The Future of Old Age in America

Note: James Ridgeway wrote this article as part of a MetLife Foundation Journalists in Aging Fellowship, a program of the Gerontological Society of America and New America Media. The article first appeared in The Guardian.

In her remarkable book The Coming of Age, Simone de Beauvoir observed that fear of aging and death drives younger people to view their elders as a separate species, rather than as their own future selves: “Until the moment it is upon us,” she wrote, “old age is something that only affects other people. So it is understandable that society should prevent us from seeing our own kind, our fellow-men, when we look at the old.”

This disconnect has, no doubt, been helpful to those who favor cutting the so-called old age entitlements, social security and Medicare – which, these days, seems to include just about everyone in Washington. Now that the congressional supercommittee charged with reducing the federal deficit has gone down in flames, some are calling for a return to the plan proposed by Obama’s Simpson-Bowles deficit commission last year. Amidst all the bipartisan warring, one thing most of these committee members agree upon is that the budget will, in large part, be balanced on the backs of old people, through cuts to social security and Medicare. The only differences are over how these cuts should be made, and how large they should be.

In the unlikely event that the rich are made to pay something toward deficit reduction, in the form of increased taxes, their contribution will pale in comparison to the share paid by elders in the form of reduced benefits. In part, that’s because the enemies of entitlements have succeeded in depicting these lifesaving government programs as the cause of our economic woes – a myth that has repeatedly been debunked, to little avail. By extension, they depict our current fiscal crisis as a standoff between the old and the young, rather than the rich and the poor. Former Senator Alan Simpson, handpicked by Obama to chair his deficit commission, was fond of talking about the perfidy of “fat cat geezers” who dared to oppose entitlement cuts at the expense of his – and everyone’s – grandchildren.

Simpson’s image of old people “who live in gated communities and drive their Lexus to the Perkins restaurant to get the AARP discount” seems to have gained traction as the dominant view of elders in this country. This belies the reality of the lives lived by millions of older Americans, for whom a comfortable retirement was never more than a distant dream. For them, old age means work or poverty – or, sometimes, both.

Recently, I attended the annual meeting in Boston of the Gerontological Society of America, a research and education organisation whose members study all aspects of aging. With 3,500 people in attendance, hundreds of sessions and a teeming exhibit hall, there was plenty of upbeat talk about the “encore years”. But there was also a body of research and discussion that presented a more rounded picture of old age in America – a place where “fat cat geezers” are far outnumbered by elders who, like Americans of all ages, are struggling to get by.

In one exhibit on “The Economics of Aging”, researchers from Wayne State University presented a study published earlier this year called “Invisible Poverty”, which found that one in three elders – including many living in middle-class suburbs – cannot fully cover their basic living expenses, including food, housing, transportation and medical care. It also found that certain shortcomings in the way federal poverty statistics are compiled meant that poverty among older people was more likely to be underestimated. “This widespread economic struggle faced by Michigan seniors is fairly hidden from public sight, making it an invisible poverty that takes its toll on older individuals, their families and caregivers and the community at large,” says the study.

Among the elderly poor are large and growing numbers of women. Consider the figures: over 40% of black and white women over 65 live alone, and over a quarter of these women are poor. They are likely to be isolated and they, too, are invisible. Also below the public policy radar, according to another study presented at the conference, are lesbian, gay, bisexual and transgender elders – who are now counted at over 2 million, and are expected to double in number by 2030. These people are far less likely to have partners or caregivers of any sort, because society banned or discouraged them.

For these elders, and millions of others, social security is more than an “entitlement” – it is a lifeline. According to a recent report by the Center on Budget and Policy Priorities, social security alone keeps 20 million Americans above the poverty line. It’s hard to argue that social security benefits are too generous, or that retirees enjoy extravagant lifestyles. The average social security benefit currently stands at just over $1,100 a month. As the Center for Economic and Policy Research’s Dean Baker notes, “More than 75% of benefits go to individuals with non-social security income of less than $20,000 a year and more than 90% of benefits go to individuals with non-social security income of less than $40,000 a year.” In addition, Baker points out:

“The private pension system has largely collapsed and the current group of near retirees saw much of their home equity disappear with the collapse of the housing bubble. As a result, the situation of retirees is likely to be worse in the near future, especially after taking into account the growing burden of out-of-pocket healthcare expenses projected in the decades ahead.”

