“This bill demonstrates for all time our nation’s ironclad commitment to Social Security. It assures the elderly that America will always keep the promises made in troubled times a half a century ago.”
Ronald Regan said these words during the signing of the Social Security Amendments of 1983. By raising and accelerating the payroll tax for higher income beneficiaries to pay taxes on part of their benefits, as well as making it mandatory for the self-employed to pay the full payroll tax rate, the Social Security deficit of the early 80’s all but disappeared. Ronald Regan got Social Security reform right.
But nowadays, all but one of the Republican presidential candidates has taken a firm stance on the idea that Social Security reform is best through privatization. Taking capitalist interests out of the equation for a minute, one only needs to ask themselves, but why? In 2005 George Bush controversially tried to privatize social security in a plan that failed to make it through both houses in Congress and had waning support from constituents. If the plan would have gotten through Congress, the average family would have lost $26,000 on the market during the 2008 recession.
There is even a real life Social Security privatization model in Galveston Texas that has shown mixed results. While some think it was a good idea to privatize the system back in 1981, ultimately, these private plans pay out lower benefits than what would have been received from the Federal Social Security system, except for those residents with a relatively high income and few to no dependents.
Moreover, the current system will work as scheduled until 2035 and moderate tax reforms could help push the program well into the end of the twenty-first century. Vermont Senator Bernie Sanders introduced a bill last week that would require all people making over $250,000 a year to pay the payroll tax on all of their income instead of just the first $106,800 required by law. According to California Senator Barbara Boxer, this would provide Social Security with enough funding to maintain current benefit levels until 2086.
If the 2008 Financial Crisis showed us anything, it is that personal financial security shouldn’t be dictated by market capitalism. The idea of decommodification – that our labor is a commodity that can be bought, sold, or traded, and it is largely the job of the government to reduce a persons’ reliance on the market for their well being – rings true. Noam Chomsky said it best on the September 13th broadcast of Democracy Now!:
“Social Security is based on a principle that you care about other people…that we care about each other and have a responsibility to one other… it is frightening that there are people who want to have a society that is dominated by power, authority, and wealth in which people are passive and obedient.”
Ultimately, the question at the end of the day is – do the Republican presidential candidates have the wrong idea about Social Security privatization? While this debate is fraught with viewpoints on both sides of the spectrum, maybe once again it’s time to take some advice from Ronald Regan.
