Clinton, Congress Work to ‘Save’ Social Security – but from Whom?





President Bill Clinton and his bipartisan Congress initiated a decade-long assault on Social Security based on a big lie cut from the whole cloth.

Starting even earlier, the news media had discovered that waves of “baby boomers,” born at the end of World War II, would soon start reaching retirement age. The pretext for the attack on Social Security that followed was that taxes paid-in would not be enough to meet the pension demands of the flood of baby boomers beginning to retire after the first decade of the new millennium.

Since then, the media has declared with one voice that Social Security was doomed to go broke.

But you don’t have to be a rocket scientist to figure out that the Social Security “bankruptcy” myth is mainly intended to serve as a rationalization for steadily cutting benefits and postponing the age of retirement. These cuts, to be sure, hit hardest on those most dependent on Social Security pensions and Medicare for mere survival.

Last year, the capitalist assault on Social Security was escalated by the amazing “discovery” that for the first time in many years instead of a deficit in 1998, a surplus of federal tax income of all kinds over all expenditures occurred and surpluses would continue for the foreseeable future!

Thus, the bankruptcy of the system deriving from a shortfall in income over expenditures seems to have been turned into its exact opposite by the alleged budget surplus “windfall.

But rather than this “windfall” being used to restore the age of retirement to 65 years and restoring cuts in cost-of-living and other less visible reductions in pensions and related benefits, it will wind up being just another gift to corporate America.

When the first alleged budget surplus was discovered last year it was arbitrarily projected to be followed by further surpluses in the foreseeable future. On the basis of the projected windfall of trillions of dollars well into the new millennium, it was first proposed to invest the bulk of it in the stockmarket.

That plan appears to have been put on the back burner, for the time being at least, since soaring stock prices are already inflated far above their real values and scores of billions of dollars of the system’s funds invested in stocks would rocket the stock market into orbit around the moon.

Reports since then also predicted a total budget surplus calculated over the next 10 years adding up to $2.9 trillion (The New York Times editorial, July 12, 1999). The editors also report that “Democrats and Republicans agree in principle that the $1.9 trillion generated by Social Security taxes [in the same 10 year period] should go back into that system to keep it solvent well into the next century.”

That meant, they concluded, that the two capitalist parties would “fight over the remaining $1 trillion.

What the media seemed not to notice was the de facto astounding admission that the money spent on Social Security benefits of all kinds is more than paid for by its beneficiaries. It proves that Social Security taxes deducted from weekly paychecks in just 10 years is more than enough to pay for the costs of pensions and related benefits “well into the next century.”

And that means that there never was an impending bankruptcy of the Social Security fund!

But it also means that a multiple of that $1.9 trillion estimate in past Social Security taxes that now exist as IOUs on pieces of paper sitting on the “asset” side of the financial ledger of the Federal Treasury could have been used to expand, not reduce, benefits for pensioners and Medicare patients.

It’s important to note that the mythological Social Security shortfall and, now, the budget surplus windfall, was accepted as good coin by virtually the entire capitalist establishment.

Just the briefest glance at how this astounding “budget surplus windfall” was calculated will show it to be full of ambiguities and outright contradictions. It all adds up, in the end, to an absolute contempt for truth by the ruling capitalist class and its political servants.

For instance, an earlier report in the June 29 Times estimated next year’s budget surplus to be $25 billion. It calculated the surplus over the next five years increasing to $179 billion, and the surplus over the next 10 years growing to $517 billion.

Accordingly, after 15 years (not 10), they estimated a total surplus of only $721 billion, much less than the numbers cited by The Times’ editors a couple of weeks later, as cited above.

This inconsistency, alone, raises a huge question mark over even a single year’s estimate. And when projected as long as five, 10, or 15 years into the future, it becomes the kind of prediction we can expect from a fortune teller gazing into a crystal ball. This and numerous other inconsistencies in the alleged facts have to my knowledge never been adequately explained.

In any event, whatever the actual facts will turn out to be, the method used to arrive at a $721 billion total tax windfall is a text-book case of counting chickens before they are hatched.

The Social Security hoax

Virtually everything that the capitalist government does is designed to advance the interests of its class. And high on their agenda is to systematically work to decrease the costs of doing business in this country and thus boost the rate of profit of corporate America relative to their competitors everywhere else in the world. And, to be sure, every such gain for capitalists is a loss for workers.

And the proof that it has benefited capitalists at the expense of working people is registered by the decades-long decline in the living standards of the American working class. This attack on living standards is carried out both at the point of production and afterward by capitalism’s tax policies.