So it is the search for work, not cleaning one’s fingernails, or studying French to stave off dementia, that is now a major concern for many older people. Historically they have been fired from long-held jobs because of their costly benefits and diminishing ability to handle the job, but now employers are taking a fresh look at this situation. Business, as it turns out, may very well embrace the old – because they often come at lower wages, with no benefits and scant legal protection. Given US supreme court rulings, the prospect of any of these people filing old age discrimination suits is unlikely. Rather than knocking them out of a job, it may turn out to be less expensive to keep on a skilled, elderly employee, perhaps at reduced salary and reduced hours,  than go through the rigamarole of hiring a young, inexperienced person who must then undergo training.

As the GSA conference showed, there is no point in cutting entitlements to the elderly when, in fact, so little is known about their lives and their emerging future. It means there must be a full, open debate – not backdoor political manoeuvring – on the issue. What may be happening here is the emerging outlines of a much different society than the one we now know: a society that, for example, will require a new service sector, a different slant towards medicine, which uses the old to assist the young, as friends and caregivers – instead of pitting generations against one another.

The late Theodore Roszak,who described and named the “counter culture”that took shape in the 1970s, thought old people were anything but a selfish bunch of useless geezers waiting to die, but an “audacious generation”, opening a new world of energy and hope. Let us hope, in de Beauvoir’s words, that moment is upon us.

The Myth of the Greedy Geezer

The following appeared today as an opinion piece on Al Jazeera English.

Old people are becoming everyone’s favourite scapegoat for America’s economic woes. Among the growing ranks of self-styled deficit hawks, Social Security and
Medicare are depicted as an intolerable burden to the nation’s already crippled
economy, which can only be saved through massive cuts to these so-called old-age entitlement programs. To advance this agenda, proponents of entitlement cuts have attacked not only the programs themselves, but the people who benefit from them – the selfish old folks like myself, who insist upon bankrupting the
country for the sake of their own costly health care and retirement income.

We in the over-65 set have become the present-day equivalent of Reagan’s notorious “welfare queens,” supposedly living high on the hog at the expense of the taxpayer. According to what I call the Myth of the Greedy Geezer, we lucky
oldsters spend our time lolling about in lush retirement villas, racing our golf
carts to under-priced early-bird dinner specials and toasting our good fortune
with cans of Ensure – all at the expense of struggling young people, who will
never enjoy such pleasures since the entitlement “Ponzi scheme” will collapse
long before they are old.

The fervour for entitlement-cutting remains strongest among conservatives, but these days, even President Obama is taking part, promoting the recommendations of his National Commission on Fiscal Responsibility and Reform, commonly known as the Deficit Commission (and to its opponents as the Cat food Commission, since that’s what old people will be eating when the Commission finishes its work).

The appointed chair of the Deficit Commission, Alan Simpson, is one of the primary promulgators of the Myth of the Greedy Geezer. A former Republican senator from Wyoming who is known for his colourful turns of phrase, Simpson insists that “This country is gonna go to the bow-wows unless we deal with entitlements, Social Security and Medicare.” The majority of the people opposed to such cuts, he claims, are “These old cats 70 and 80 years old who are not
affected in one whiff. People who live in gated communities and drive their
Lexus to the Perkins restaurant to get the AARP discount. This is madness.”…

Read the rest at Al Jazeera.

The Cost of Prisons

In “It Takes a Village,” an op-ed column in Friday’s New York Times, Charles Blow writes about the Dorothy Day Apartments in West Harlem:

Well, the  cost of the building plus renovations was $17 million. So if it  houses 190 people, that works out to about $89,500 a person, not including most of the children served by the day care center. But let’s put that into the context of prison construction, for  instance. According to the New York State Commission of  Correction, 1,000 new jail beds will have been built between the end of 2007 and the end of 2011 in the counties of Albany, Essex,Rensselaer and Suffolk at a cost of $100,000 per bed.

Furthermore, as Broadway Housing Communities points out on its Web site, “permanent supportive housing for an individual costs taxpayers $12,500 annually, compared to annual costs of $25,000 for an emergency shelter cot; $60,000 for a prison cell; and $125,000 for a psychiatric hospital bed.”

Obama, Can You Spare a Job?

One of the latest attacks on Obama’s failed policies claims that his economic stimulus created few jobs at exorbitant cost to taxpayers: $278,000 per job, to be exact. Fuzzy math aside, what these attacks omit to mention is that the stimulus, like all else these days, operated under the conservative creed that everything has to be done through the private sector. This ethos, firmly embraced by Obama
himself, prevents the government from taking the far more efficient route of simply employing people, which might have created many more good jobs for the same price tag.

Had Obama had heeded FDR’s experience during the Great Depression, we could have put unemployed people to work rebuilding American infrastructure—bridges, tunnels, railroads, roads–not to mention restoring and shoring up wetlands and carrying out other environmental projects. That’s what Roosevelt
famously did with his Works Progress Administration and Civilian Conservation
Corps.

