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The Struggle to Save Social Security

Jacob Morris has effectively exposed the attack on Social Security for what it is, and he has done this within the framework of the existing system. The underlying assumption is that Social Security must be paid for out of an accounting reserve supported by payroll taxes. Based on this premise, generally accepted by liberals and conservatives alike, the financial integrity of the reserve is taken as equivalent to the integrity of Social Security itself. But the real questions are different. Why use an accounting reserve and why apply the test of financial integrity? No such tests are applied to any other part of the federal budget, surely not to the enormous armaments expenditures. Basically, what is at issue here is not a financial but a social problem. This was spelled out in a recent communication we received from Irving Kaplan, an economist friend of ours who has been a student of the Social Security program from its very inception:

The most important political issues over the social-security program and its future are reduced, in the public mind and sometimes designedly, to technical issues often so abstruse and complicated that only experts can understand either the issues or the merits of the proposals to modify benefits, thus providing a field day for all manner of political claims and confusion.

In reality, however, all the fuss and feathers over the problem of social-security financing and the future of the social-security system reduces to the very simple question faced by the American people and their government in 1935, faced very directly too when the country first began to raise its head out of more than five dismal years of unprecedented depression: Should and will the government accept the responsibility for assuring (for all time, as everybody then thought) that the working people of the country and their families shall have a decent standard of living during their working lifetime and in their old age when they are ready for and have earned their right to retirement?

The question of responsibility of society as a whole, of an acceptable social order, for assuring a life in decency for the people who built or build the country and provide-as only they can and must-the means for everyone’s livelihood, i.e., the standard of living for the whole country, had already confronted 100 million Americans, more or less, for years and been the subject of discussion in millions of homes, in workplaces, wherever people met. By 1935, when the government did accept this responsibility, enacting the Social Security Act of 1935, it was clear beyond any doubt, even the doubts of those who had stalled and delayed on the issue before, that the people’s answer was an emphatic Yes!

The question really being raised by the proponents of cutbacks now is whether the country can afford to fulfill the responsibility acknowledged in 1935. To the implicit question they give only an implicit answer, a presumptive No. The only effective response is to re-frame the question: Can the country afford to renounce the commitment made to its working people in 1935? And to answer it with a resounding No! Only the working class can give this answer with the necessary political resonance.

The proposition that the United States cannot afford the presently constituted, or an improved, Social Security program is as phony as the talk about its possible bankruptcy. Jacob Morris has clearly shown that even within the context of an accounting reserve the issue of financial bankruptcy is only a propaganda ploy. In any event, the pension obligations could and should be paid out of the general revenue instead of from funds raised through the regressive payroll tax. All that is at stake is the political will to do so-by cutting military expenditures, eliminating tax loopholes, and raising tax rates for the wealthy. Nor should anyone doubt the basic ability of the economy to supply the needed goods and services which the pensions would buy, in light of the existing idle productive capacity, the great capability to enlarge productive capacity, an ever-present surplus of unemployed labor, and a huge agricultural production.

Yet despite these fundamentals the propaganda mills of the bourgeoisie grind on. The latest blockbuster consists of two long articles in the New York Review of Books by Peter G. Peterson, chairman of the board of the investment banking firm Lehman Brothers Kuhn Loeb and a former Secretary of Commerce. (“Social Security: The Coming Crash,” December 2, 1982; and “The Salvation of Social Security,” December 16, 1982) These articles appearing in a journal with prestige among many intellectuals got quick results. The liberal New York Times columnist Anthony Lewis promptly jumped on the bandwagon, digesting and endorsing Peterson’s attack on Social Security benefits for a much wider public. (The column by Lewis, “The Social Security Alarm,” appeared in the Times of November 29, based apparently in part on advance copies of the New York Review of Books articles.)

The Peterson articles contain a mountain of fallacies and bogus arguments. This is not the place for a full-dress refutation, but we must draw attention to what amounts to the heart of his analysis:

Nothing could be more salutary for the prospect of long-term productive investment and indeed the global financial system than the news that these grotesquely large obligations to pay public retirement benefits were being reduced and brought under control.

Investment requires savings. One reason we are investing too little is that we are using up every year, in current and often imaginative consumption, far too much of the income we are producing.

This is said at a time when manufacturing firms are operating at less than 70 percent of capacity, when vast sums in the hands of corporations and the wealthy are devoted to mergers and all sorts of speculation, while welfare benefits are being steadily reduced and the unemployed go hungry. In the midst of such widespread failure of the capitalist system, all that the chairman of one of our leading investment banks has to offer as a solution is a further reduction in consumption, especially by the aged. For what? So that the investment bankers can have still more funds available with which to profit from financial manipulations? (See the Review of the Month on “Supply-Side Economics,” March 1981 MR, for a discussion of the fallacy of the lack of savings being the cause of inadequate investment.)

It would be hard to match the hypocrisy underlying the claim that the health of the global financial system would be improved by a reduction of the “grotesquely large obligations to pay public retirement benefits.” What exists today is an international financial system that has been brought to the brink of collapse by the ruthless, uncontrolled drive for profits by the bankers and by the burgeoning Eurodollar market that has arisen as a result of arrogant U.S. imperialist policies. The way to rescue the system, this banker has the gall to tell us, is to reduce further the consumption of the masses and, in particular, to renege on the country’s longstanding commitment to the aged. Could there be a clearer demonstration that the attack on Social Security is a class issue? As ever, the ruling class is seeking to preserve and increase its wealth by shifting the burden of the crisis on to the backs of the workers, including the retired. The fightback can only be effectively conducted if there is proper awareness by the people that the struggle over the future of Social Security is a class struggle-that the real issue is not finance but social justice.