Opinion

Don't fall for the scam to destroy Medicare and Social Security

Social Security is not generational theft. It's mutual support over time.

The Republican tax bill is moving closer and closer to passage. If the GOP manages to ram it through, make no mistake about what's next: a pell-mell rush to eviscerate social insurance programs like Medicare, Medicaid, and Social Security.

It's a simple trick: You blow up the deficit with tax cuts for the rich, then feign shock at the deficits you just caused, then insist that the only way to "get the debt under control" is by slashing social programs to the bone.

Don't buy this nonsense, not from Ayn Rand worshipers like House Speaker Paul Ryan, and not from the more moderate deficit scolds who make up the Beltway's spineless and squishy center. America can easily provide for a decent standard of living for retired people, and decent medical care for the elderly and those in need. All that is necessary is raising taxes a bit — mainly on the rich.

The Republican line on this is so transparently duplicitous it barely requires refutation. They are trying to stuff as much money as possible into the pockets of the rich, and take as much as possible from the pockets of the middle class and poor. A distracted child could understand the theft that is taking place.

However, there is a larger moderate contingent that has long advocated for cuts to Social Security and Medicare. One powerfully misleading argument towards this end is the generational warfare take, most recently presented by Eric B. Schnurer, who presents as some kind of astounding revelation the fact that Social Security and Medicare are funded by taxation of mostly young, non-retired people. Thus Social Security and Medicare is "the grandparents stealing from the grandchildren."

On one level, it is true that FDR sold Social Security as a kind of savings program on political grounds, which is both misleading and deeply harmed the program's initial effectiveness. Social Security is really a pension scheme — a welfare program for the elderly, paid for almost entirely through payroll taxes, where benefits are partially calculated based on your lifetime earnings.

But as Dean Baker points out, as a matter of accounting Social Security recipients do get about what they paid in, adjusting for a reasonable rate of return. And while people on Medicare do get vastly more than they paid in, that's merely a result of endlessly increasing medical prices. Retirees are getting about the same amount of medical care as generations past, it just costs much, much more than it used to.

More fundamentally, what Schnurer — and most people who write about supposed problems with these programs — misses is that as a matter of basic logic, all retirement is supported by the work of the currently employed. Many people have a fixation on building up savings to "pay for" retirement, both for Social Security and for individuals, because it tracks better with traditional American desertist individualism. But in reality, retirement is an inescapably parasitic activity. Retired people do no work, but for economic production to take place, some people must work. Therefore, as a matter of brute necessity, all retired people live off the production of the working-age population.

This holds whether you have Social Security, or private investments, or a private pension, or a huge pile of shrink-wrapped cash bricks hidden in a pirate chest in your attic. Even that El Chapo hoard is worthless without non-retired people going to work every day and pushing the economy forward through time, and a government that will preserve the purchasing power of currency — thus making it possible for you to buy stuff with your cash.

The actual shape of retirement programs is determined by political decisions over how much economic product to dedicate to the elderly. There are basically three factors in figuring this out: the structure of demographics, the efficiency of program design, and the productivity of the economy. For the United States, demographics is a minor headwind. Efficiency is a problem for Medicare and Medicaid mainly because of medical pricing, which could be solved. But economic growth has dramatically expanded the potential resources that might be tapped without unduly impoverishing the working class.

In a social democratic framework, the justification for retirement programs (and the welfare state more broadly) is solidarity: Workers pay into the system when they can, and in return, they receive a decent income when it's time to retire. It's not generational war. It's mutual support over time.

The United States is a rich country. We can easily afford to dedicate enough national income to keep grandma off the street. To do so, we just have to soak the rich, who have rigged the economy to hog most of the national income for themselves. Don't let Paul Ryan or misleading nonsense about generational theft confuse you on this point.

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