Such an initiative might conceivably have been possible, on some scale, prior to the midterm elections. But with the gridlock in Congress and diminishing confidence in the President and government, any such course now is hard to imagine. Instead, the austerity imposed by the debts deal will likely further impede any chance at real job growth–as Roosevelt himself found in 1937 when he briefly adopted austerity measures, only to see falling unemployment rates spike once again.

But even at this dismal stage, there are nonetheless a handful of realistic projects that ought to appeal to some fiscally minded conservatives as well as to Democrats.

Jonathan Alter, who is a historian of FDR’s New Deal as well as a journalist, has promoted an idea that involves allowing states to “convert their unemployment insurance payments from checks sent to the jobless into vouchers that can be used by companies to hire workers.” The amount of the unemployment checks would in effect become subsidies to the employers, so that “for instance, a position paying $40,000 might cost employers only $20,000, thereby encouraging them to hire…If a mere 10 percent of unemployed Americans persuaded employers to accept such vouchers, more than a million people would find work with no new spending beyond some administrative costs.”

Alter believes the plan, first suggested by Alan Khazei, a Democratic candidate for the Senate in Massachusetts, might appeal to “a Republican House  that loves the concept of voucher.” But so far there’s been no interest from either Congress or the Obama Administration.

Another option is the already much-discussed German experience with the short work week. As Kevin A. Hassett of the American Enterprise Institute explained this scheme back in 2009.

Firms that face a temporary decrease in demand avoid shedding employees by cutting hours instead. If hours and wages are reduced by 10 percent or more, the government pays workers 60 percent of their lost salary. This encourages firms to use across-the-board reductions of hours instead of layoffs. Here’s how the program works.

A firm facing the challenges of the recession cuts Angela’s hours from 35 to 25 per week, thus reducing her weekly salary to 714 euros from 1,000 euros. Angela does not work for the firm during those hours. As part of its short-work program, the government now pays Angela 171 euros–60 percent of her lost salary. Most important, she still has a job. Effectively, the government is giving her unemployment insurance for the 10 hours a week that she is not employed.

Senator Jack Reed and  Congresswoman Rosa DeLauro have put this program into legislation which so far has  gone nowhere, with only a handful of co-sponsors. This despite the fact that as Dean  Baker of the Center for Economic and Policy Research points out: “Twenty  one  states (including California and New  York) already have short-time compensation as an option under their
unemployment insurance system. In these states a governmental structure already  exists to support work sharing, although there would have to be changes to make  the system more user friendly so as to increase take-up rates.”

Steven Pearlstein in the Washington Post last week pointed to another way of immediately putting people to work, which harkens back to the idea of rebuilding the nation’s crumbling infrastructure:

Over the next decade, the federal government is slated to spend hundreds of billions of dollars building roads, schools, airports, trolley  lines and airport terminals, modernizing the air traffic control system, replacing computer systems and buying planes, ships, tanks, trucks and cars.  Moving up some of that spending from years 8, 9 and 10 to years 1, 2 and 3 won’t cost any more in the long run, or increase the long-term deficit any more, but could sure help put a floor under the economy in the short run. For those worried about pork, the actual spending decisions could be left to an independent Infrastructure Bank.

To spur private investment in equipment and research, the government could immediately allow companies of all sizes to deduct 100 percent of such expenses made in the next three years, rather than “depreciating” them over many years. That incentive to invest now will increase the deficit in the short run but have little or no impact on the long-term deficit.

As Suzy Khimm reports in the Washington Post, “The question of infrastructure funding will come up as soon as Congress returns from its August recess,” since “a bill reauthorizing  spending on surface transportation — which would help build roads, highways,  and the like — is set to expire in September. There’s a big gap between the House GOP proposal, which would slash federal spending to 35 percent less than Fiscal 2009 levels, and Democratic Sen. Barbara Boxer’s two-year plan to spend $55 billion a year. Boxer’s proposal would require revenue beyond what’s in the Highway Trust Fund, which receives money from the gas tax, promising yet another fight over which will be better for the economy — reducing the deficit or Keynesian spending on infrastructure.”

We all know how that fight is likely to turn out. And as Jonathan Alter points out, even these modest approaches to job creation call for an attitude of what Roosevelt called “bold, persistent experimentation” on the part of the government–and the leadership to back it up. And as we’ve seen all too clearly, Obama is no FDR.

Soylent Greenbacks: David Brooks Wants Some People to Die for Debt Reduction

To help solve the debt crisis, the best thing I can do is die. Maybe not right now, but certainly before I put too much strain on the public purse—and since I’m 74, that means pretty soon. If I should be lucky enough to contract a fatal disease, I can do the right thing by eschewing expensive medical care that might extend my life. If that doesn’t happen, and I enter a slow and costly decline, then in the interests of the greater good I should take the Hemingway solution.

