A program to save Social Security

by Vic Perlo

This article was reprinted from the February, 15, 1997 issue of the People's Weekly World. For subscription information see below. All rights reserved - may be used with PWW credits.

Wall Street is out to wreck Social Security and Medicare. They are in a hurry to do it while they think they have a chance. They have on hand the same trained seals - Senator Daniel Patrick Moynihan and Michael J. Boskin, George Bush's chief economic advisor - who provided ammunition that significantly weakened the Social Security system in the 1980s. And, in his Jan. 26 news conference, Bill Clinton joined the clamor.

Social Security was won by labor and other militants in a campaign led by Communists during the 1930s. The U.S. system is much weaker than those in other industrial countries where unions are stronger and Communist parties are larger.

So far, opposition to the wrecking attack is weak and defensive, offering concessions to the pirates and making no demands for improvements - a strategy much like bargaining against yourself.

When Social Security became law in 1935, Pres. Franklin D. Roosevelt envisioned a system that would provide a minimum level of comfort to workers in their old age. But that is not the case today: The Social Security Administration (SSA) says that the system only provides the average worker with 42 percent of previous earnings - and this while admitting that the average retired worker needs at least 70 percent of his/her previous income in order to live with a modicum of dignity.

In an attempt to rationalize these low benefits, the SSA claims that Social Security is only one leg of a three- legged stool, a leg that is splintered and in danger of collapse. The other two legs are private pension plans - which 82 million workers do not have - and savings and investment income which even fewer workers have, meaning that the average worker doesn't have a stool to sit on - or a chance for a decent retirement.

Those puppet statisticians who warn that the system is about to go bust present elaborate tables to "prove" that the SS Trust Fund will run out of money 30 years from now. Such long-range forecasting is just statistical game-playing and their 75-year projection is pure snake oil. Think about it - these people can't even project a five-year budget.

But even by their calculations, enough money will pour into the system so that the present $500 billion in the trust fund will multiply six times to nearly $3 trillion by 2019. Wouldn't it be sensible to assume that with such a prospect we should wait and see if problems develop after 20 years? And further, they have an alternate set of calculations that is just as valid as the one they emphasize. This assumption shows that the fund will never decline but will soar to $82 trillion - that's 166 times the present level - by 2070.

The assault on Social Security has two principle aims: 1. To reduce benefits and raise taxes on workers, freeing the surplus for tax cuts to the rich. 2. To invest at least 40 percent of the trust fund in the stock market instead of in Treasury securities, as the present law dictates. This is fraught with danger: The long bull market is bound to be followed by a major bear market. Wall Street wants to use the workers' Social Security money to prop up the over- priced market a little longer before that money is lost when the market collapses.

The Communist Party recommends the following program which is designed to put Social Security on a firm financial base for meeting workers' needs:

1. Make the Social Security Trust Fund the minimum guaranteed source of benefits, with whatever else is needed to provide benefits to come from general tax revenues as is the case in other industrialized countries.

2. Double Social Security benefits.

3. Restore retirement at full pension at age 65 instead of 67; with workers in heavy or dangerous jobs eligible at 55.

4. Full Social Security retirement benefits for women workers at age 60.

5. Recalculate the Consumer Price Index upwards to more accurately reflect the real growth in the cost of living.

6. Limit investment of the Social Security and Disability Trust Fund surplus to U.S. Treasury securities as provided by present law.

There are several ways to finance improved benefits, beginning with the fact that all wages and salaries should be taxed for Social Security purposes instead of limiting Social Security payments to the first $63,000 as is presently the case. After that tax all income - capital gains, interest, etc. - of the rich at the full Social Security rate as proposed by the National Council of Senior Citizens. Other solutions include doubling the employers' contribution to Social Security and slashing 90 percent of the military and all of the CIA budgets and use as much of those funds as needed for the SSA.

The immediate target of those who would destroy Social Security and other entitlements is Medicare. This program was enacted in the 1960s, along with the civil rights laws, in an effort to ward off mass struggles against the Vietnam War.

But Medicare has been shot as full of holes as a victim of machine gun fire. In 1960, before Medicare, the elderly spent 11 percent of their income on health care. Now they spend 18 percent of their income on health care - and this over and above Medicare.

There's a special trust fund for hospital charges in the Medicare program and that fund will run out soon. Because hospitals raise prices so rapidly, 65 percent of all Medicare outlays go to hospitals with their rich profit margins. Since Medicare payments for hospital service are limited to what's in the trust fund, the proposal is to "save it" by increasing taxes on workers and retirees and by sharply curbing benefits by making medical care more and more like an assembly line: in and out of the hospital in half the time necessary for proper care; in and out of doctors' offices in 15-minute time slots.

Then there's an additional aim: to force people to buy "Medigap insurance" to cover expenses not paid by Medicare. Prudential, which has one-third of this business, raised its fees 23 percent in the last two years, as did Blue Cross- Blue Shield and others.

Another objective is to herd people into health maintenance organizations (HMOs) which are rapidly taking over more and more doctors' practices. The HMOs are favored in Medicare payments, so people are left with little option but to join. But through HMOs, patients are limited to part-time doctors, second-rate drugs and have to pay profit margins of 15-25 percent to the HMOs.

The Communist Party program for health care:

1. Make Medicare obligations absolute, over and above trust funds.

2. Extend Medicare to include dental and eye care and the cost of medicines.

3. Strictly regulate and reduce prices paid to all providers of medical services.

4. And further, nationalize the entire health care industry. Coordinate it with a national health insurance act which Bill Clinton promised but never delivered.

This article was prepared on the basis of research done by members of the Communist Party Economic Commission.