That Was Then ...

   

Signing Social Security Act

     Unlike a certain Supreme Court Justice, before discussing the pros and cons of any legislation, I like to read it. I want to know, not only the verbiage, but the spirit of the legislation. It is always a good idea to know the opposition's arguments ... so here goes. I'll revisit Social Security and the Roosevelt Administration's intentions, to begin yet another discussion about "fixing" Social Security.
     What could Franklin Delano Roosevelt have been thinking? To say he was a fiscal conservative does not go quite far enough. Roosevelt was a complicated man; as the Nation's President in 1935, he was faced with a hornet's nest of socio-economic issues. The citizenry was still recovering from the Great Depression and the Dust Bowl years, with millions of Americans dispossessed and/or unemployed. Anyone running for the highest office in the land would have to offer creative solutions for the immediate present and for the future. Here is a partial quote from President Roosevelt, upon signing the Social Security Act:

...This social security measure gives at least some protection to thirty millions of our citizens who will reap direct benefits through unemployment compensation, through old-age pensions and through increased services for the protection of children and the prevention of ill health.
   We can never insure one hundred percent of the population against one hundred percent of the hazards and vicissitudes of life, but we have tried to frame a law which will give some measure of protection to the average citizen and to his family against the loss of a job and against poverty-ridden old age.

     In looking at the numbered photo of those present at the signing of the Act, it is important to note that some of these legislators were fiscal conservatives, who had voiced opposition to the legislation. They stepped up and did the right thing; they compromised. I believe they showed the courage of their convictions (and of FDR's conviction,) something exceedingly rare in today's political climate. (See the Social Security Administration's history site, to see who was who at the signing: http://www.ssa.gov/history/)
     While the vicissitudes of life remain unchanged, the landscape has changed, as has the legislation. To suggest Social Security cannot or should not change again, is to deny history and avoid reality. One reality check came to millions of Americans in the form of what I call the Big Lies; 1) the Social Security Trust is backed by worthless securities and 2) the Trust is broke. The Social Security Trust is funded by United States Treasury Bonds; the bonds are not liquefiable, true; however, they are, by no means, worthless. The reason for funding the trust with treasury bonds is the same as the reason many Americans choose to invest in them. Interest on the bonds has remained reliable. More myths abound in the political rhetoric concerning Social Security, never mind generalities that do nothing to accurately spell out the issues. However one problem looms large on the horizon. It pertains to disabled Social Security beneficiaries (SSI recipients,) as discussed in the 2014 Social Security Trustees' Report: "Social Security’s Disability Insurance (DI) program satisfies neither the Trustees’ long-range test of close actuarial balance nor their short-range test of financial adequacy and faces the most immediate financing shortfall of any of the separate trust funds." Should you feel the need for a translation, the effect will be reductions in benefits to SSI beneficiaries and prospective beneficiaries by 2016. May I say that again? Substantial cuts in disability benefits will take effect in 2016, failing action on the part of Congress and the Senate. THE CLOCK IS TICKING. Am I screaming?
     What can be done to "fix" Social Security, if we have legislators who will act on behalf of both beneficiaries taxpayers? (Keep in mind, a certain amount of courage and a number of compromises will be required. Neither the courage of conviction to do what is right, nor the ability to compromise and garner bipartisan support is easily found in Washington D.C. these days.) Here is some of the change experts recommend:

• Incorporate all of Social Security into the disability insurance (SSI.) That would combine the funds, changing the window of insolvency for SSI to 2033 (per the 2013 Trustees.) This would ensure benefits for something over eleven million disabled workers.
• Lift or eliminate the payroll tax cap, now fixed at $117,000. This change packs a large dollar wallop for the fund.
• Increase the payroll taxes that fund Social Security and Medicare, incorporating contributions of employees with those of employers and a modest (approximately) 3 percent for most taxpayers.
• Raise the retirement age for collecting full Social Security benefits. The retirement age is currently set at 67 for Americans born in 1960 and beyond. 
• Means test Social Security. This would reduce or eliminate Social Security benefits for people who have other incomes above a certain amount. 

Meanwhile it is important to know other measures actually have worked in certain parts of the country. I'll try to tackle this topic in subsequent posts.