That’s pretty much the message of David Brooks’s column in today’s New York Times. “This fiscal crisis is about many things,” he writes, “but one of them is our
inability to face death — our willingness to spend our nation into bankruptcy
to extend life for a few more sickly months.”

Here’s how Brooks comes by his position: To begin with, he says: “The fiscal crisis is driven largely by health care costs.” Never mind two futile wars and ten years of tax relief for millionaires—it’s primarily health care that’s driving us into national penury.

Furthermore, Brooks argues, the reason for these soaring health care costs is that very old and very sick people insist on clinging on to their miserable lives, when they ought to be civic-minded enough to kick off. It’s not the insurance companies, which reap huge profits by serving as useless, greed-driven middlemen. It’s not the drug companies, which are making out like bandits with virtually no government regulation. It’s not the whole corrupt, overpriced system of medicine-for-profit, which delivers the 37^th best health care in the world, according to the WHO, at more than twice the cost of the best system (France). No. It’s all about us greedy geezers. We’re the ones who are placing an untenable burden on the younger, heartier citizenry, with our selfish desire to live a little longer.

Brooks cites the usual figures: “A large share of our health care spending is devoted to ill patients in the last phases of life,” he writes, and Alzheimer’s patients will soon cost us hundreds of billions. He continues: “Obviously, we are never going to cut off Alzheimer’s patients and leave them out on a hillside.” (Thanks, Dave.) “We are never coercively going to give up on the old and ailing.” Nonetheless, Brooks hopes than many “old and ailing” people will make the choice made by Dudley Clendinen, a man suffering from A.L.S., who wrote a moving essay in the Times about his decision to end his life before the disease takes its full course and renders him “a conscious but motionless, mute, withered, incontinent mummy of my former self.”

I have great respect for Clendinen’s decision. As I’ve written before in Mother Jones, I am a big supporter of what these days is called “choice in dying” or “death with dignity”—each person’s right to decide when and where and in what
circumstances they will die. But I don’t want anyone else making those decisions for me, or telling me when the time is right—not an insurance company or a Medicare bureaucrat, not Barack Obama or John Boehner, and certainly not
David Brooks. I have every intention of being my own one-man death panel. But I won’t be persuaded to die a moment sooner than I want to just because it might
save some money–money that could easily be saved by far more equitable and less draconian means.

Brooks writes that “it is hard to see us reducing health care inflation seriously unless people and their families are willing to do what Clendinen is doing —confront death and their obligations to the living.” But why is it “hard to see us reducing health care inflation” any other way? Because conservatives like Brooks don’t believe in challenging the profit-driven health care system, and the people who pass these days for liberals lack the moxie to stand up to them.

Based on models from countries like France and Canada, we could bring about whopping savings in health care expenditures through a single payer system without rationing or compromising the quality of care. Short of this, we could opt for much more regulation and still save more money than we could by pulling the plug on every geezer in the land.

If I have any “obligation to the living,” it’s to leave them with a better health care system than we have now—a health care system that values all human life above profits. But I know that’s not likely to happen before my death—which, if I listen to Brooks, could be right around the corner.

The S&P Smackdown

As Dean Baker points out, yesterday’s stock market decline was likely due to poor earnings reports from Bank of America ( Friday) and Citigroup (Monday). Not from S&P. Future profits for our bailed-out banks don’t look so good.

More Baker:

It is also worth noting that S&P has a horrible track record for judging credit worthiness. It rated hundreds of billions of dollars of subprime backed securities as investment grade. It also gave Lehman, Bear Stearns, and Enron top ratings right up until their collapse. Furthermore, no one was publicly fired for these extraordinary failures. Investors are aware that S&P’s judgement does not mean very much.

Why can’t we hang these banks out to dry?

How come Wall Street’s own kiss ass ratings gang whose heads were deep in the sand when the recession began,now rise from the sewer to run the nation’s finances. What about investigating S&P’s role in the recession?

How to Put Wall Street CEOs in Jail

“Forgive me,’’ director Charles Ferguson said in receiving an Academy Award for his documentary Inside Job, “I must start by pointing out that three years after a horrific financial crisis caused by fraud, not a single financial executive has gone to jail — and that’s wrong.”

In New York, Tuesday marked the beginning of the long awaited trial of hedge fund manager Raj Rajaratnam–who ran the $7 billion Galleon Group  and whose personal wealth is estimated at $1.3 billion. He is being prosecuted by the SEC for insider trade deals. Rajaratnam is said to have made $45 million in illegal profits. He has denied the charges and is free on $100 million bond. If he is convicted he could go to prison for as long as 20 years. The SEC historically has been such a handmaiden of the finance business that it’s hard to imagine anything serious coming out of its prosecutions, but one never knows.

