Let ’em eat cake,” Marie Antoinette is said to have replied when told her starving subjects had no bread.

Rivaling the French queen’s indifference to the plight of society’s disadvantaged,  Alan Simpson recently wrote that Social Security is “like a milk cow with 310 million tits”–thereby dissing not only the elderly, the disabled, surviving spouses and children who benefit from Social Security, but women of all ages. Marie’s remark is apocryphal, but Simpson’s unfortunately is not, especially since he is in a position to destroy Social Security as we know it. Shortly after being appointed co-chair of the National Commission on Fiscal Responsibility and Reform last March, Simpson told CNBC that “a lot of blood, hair and eyeballs will be on the floor before we finish. It’s going to be anguishing.”

The former Republican senator from Wyoming has been gunning for Social Security since he was elected to the Senate in 1978, promoting privatization and benefit cuts to the program that has been a lifeline for millions of Americans since its inception during the Great Depression. In 2008 alone, Social Security kept about 20 million people, including 13 million seniors and 1 million children, out of poverty, according to a Congressional report released two weeks ago.

Who are the 310 million people Simpson’s accused of milking Social Security? The entire population of the United States? Presumably, his cow has a teat for each recipient. Certainly not the 160 million working Americans who pay into the fund through the payroll tax or FICA. The recipients of Social Security? There are 53.4 million of them. Or was Simpson “babbling into” the same “vapors” that he likes to accuse his critics of doing? If so, it wouldn’t be the first time Simpson was caught spouting figures ungrounded in fact.

In 1987, for example, the Congressional Record shows Simpson predicting that “in 20 years 60 percent of the domestic budget of the United States will go to people over 62.” Today, 23 years later, the Center on Budget and Policy Priorities demonstrates that less than 27 percent of federal spending–a far cry from Simpson’s prediction–goes to older Americans. (Twenty percent of the budget goes to Social Security, of which about two-thirds is for retirees. Medicare, Medicaid and CHIP [Children’s Health Insurance Program] account for another 21 percent. Seniors and the disabled account for two-thirds of Medicare spending.)


(Graphic: New York Times)

This past April, Simpson told Fox News that the seniors who implore him not to gut Social Security— the “greedy geezers” of the AARP— “live in gated communities and drive their Lexus to the Perkins restaurant to get the AARP discount.” How is it that the person heading the deficit-reduction commission either doesn’t know or simply denies that far from living in luxury, 64 percent of Social Security beneficiaries depend on their benefit for 50 to 90 percent of their income? That the average monthly benefit in 2009 was $1,064, or $12,772 per year? That retired women received an average of $3,600 less per year than men? That African-Americans received an average of $2,400 less than whites per year? That other minorities received over $3,600 less than whites per year? (As the chart at left demonstrates, even the slightly-more-affluent count on Social Security for at least a third of their income.)

Furthermore, nearly 25 percent of older African-American women and 45 percent of all older women who live alone are poor: they subsist on $10,830 (the poverty level for a single person in 2009) annually or less.

The Cat Food Commission— so called because when it has slashed benefits, seniors dependent on Social Security won’t afford to eat anything else — meets behind closed doors. But Simpson has made clear that “We are going to stick to the big three,” Social Security, Medicare, and Medicaid. In order to reduce the deficit, Simpson argues, “You’re going to have to do something with the entitlements. You’re going  to have to limit a situation where you reach a certain age, a certain time of life, and then you’re entitled to bucks from the federal treasury, regardless of your net worth or your income.”

Simpson’s argument is specious, because the “bucks” retirees receive from the government is money they and their employers paid into the fund through the payroll tax. The system is designed so that taxes paid by current workers fund the benefits paid to retirees until they themselves retire and begin to collect in return. Is it a special entitlement to expect a return on funds paid into a retirement account?

And Social Security is far from broke, despite the claims of Simpson and its other foes. The program has always been self-sustaining and has produced a surplus for the last 25 years. Invested in a special account known as the trust fund reserves, the surplus is augmented by the interest it earns and the income tax paid by the wealthy on their Social Security benefits. This year’s annual surplus, report the Social Security Trustees, will be $77 billion, and the total assets are now $2.6 trillion. The surplus will increase through 2024, reaching a projected $4.2 trillion. After that, the trust fund reserves will begin to diminish with the increasing proportion of retirees to workers until the reserves run out in 2037. These calculations presume that no changes are made to the system.

Suggestions for modifying Social Security include raising the retirement age. Proponents argue that life expectancy has increased, but they ignore the demographic niceties: the wealthiest Americans, those who least need Social Security, are living longer. The poorest Americans are not, because they don’t have access to the same health care and they can’t afford to eat as well, among other reasons. Postponing the retirement age to 70 as an across-the-board benefit reduction would throw 1.5 million retirees into poverty.

Another option is raising the cap of $106,800 on the amount of income subject to Social Security tax. Or: instead of dismantling Social Security, the committee could meet its objective of reducing the deficit by letting some of the Bush-era tax cuts expire. That would result in a saving of $2.56 trillion over the next 10 years, as estimated by the Congressional Budget Office. President Obama has proposed a middle ground: if all the cuts are extended except those for the wealthiest Americans— two percent of us—federal revenue would increase by an estimated $700 billion in the next decade.

Currently, Social Security benefits represent 4.8 percent of G.D.P.; by 2035 they will be 6 percent. Paul Krugman pointed out that the increase is “significantly smaller” than the rise in defense spending over the last nine years. Our defense spending is now close to half of what the entire world budgets for defense. Wouldn’t it make more sense to modify our priorities and spend some of that money on health care, infrastructure and yes, retirement benefits to keep the citizens of the wealthiest country the world has ever known from falling–or falling further–into poverty?

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  • Bill Woessner September 7, 2010 at 11:21 am

    In 2008 alone, Social Security kept about 20 million people, including 13 million seniors and 1 million children, out of poverty

    Elevating 19 million adults and 1 million children out of poverty can’t cost any more than $201 billion. And that’s assuming that all of those people have no income of their own. What happened to the other $424 billion Social Security spent in 2008?

    less than 27 percent of federal spending–a far cry from Simpson’s prediction–goes to older Americans

    I think it’s actually closer to 33%. But both numbers have been artificially lowered by the federal government’s current spending spree. If federal spending were closer to its historic average of 20% of GDP, Social Security and Medicare would consume more like 43% of federal outlays.

    Is it a special entitlement to expect a return on funds paid into a retirement account?

    Talk about a specious argument. Social Security is NOT a retirement account. It is a wealth transfer program. It transfers wealth from workers to retirees. Nothing more.

    The program has always been self-sustaining and has produced a surplus for the last 25 years.

    Social Security is self-sustaining because they keep moving the goal posts closer and closer. Since its inception, the Social Security tax rate has been increased by 520%. The Social Security tax base has been increased 135% (over inflation). And the full retirement age has been increased from 65 to 67. Do you think Social Security would be self-sustaining had these changed not been enacted?

    Currently, Social Security benefits represent 4.8 percent of G.D.P.; by 2035 they will be 6 percent. Paul Krugman pointed out that the increase is “significantly smaller” than the rise in defense spending over the last nine years.

    Again, those numbers are taken out of context. Krugman’s statement is only true because defense spending was at a post-WW2 low in 2001. Since WW2, defense spending averaged 6.5% of GDP per year. During the Kennedy-Johnson administration (when Democrats controlled Congress, too), defense spending averaged 8.6% of GDP per year. The problem isn’t that we’re spending too much on defense – defense spending has been steadily decreasing since WW2. The problem is that entitlement spending is increasing and shows no signs of slowing down.

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