By Chris Powell
Strengthening the Social Security system has been Connecticut U.S. Rep. John B. Larson’s main objective in his last several terms.
Larson, D-1st District, keeps introducing legislation that would bring more revenue into the system, covering the costs of the worsening ratio between retirees and workers; increasing benefits, especially for the working poor and homemakers; and keeping the system financially sound for the long term, averting the insolvency projected for about 2034, when benefits paid are likely to exceed the system’s revenue.
Larson’s bill would achieve solvency mainly by imposing Social Security taxes on incomes above $400,000. At present Social Security taxes stop when an income reaches $160,200. That is, the Social Security tax is surprisingly regressive.
There are other ways of achieving solvency, as by raising the retirement age and cutting benefits, but that would make life harder for the working poor. Indeed, as Larson notes, Social Security is the country’s main and most successful anti-poverty program and has lower administrative costs than other programs. So strengthening it makes sense.
Nearly all Democrats in Congress favor Larson’s legislation, and if it was enacted, it might be the greatest accomplishment ever by a member of Congress from Connecticut. But strangely the Democratic congressional leadership failed to advance the bill in recent years when the party held majorities in both houses.
Now Republicans hold the House and are almost tied with Democrats in the Senate, and no Republican support can be found for the bill, though most Americans strongly support Social Security and almost certainly would favor strengthening it.
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The problem Republican congressmen seem to have with Larson’s legislation is the old one — that it raises taxes on the rich, people with incomes above $400,000. But most Republicans in Congress, like most Democrats (including Larson himself) have no problem with raising taxes on everybody by the back door, by increasing the national debt and the federal government’s interest costs. Those costs are increasing sharply, since the federal debt limit has just been suspended and interest rates are rising.
Of course making Social Security solvent by raising the retirement age and cutting benefits probably would be even less popular than raising payroll taxes on people earning more than $400,000 per year.
But why should the law require Social Security to pay for itself when the federal government is indifferent to solvency in most other respects?
Taxes were not raised to pay for the hundreds of billions spent on this country’s stupid imperial wars of recent years, nor are they being raised to sustain the U.S. proxy war with Russia in Ukraine. Taxes weren’t raised for the recent big federal appropriations for “infrastructure” projects around the country.
Most aspects of the federal government now are operating in large part on borrowed money that can never be repaid except with a devalued dollar and inflation – the back-door tax, which has been soaring.
Maybe Social Security is considered easier to defend politically when it has its own revenue source in payroll taxes. But as the dollar devalues from excessive deficit spending, inflation is devaluing Social Security benefits as well.
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Lately Democrats in Congress have expressed support or sympathy for “modern monetary theory,” which holds that deficit spending and money creation don’t matter as long as there is spare productive capacity in the economy and inflation is low.
Inflation never was as low as officially reported and is hugely visible now, but deficit spending has exploded anyway and neither party cares. So maybe Democrats in Congress should test the Republicans by offering Larson’s Social Security bill minus the payroll tax increases — just benefit increases and more deficit spending and borrowing. If deficit spending and borrowing can work for sending cluster bombs to Ukraine, why not for Grandma’s monthly check as well?
As long as it is pretended that deficits don’t matter, why not show the country that old-age pensions are as important as discretionary wars, and postpone setting better priorities until the dollar blows up? When that day comes, Social Security will be more popular than war.
Chris Powell has written about Connecticut government and politics for many years. (CPowell@cox.net)
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Chris Powell column 