Whatever happens to Rajaratnam, it  would be simple enough to prosecute many of the high rollers on first civil, then criminal charges, fining them millions of dollars and taking them out of circulation for up to 20 years.

“Contrary to prevailing propaganda, there is a fairly straightforward case that could be launched against the CEOs and CFOs of pretty much every US bank with major trading operation,” writes Yves Smith in her popular Naked Capitalism blog.  “I’ll call them ‘dealer banks’ or ‘Wall Street firms’ to distinguish them from very big but largely traditional commercial banks.’’ She proceeds to lay out the case, the key points of which I have excerpted below:

Since Sarbanes Oxley became law in 2002, Sections 302, 404, and 906 of that act have required these executives to establish and maintain adequate systems of internal control within their companies. In addition, they must regularly test such controls to see that they are adequate and report their findings to shareholders (through SEC reports on Form 10-Q and 10-K) and their independent accountants. “Knowingly” making false section 906 certifications is subject to fines of up to $1 million and imprisonment of up to ten years; “willful” violators face fines of up to $5 million and jail time of up to 20 years.

The responsible officers must certify that, among other things, they “are responsible for establishing and maintaining internal controls’” and making sure everyone concerned knows about them–and beyond that, for taking steps to have these controls evaluated and reported. Smith continues:

It’s almost certain that you can’t have an adequate system of internal controls if you all of a sudden drop multi-billion dollar loss bombs on investors out of nowhere. Banks are not supposed to gamble with depositors’ and investors’ money like an out-of-luck punter at a racetrack.

Readers may have better suggestions of where to start, but I’d target Lehman. First, it already has a smoking gun: a May 2008 letter written by former senior vice president Michael Lee to senior management, including the CFO Erin Callan. It describes numerous accounting shortcomings, none of which look to be new and many of which look to be Sarbanes Oxley violations. Second, its derivatives books were by all accounts an utter disaster at the time of its collapse: multiple non-intergrated systems, to the point where the bank did not even have a good tally of how many positions it had….

 Naked Capitalism concludes:

Will any of this happen? Of course not. The decision was made at the time of the TARP, and reaffirmed early in the Obama administration when there was serious talk of resolving Citigroup and Bank of America, that no one at the helm of the senior banks would be subject to serious scrutiny, much the less actually expected to be held accountable for actions that wrecked the economy and have imposed serious costs on ordinary Americans. The case we described above is relatively simple to explain to a jury and has the advantage of being the sort where the plaintiffs could build on their experience in one action in subsequent cases.

But that sort of truth, that most, probably all, of the major Wall Street banks were engaged in the same sort of misconduct and the violations extended to the very top of the firms, would expose numerous other parties as complicit. So we’ll permit the cancer in our society to metastasize rather than threaten the power structure. But at least we citizens can make it clear, even if we cannot change the outcome, that we are not buying the canard that nothing can be done to fight this disease.

In other words, the power structure forges ahead, while the poor and middle classes will pay for their own screwing with reduced social security, medical care, and social welfare services of all sorts. All this is being arranged by both Democrats and Republicans, in response to a recession that will only serve to deepen the already enormous divide between rich and poor in American society.

In the Social Security Debate, Today’s Democrats Are Worse Than Yesterday’s Republicans

Having “retooled’’ his Presidency for a more open accommodation of the center right, Obama will soon be overseeing the battle to launch a dismantling of the Social Security system.

His government has, from the start, been reminiscent of the Clinton years, so it’s safe to say that we can expect more triangulation. Clinton’s adoption of Republican tropes led him to fulfill some of the conservatives’ fondest dreams: His administration countenanced the demise of the banking regulations originally established by the Depression-era Glass Steagall Act, and the destruction of the welfare system established in the 1930s and expanded in the 1960s. Obama will provide much the same function on Social Security. Without entirely destroying the popular program, he will support cuts that go beyond anything that should rightly happen during a Democratic administration.

Of course, the Democrats will say that it isn’t their fault: It all happened because of that horrid Tea Party, dragging conservative Republicans even further to the right. This suggests that Democrats had no choice but to head them off at the rightward pass, as if standing and fighting simply wasn’t an option—and as if they didn’t still hold the Senate and the White House.  

What makes this especially disconcerting, for anyone who has lived long enough to remember earlier political eras, is how favorably the Republicans of the past compare to the Democrats of the present on many points.

