And therein lies a whole new Social Security debate
by digby
The Wall Street Journal reports a tear in the matrix:
Elizabeth Warren is telling us something important: The politics surrounding Social Security are shifting… [and] it signals an important longer-term change in the political forces behind the debate on Social Security, and perhaps other entitlements as well. The rising focus on income inequality, reduced concern about federal deficits, the effect of the recession on baby-boomer finances and the aging of the Republican Party all are subtly shifting the ground beneath the discussion.
Ms. Warren gave voice to this new phase when she took to the Senate floor recently with a speech calling head-on for higher Social Security benefits. “Seniors have worked their entire lives and have paid into the system, but right now, more people than ever are on the edge of financial disaster once they retire—and the numbers continue to get worse,” she said. “That is why we should be talking about expanding Social Security benefits—not cutting them.”
As that reference to retirees on the “edge of financial disaster” indicates, one force driving the argument is the fact that a lot of baby boomers saw their retirement cushions deflated by the financial shock of 2007 and 2008. Research by the Employee Benefit Research Institute shows that the share of workers saving for retirement has declined to 57% now from 64% in 2008—and that the share of workers who have more than $25,000 set aside has declined over the same period to 43% from 51%.
That slide in retirement preparation coincides with a resurgence of concern—to some extent in both parties—about income inequalities in the American economy. The argument that the wealthy have done fine in recovering from the financial shock while others have struggled helps ease the way for benefit-increase proponents to push for a boost in payroll taxes on upper-income Americans to finance higher Social Security benefits.
[…]
But the Committee for a Responsible Budget argues that while modest tax increases may help preserve current benefits, raising them enough to finance higher benefits would be a politically and economically dicey proposition—and have the questionable effect of diverting resources toward the old from the young.Expanding benefits under current conditions “makes no sense at all,” says Maya MacGuineas, the committee’s president.
And therein lies a whole new Social Security debate.
Welcome to our turf, Ms MacGuineas.
We haven’t been on this side of the argument in some time, but as this column points out, certain realities are beginning to come into focus and the politics are favorable for a push to actually expand the social insurance programs. At the very least we seem to have arrested the drive to cut benefits, which was always a cynical Shock Doctrine style attack born of the financial crisis that should never have been endorsed by any right thinking human being.
But don’t get too excited. This battle will be waged again. Whether the economy is “performing” well or in the ditch, the financial elites will always say there is a good reason to degrade the New Deal programs or cut their taxes. Usually both at the same time. But it’s just possible that we have managed to shame the neo-liberal members of the Democratic Party a little bit, resulting in them putting their Wall Street benefactors’ agenda on the back burner for the moment. Baby steps.