Since just before World War II, the tax burden has been steadily shifted from capitalists to workers. A further shift in the tax burden results from the systematic reduction in social benefits which are paid for directly and indirectly by working class.

Reducing taxes on American capitalists increases their net after-tax profits. It contributes to lower costs, and higher profits for American capitalists-absolutely and in relation to the costs and profits of their global competitors.

That’s why the one sure thing to result from the diabolical machinations in Congress surrounding the Social Security hoax, is a further cut in taxes on the rich, a rise in taxes on the poor, and a continued real decline in Social Security pensions and Medicare benefits.

And to top that off, the $1.9 trillion reportedly to be generated by Social Security taxes over the next 10 years, and allegedly slated to go back into the system, may possibly occur.

But like the Social Security funds that now exist as IOUs on pieces of paper now sitting as if they were real money in the system’s balance sheet, the alleged “repayment,” even if it happens, will undoubtedly also be repaid in IOUs as well.

Clinton’s Medicare scam

President Bill Clinton, seeking to take full credit for the alleged budget surplus windfall, now promises a new “voluntary” prescription drug coverage “gift” to Medicare patients.

The word voluntary is another deception, since it focuses on benefits but refers-in the fine print-to premiums to be paid by Medicare beneficiaries for the new prescription coverage. For instance, the added costs Medicare clients must pay to be eligible for prescription drug benefits is an additional $24 dollars a month in 2002, rising to $44 by 2008. That’s no small sum for those retirees barely getting by on poverty-level pensions.

Furthermore, the extended prescription coverage requires a 50 percent copayment, with the total cost to government limited to only half the $2000 allotted for prescription costs in any one year.

As the saying goes, “the devil is in the details.” Thus, additional costs to those signing on to the proposed prescription plan, such as a 20 percent copayment by Medicare patients for laboratory services, whereas no such copayment is required in the existing Medicare plan. If past practice is any guide, when all the details see the light of day, the costs are more likely to outweigh any benefit at all to patients from the vaunted prescription drug payment plan.

What really appears to be the case, however, is that the real beneficiaries will not be the tens of millions dependent on Social Security and Medicare. Rather, it will be the HMOs and insurance and drug companies, who will simply have more room for raising prices charged Medicare patients in exchange for so-called “free” drug prescriptions and other alleged benefits.

Meanwhile, Democratic and Republican Party politicians seek political advantage for themselves and their parties, and to line their own pockets from what promises to be prolonged negotiations over what to do with the “surplus.”

Hard-cop, soft-cop game continues

Endless bickering and bartering between the good guys and the bad guys in Congress has already begun-although determining who is who will appear only in the eyes of the beholders.

Experience has long since convinced at least 40 percent of American voters that there is no difference between capitalist politicians. This is a fact made known by the tendency of ever fewer eligible voters bothering to register or vote.

Experience also suggests that the legislation concerning what to do with the alleged budget surplus bonanza is preordained. That is, assuming that the great budget surplus myth hasn’t been punctured well before the presidential election. In any case, it can be safely predicted that the promises to the rich will be kept, and the promises to the rest of us will, as usual, be left unkept.

The “battle-lines” between bad guys and good guys have already been drawn. Democrats, with Clinton leading the pack, have staked out their territory. First, they pledge to use the imaginary budget bonanza to pay down the $5.6 trillion national debt and second, to give the rest of us the aforementioned prescription drug benefit plan. (Which, by the way, ignores the plight of the reported 40 million Americans with no medical coverage whatsoever.)

Republicans, who have long staked out the role of hard cop for their party, have focused their demands on a massive tax reduction that will leave little room for paying down the national debt or the prescription drug benefit.

In line with their role in the game of hard cop, soft cop, Republicans, moreover, are demanding more than a lion’s share of tax reductions on taxes only paid by the very rich. First on their list is a reduction in capital-gains tax rates, a complete phase-out of the estate tax, and a wide swath of special-interest breaks for corporations.

Experience also tells us that the bad-guy, good-guy charade always ends in a compromise substantially closer to the demands of the bad guys because that simply is the reason for, and the goal of, the game.

But there is another greedy side-line game that goes on in all bargaining in Congress over new legislation. Intimately tied into the bickering and bargaining will be the “amendments” each politician will demand before agreeing to vote for any legislation that results.

Such amendments are designed to serve no one but the interests of each and every “public servant”-and, most important, the interests of their corporate patrons who have bought and paid for their services.


Socialist Action /August 1999

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