Tracking back to the New Deal, one can find Senator Robert A. Taft of Ohio—the most prominent conservative Republican of his time, later identified by John F. Kennedy in Profiles in Courage as one of the five most important senators in history–registering his support for Social Security. A champion of private enterprise and enemy of labor unions, Taft bashed Roosevelt’s “socialistic” programs every which way, fighting to reduce runaway government and even opposing entry into World War II. But at the height of the Great Depression, he also supported the new Social Security program, as well as public housing and public education.

Taft embodied the tenets of Main Street middle western life before the Second World War. And he was not unreservedly laissez faire, nor was he anti-government. He believed in the intervention and utility of the federal government where he deemed it necessary, and that included providing an adequate, if not generous, public welfare system.

Taft ran for president three times and never made it. But Eisenhower, the war hero who became a popular Republican president, carried some of these same basic tenets into the postwar era. Eisenhower was not opposed to federal intervention in the economy and, for example, backed the creation of an interstate highway system, which became a vast public works program. And Eisenhower not only supported Social Security, but took steps to enlarge the program. According to the Eisenhower Memorial Commission:

Dwight Eisenhower was the principal force behind the greatest single expansion of Social Security beneficiaries in the history of the program. He led the legislative drive to add over ten million Americans to the system. Here’s how it developed.

When the Social Security Act became law in 1935 its purposes were primarily aimed at factory workers and other employees of business organizations. The legislative process leading to passage of the law was both lengthy and contentious. Large numbers of working American’s were left out of the original Old Age and Survivors Insurance coverage. No major changes in the Social Security law had been made since its initial passage.

During the presidential campaign of 1952, candidate Eisenhower made it clear that he believed the federal government played a rightful role in establishing the Social Security system, but he made no promises concerning its future. However, after the election it became clear that the Republicans would have control, by slim margins, of both the House of Representatives and the Senate. This changed the political and legislative landscape considerably.

Previously, expansion of the Social Security system or increasing the level of payments to retired Americans had been given no chance to succeed in the Congress because there were enough conservative Democrats (and the majority of Republicans) who would vote against such bills. With a Republican President it now appeared likely that the majority of congressional Republicans would honor their President and support his initiatives. Among the new legislative possibilities, action on Social Security now seemed possible.

Thirteen days after taking his oath of office, President Eisenhower delivered his first State of the Union message to Congress and, when discussing the need for greater effectiveness of government programs, he said, “The provisions of the old-age and survivors insurance law should promptly be extended to cover millions of citizens who have been left out of the social security system.”

The following week, during a White House meeting of the House and Senate Republican leadership, Eisenhower brought up the Social Security expansion proposal and asked America’s most famous living conservative, Senator Robert A. Taft, if he would support the initiative. When he received a positive reply he knew that the possible had just become the probable. Before the end of the month, Eisenhower appointed a presidential commission to study the Social Security system’s deficiencies and submit a detailed report on specific reform measures. In his public statement creating the commission, the President said, “It is a proper function of government to help build a sturdy floor over the pit of personal disaster, and to this objective we are all committed.”

Those opposed to the initiative stressed their belief that retirement income was the responsibility of every individual and the federal government should not be involved. One citizen should not have to pay for the old age necessities of another. President Eisenhower responded to this notion during his press conference on June 17, 1953 with these remarks: “A strict application, let us say, of economic theory, at least as taught by Adam Smith, would be, ‘Let these people take care of themselves; during their active life they are supposed to save enough to take care of themselves.’ In this modern industry, dependent as we are on mass production, and so on, we create conditions where that is no longer possible for everybody. So the active part of the population has to take care of all the population, and if they haven’t been able during the course of their active life to save up enough money, we have these systems.”

You know it’s a measure of how far this country has moved to the right that someone like myself could wax nostalgic for the likes of Dwight Eisenhower and Robert Taft. (Next stop: Remembrances of the Nixon years, when the richest Americans were taxed at a rate of 70 percent.) Yet now we see the historic approach of these two major Republicans figures—the icon of the Senate and the storied war hero—submerged beneath the threat of the Tea Party adherents. And it is all happening under the listless hand of Obama, while the Democratic mainstream sits passively back and watches the demise of the programs that made their party great.

In the end, history most likely will judge that the final blows against the New Deal came not from the Republicans, but from weak or opportunistic Democratic politicians–first Clinton, then Obama.

Obama’s Tax Deal and the Future of Social Security

It’s worth pointing out once again that  last week’s  tax deal is hardly the victory for the American people it is made out to be. One of the biggest chunks —thirteen percent of the total monies — come from Social Security and Medicare in the form of a one-year cut in payroll taxes. The government promises to pay back what it is taking from the Social Security trust fund by borrowing the money, then floating bonds to guarantee  repayment.

