5 reasons cutting Social Security would be irrational

Don't expect even the current Congress to go there

By Paul Buchheit
Published October 28, 2013 4:45PM (UTC)
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(zimmytws via Shutterstock)

This article originally appeared on AlterNet.

AlterNetEven for Congress. They, and others who apparently don't study the facts, believe that Social Security is a government handout. But "entitlement" means that people who have paid into a program all their lives are entitled to a reasonable return on their investment. A better definition, as pointed out by  Mark Karlin at Truthout, is a "mandated retirement savings plan."

Cutting this popular and well-run and life-sustaining program would be irrational. There are many reasons for this.

1. Americans Have Paid for It Throughout Their Working Lives 

As of 2010, according to the  Urban Institute, the average two-earner couple making average wages throughout their lifetimes receive less in Social Security benefits than they paid in. Same for single males. Same by now for single females. One-earner couples get back more than they paid in.

2. It's a Small Benefit, but Most Seniors Depend on It 

The average Social Security benefit is less than  $15,000 a year, but most of our seniors rely on this for the majority of their income. Even the  second richest quartile of Americans depends on Social Security for over half of its retirement income.

3. It's Been Well-Run for Over Half a Century 

The poverty rate has  decreased dramatically over the past 50 years, in large part because of the benefits of the Social Security program.

Social Security is running on a  surplus of $2.6 trillion, it's funded until  2037, it cannot run out of money, it  cannot contribute to the deficit, it has lower administrative costs than private sector 401k retirement plans, and it's wildly popular.

On top of all this, a report by the  AARP Public Policy Institute found that Social Security stimulates the economy, adding more than $1 trillion to the U.S. economy each year as recipients spend their benefits on goods and services.

Dean Baker calls Social Security "perhaps the greatest success story of any program in US history."

4. The Free-Market Alternative Doesn't Work 

The free-market alternative is everybody for themselves. That's fine for people with good jobs and retirement plans. But stunningly, the number of private sector workers  covered by a pension with a guaranteed payout has dropped from 60 percent to 10 percent in a little over 30 years.

Americans are  going into debt faster than they're saving for retirement, and those able to put something aside often make wrong choices with their money.

Financial experts, who generally speak for the people with enough money to hire a financial expert, tell us to have $200,000 to $300,000 in personal retirement savings. Most Americans have about a tenth of that, less than  $25,000.

5. Redistribution Has Moved Retirement Money from the Middle Class to the Rich 

Tax Expenditures -- subsidies from special deductions, exemptions, exclusions, credits, capital gains, and loopholes that move  tax money to the richest taxpayers -- are  estimated to be worth up to  8 percent of the GDP, or about $1.2 trillion.

That alone is more than enough to pay for  Social Security ($883 billion).

Because of this misdirected revenue, government has been forced to  borrow from Social Security to fund its programs. Most notably,  George W. Bush took our retirement money to pay for his two wars and his tax cuts for the rich.

This last reason, more than any of the others, reveals the overwhelming unfairness of cutting Social Security. In effect, the middle class is being told to replenish its own savings account after those savings were passed along to the military and the super-rich.

Paul Buchheit

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Related Topics ------------------------------------------

Alternet Entitlements Inequality Safety Net Seniors Social Security U.s. Economy