The War Against Social Security The People's Pension: The Struggle to Defend Social Security Since Reagan by Eric Laursen AK Press, 2012, 818 pp.
Eric Laursen has written a highly readable, exhaustively researched history of the last thirty years of struggles over Social Security. His story about this ongoing war against Social Security is both timely and sobering.
Laursen's masterful account is timely because it brings to light, just on the cusp of its possible victory, a well -orchestrated, richly financed, powerful effort to undo Social Security. Bipartisan discussions are currently taking place behind closed doors in Washington. It is not hyperbolic to say that the discussions could lead to legislative changes to Social Security that would gradually but inexorably result in its demise.
The People's Pension is sobering because it provides a disturbing answer to an intriguing and paradoxical question: why are today's political leaders on the verge of cutting, rather than expanding, the most successful and popular social/economic program in the history of the United States? Laursen reveals the forces that have led so many politicians to be ready, even eager, to reject the wishes of their constituents, notwithstanding that championing Social Security is both winning politics and policy.
Let's start with the politics. The American public overwhelmingly supports Social Security. From those who identify with the Tea Party movement to those who have union members in the household, across virtually every demographic, the American people value the protection that Social Security provides by insuring workers and their families against the loss of wages in the event of disability, old age, or premature death. They believe that Social Security is more important than ever. They do not want its modest benefits cut.
The American people have it right. The Social Security system provides the most universal, fair, secure, and efficient source of retirement income in the nation. It provides the largest, and often only, source of middleclass families' life insurance and disability insurance. With the decline of traditional pensions, the riskiness of 401 (k) plans, and the loss of home equity, Social Security's benefits should be increased, not decreased.
Social Security is fully affordable. Its benefits are modest by virtually any measure. They average just $13,500 a year, less than full-time, minimum wage work. In relation to the wages they are designed to replace, Social Security benefits in 2012 replace only a little more than a quarter of the wages of workers earning around $100,000; around 40 percent of the wages of workers earning around $40,000; and about 55 percent of the wages of workers earning around $20,000. Moreover, these already minimal replacement rates will be lower in the future, as the result of already enacted changes. They rank toward the bottom when measured against the old-age benefits provided by other developed countries.
At its most expensive, Social Security's cost will be much less, as a percentage of gross domestic product, than most other developed countries today spend on the old age portion of their Social Security programs. In about a quarter of a century, Social Security will account for just 6.4 percent of GDP and then gradually decline to around 6 percent, at a time when the percentage of the population aged sixty-five and over will represent 20 percent or more of the population. Social Security's entire projected actuarial imbalance is just 0.9 percent of GDP.
That manageable shortfall, still decades away, could be eliminated in numerous ways. For example, wages covered by Social Security are insured against loss in the event of disability, death, or old age. Insured wages are those up to a maximum - $110,100, in 2012 - which is adjusted annually to reflect the growth in average wages. The Social Security insurance premiums (colloquially known as "FICA" and "payroll taxes") are assessed against those wages and deducted from pay checks. …