Work must pay well so that workers can afford to put money away, as the three-tooled retirement model requires. Note that an employee-ownership model would restore pensions and end the need for such furniture.

Build Back Better’s inclusion of the American Recovery Act’s Child Tax Credit provisions is a major step in that direction. It is one of the two things that must be continued to meet our sacred trust for their retirement, as well as their present well being. 

As we wrote in July, and many times since then, minimum wages must be increased for present workers. This also increases future revenue to Social Security and allows for a much needed raise in benefits that will occur when benefit formulas are rebased to align with new labor rates.

One last reform is to credit the employer contribution on an equal dollar basis and rebasing benefits to account for this as well. The redistributive function of Social Security needs to be accounted for in benefit accumulation. Doing so decreases the need for redistribution on the back end. 

In 1998, when I participated in on-line discussions on Social Security personal accounts, I brought up the necessity of doing this. This idea raised the hackles of the privatizers much more than their desire to take advantage of riskier investment strategies. The best way to kill talk of private accounts is to introduce redistribution on the front end and give organized labor proxies to vote worker shares. 

Under those conditions, those on the left should consider the advisability of  personal accounts holding employer voting and preferred shares, with an insurance fund holding enough of these shares to prevent pension loss.

Even without personal accounts, we must double down on encouraging employee-ownership. Currently, transfers to employee-owners are tax free for founders and initial shareholders. Sales of publicly traded and inherited shares should carry the same benefit. A greater incentive to sell such shares is the transfer of capital gains and inheritance taxation to a transaction based asset value added tax. Such a tax would be much harder to dodge, which makes any incentive to avoid it all the more attractive.

Attachment - Legislative Hearing on the Social Security 2100 Act,  July 25, 2019

Attachment - Tax Reform, Center for Fiscal Equity, December 7, 2021