This one year abeyance might not seem like much. But with the coming of a right-wing  Republican House, under pressure from the further fringes in the Tea Party, it does not augur well for the future of the program. From its inception under FDR, the Republicans have dreamed of getting rid of Social Security, along with such other things as the Federal Reserve, the income tax, the Department of Education and the UN.

“Social Security’s dedicated funding base is jeopardized by this deal in an unprecedented way and there is a grave risk now that the retirement benefits of America’s workers will have to compete with our other priorities for a share of the general budget,” said Texas Congressman Loyd Doggett at a press conference cheld by the National Committee to preserve Social Security and Medicare. “It would result in Social Security being as dependent on annual Congressional action as public television or our National parks.”

“If the recent debate on the Bush tax cuts has taught us anything, it is that taxes are easy to cut but hard to restore, said Florida Congressman Ted Deutch at the same press conference. “If this provision is made permanent, it will double Social Security’s long term funding gap and open a door that Democrats have long fought to keep closed – budgetary attacks on Social Security.’’ 

Cutting social welfare programs will be very much in vogue with the new Congress, especially as it ramps up for a showdown on raising debt limits this coming spring. Because the right wingers are out to get social programs and because all spending measures must start in the House, it is highly likely that Social Security and Medicare will occupy center stage in this debate, and that the proposals of various fiscal commissions will come into play. First, the suspension of a cost of living increase for Social Security recipients could well be extended. Second, the age at which one can begin to collect Social Security will most likely be raised from 67 to 69. And finally, the Bush tax cut deal digging into the Social Security trust fund certainly will be an opening for the right to further a  borrowing spree–ironically, all in the name of reducing the deficit.

However, there is a potential remedy. In 2012, the economy should be stronger than it is today, argues Robert Greenstein, executive director of the liberal Center on Budget and Policy Priorities. 

 In addition, Congress likely will have enacted some significant budget cuts, and the nation likely will be debating the sort of further cuts that various commissions have recently proposed, including cuts in Social Security and Medicare benefits for elderly widows and seriously disabled people with incomes as low as $20,000. At that point, the President will need to make clear that he will veto any legislation extending the high-end tax cuts or the weakening of the estate tax beyond its 2009 parameters, and he should use the bully pulpit to take this case to the country.

If only we could count on our president to do something like this at all, much less in an election year.

Obama’s Fiscal Commission Prepares to Carve Its Turkey

The dread report of the White House’s National Commission on Fiscal Responsibility and Reform is due out this week.  One of the Commission’s co-chairs, the putative Democrat and consummate wheeler-dealer Erskine Bowles, has been up on the Hill flogging their plan to reduce the debt by cutting the country’s already skimpy programs for the old, the sick, and the poor. His partner, motor-mouth Republican Alan Simpson, continues his ranting and ravings against the greedy geezers who want to sink the entitlement-cutting ship before it’s launched. Both of them have taken to boo-hooing because no one appreciates all the work they are doing to save the nation from certain fiscal doom, and nobody is willing to pitch in to meet this noble goal.

Fiscal Commission's Plan: Starve the Old to Stuff the Rich

Personally, I’m still waiting to hear how Wall Street is going to pitch in and do its part–or the people with high six-figure incomes who claim they still aren’t rich enough to give up their tax cuts. Or, for that matter, Bowles and Simpson themselves, who retired on fat  pensions and don’t have a financial care in the world.  Since none of this is likely to happen any time soon, we’d better take a good hard look at what these sanctimonious old coots have come up with.

We already know a lot about what to expect from the Fiscal Commission Plan, since the co-chairs released their own preliminary proposals (as yet unapproved by the 18-member Commission) earlier this month. According to people with access to the Commission’s thinking, they seem to think their best bet is to achieve consensus on a proposal to change the way Social Security’s annual cost of living increases (COLAs) are calculated. What seems like a mere accounting adjustment would, in reality, severely affect benefits over time. The National Committee to Preserve Social Security and Medicare explains the impact of this scheme:

This proposal will affect current and future beneficiaries uniformly.  The impact would occur after benefits are initiated, with each COLA, as the yearly increase in benefits would be slightly lower than would have been the case without the change.  The impact would be greater with each successive COLA.  For example, the Social Security benefits paid to someone collecting benefits for 10 years would be about 3 percent lower, on average, if the chained-CPI was used for the COLA instead of the current CPI-W.  After 20 years this reduction would reach 6 percent and 9 percent after 30 years.

This is is bad enough–especially since old people’s cost of living increases faster than the national average because of exploding health care costs. But of course, there’s more, in the form of a plan that would raise the retirement age to 67 and eventually 69. Working until you drop dead or  literally are forced out of the labor market is utilitarian nineteenth-century thinking. But at that time, at least there was an expanding need for workers in a burgeoning industrial capitalist economy. The one big profitable industry surviving in America today is so-called financial services, which consists of a small number of overpaid people passing money back and forth amongst themselves. They certainly don’t need any more workers, and if they do, they’ll get them in India. Vermont Senator Bernie Sanders said of the idea that it was not only “reprehensible,” but “also totally impractical. As they compete for jobs with 25-year-olds, many older workers will go unemployed and have virtually no income.”

There was no such ringing takedown of the plan, of course, from Senate Majority Leader Harry Reid, whose mealy-mouthed statement tells us what we can expect from our Democratic Senate. “I thank the leaders of the bipartisan debt commission for their work,” Reid said. “While I don’t agree with every one of their recommendations, what they have provided is a starting point for this important discussion. I look forward to the full commission’s recommendations and to working with my colleagues on both sides of the aisle to address this important issue.”

Nancy Pelosi had somewhat stronger words, calling the preliminary proposals “simply unacceptable”–but then, she’s nothing but the soon-to-be-ex-Speaker of the House. In fact, co-chair Simpson has been predicting, with something close to glee, the “bloodbath” that’s likely to ensue next spring, when the new Republican House refuses to extend the debt limit and threatens to send the nation into default “unless we give ’em a piece of meat, real meat, off of this package.”

When all is said and done, there’s pretty much no way this so-called debate will end up without most of us, old and young alike, getting screwed. An already stingy program that ought to be expanded to cover elders as their numbers grow instead  is going  to be reduced, and the only question is how and by how much. It makes no sense, but it may well have political traction because the pols can sell it as an attack on rich grannies–“the greediest generation” as Simpson calls the old–while the young are hoodwinked into thinking it’s good for them. And since its full effect will take  years to be felt, the current crop of opportunistic politicians will be long gone into splendid retirement by the time these young people realize how wrong they are. Alan Simpson was frank about this fact in the Washington Post on Friday, using another one of his nauseatingly folksy metaphors:

 It takes six to eight years to pass a major piece of legislation. . . . On a piece of legislation that you know is going to go somewhere someday, you want to get a horse on the track. That might be not much. Then the next session you want to put a blanket on the horse. Nobody’s paying attention then. Then you put some silks on the horse. Then you clean the outfield and the infield. And then you put a jockey on the horse in the sixth year, and you can win it. Because the toughest part is to do the initial thing, and so it’s usually so watered down, it’s just gum, you could gum it. Then you begin to build it the next year, the next year and then you get it done. That’s what I see.

And just in case you thought it couldn’t get any worse, consider this warning from Allan Sloan, Fortune’s senior editor, who wrote an op-ed in the the Washington Post on Thanksgiving day:

[P]rivatizing Social Security, slaughtered when George W. Bush proposed it five years ago, seems about to rear its foul head again. You’d think that the stock market’s stomach-churning gyrations – two 50 percent-plus drops in just over a decade – would have shown conclusively the folly of retirees’ having to bet their eating money on the market. But you’d be wrong. Stocks have been rising the past 18 months, and you can bet that we’ll see a privatization push from newly elected congressmen and senators who made it a campaign issue.

Why is privatizing Social Security such a turkey? Because retirees shouldn’t have to depend on the market’s vagaries for survival money. More than half of married couples older than 65 and 72 percent of singles get more than half of their income from Social Security, according to the Social Security Administration. For 20 percent of 65-and-older couples and 41 percent of singles, Social Security is 90 percent or more of their income. That isn’t projected to change.

Arrayed against these grim prospects are a small group in Congress, led in the Senate by Bernie Sanders and Sheldon Whitehouse of Rhode Island, and in the House by Jan Schakowsky of Illinois. Says Shakowsky: 

Social Security has nothing to do with the deficit. Addressing the Social Security issue as part of the deficit question is like attacking Iraq to retaliate for the 9/11 attacks – there is simply no relationship between the two and attempting to conflate them does a grave disservice to America’s seniors. Taking money from Social Security retirees whose average total income is $18,000 per year and average benefit is $14,000 ($12,000 for women) is simply wrong. It places them at fiscal risk and hurts the economy because they will be unable to purchase the goods they need.  Americans in poll after poll have indicated their opposition to benefit cuts – particularly at a time when Wall Street bankers are making record bonuses.’

Schakwosky has her own plan, which will be an antidote to whatever the Fiscal Commission comes up with. But her ideas are unlikely to make any headway in the lame duck Congress or with the Democratic leadership, as they wait, already on bended knee, for the coming of the Republicans.