Social Security Versus National Security – Whose Entitlement Really Makes Us Safer?

These days my conversations with friends about the new administration go something like this:

“Biden’s doing better than I thought he would.”

“Yeah. Vaccinations, infrastructure, acknowledging racism in policing. A lot of pieces of the Green New Deal, without calling it that. The child subsidies. It’s kind of amazing.”

“But on the military–”

“Yeah, same old, same old.”

As my friends and I have noticed, President Joe Biden remains super-glued to the same old post-World War II agreement between the two major parties: they can differ vastly on domestic policies, but they remain united when it comes to projecting U.S. military power around the world and to the government spending that sustains it. In other words, the U.S. “national security” budget is still the third rail of politics in this country.

Assaulting the Old New Deal

It was Democratic House Speaker Tip O’Neill who first declared that Social Security is “the third rail” of American politics. In doing so, he metaphorically pointed to the high-voltage rail that runs between the tracks of subways and other light-rail systems. Touch that and you’ll electrocute yourself.

O’Neill made that observation back in 1981, early in Ronald Reagan’s first presidential term, at a moment when the new guy in Washington was already hell-bent on dismantling Franklin Delano Roosevelt’s New Deal legacy.

Reagan would fight his campaign to do so on two key fronts. First, he would attack labor unions, whose power had expanded in the years since the 1935 Wagner Act (officially the National Labor Relations Act) guaranteed workers the right to bargain collectively with their employers over wages and workplace rules. Such organizing rights had been hard-won indeed. Not a few workers died at the hands of the police or domestic mercenaries like Pinkerton agents, especially in the early 1930s. By the mid-1950s, union membership would peak at around 35% of workers, while wages would continue to grow into the late 1970s, when they stagnated and began their long decline.

Reagan’s campaign began with an attack on PATCO, a union of well-paid professionals — federally-employed air-traffic controllers — which his National Labor Relations Board eventually decertified. That initial move signaled the Republican Party’s willingness, even enthusiasm, for breaking with decades of bipartisan support for organized labor. By the time Donald Trump took office in the next century, it was a given that Republicans would openly support anti-union measures like federal “right-to-work” laws, which, if passed, would make it illegal for employers to agree to a union-only workplace and so effectively destroy the bargaining power of unions. (Fortunately, opponents were able to forestall that move during Trump’s presidency, but in February 2021, Republicans reintroduced their National Right To Work Act.)

The Second Front and the Third Rail

There was a second front in Reagan’s war on the New Deal. He targeted a group of programs from that era that came to be known collectively as “entitlements.” Three of the most important were Aid to Dependent Children, unemployment insurance, and Social Security. In addition, in 1965, a Democratic Congress had added a healthcare entitlement, Medicare, which helps cover medical expenses for those over 65 and younger people with specific chronic conditions, as well as Medicaid, which does the same for poor people who qualify. These, too, would soon be in the Republican gunsights.

The story of Reagan’s racially inflected attacks on welfare programs is well-known. His administration’s urge to go after unemployment insurance, which provided payments to laid-off workers, was less commonly acknowledged. In language eerily echoed by Republican congressional representatives today, the Reagan administration sought to reduce the length of unemployment benefits, so that workers would be forced to take any job at any wage. A 1981 New York Times report, for instance, quoted Reagan Assistant Secretary of Labor Albert Agrisani as saying:

“‘The bottom line… is that we have developed two standards of work, available work and desirable work.’ Because of the availability of unemployment insurance and extended benefits, he said, ‘there are jobs out there that people don’t want to take.’”

Reagan did indeed get his way with unemployment insurance, but when he turned his sights on Social Security, he touched Tip O’Neill’s third rail.

Unlike welfare, whose recipients are often framed as lazy moochers, and unemployment benefits, which critics claim keep people from working, Social Security was then and remains today a hugely popular program. Because workers contribute to the fund with every paycheck and usually collect benefits only after retirement, beneficiaries appear deserving in the public eye. Of all the entitlement programs, it’s the one most Americans believe that they and their compatriots are genuinely entitled to. They’ve earned it. They deserve it.

So, when the president moved to reduce Social Security benefits, ostensibly to offset a rising deficit in its fund, he was shocked by the near-unanimous bipartisan resistance he met. His White House put together a plan to cut $80 billion over five years by — among other things — immediately cutting benefits and raising the age at which people could begin fully collecting them. Under that plan, a worker who retired early at 62 and was entitled to $248 a month would suddenly see that payout reduced to $162.

Access to early retirement was, and remains, a justice issue for workers with shorter life expectancies — especially when those lives have been shortened by the hazards of the work they do. As South Carolina Republican Congressman Carroll Campbell complained to the White House at the time: “I’ve got thousands of sixty-year-old textile workers who think it’s the end of the world. What the hell am I supposed to tell them?”

After the Senate voted 96-0 to oppose any plan that would “precipitously and unfairly reduce early retirees’ benefits,” the Reagan administration regrouped and worked out a compromise with O’Neill and the Democrats. Economist (later Federal Reserve chair) Alan Greenspan would lead a commission that put together a plan, approved in 1983, to gradually raise the full retirement age, increase the premiums paid by self-employed workers, start taxing benefits received by people with high incomes, and delay cost-of-living adjustments. Those changes were rolled out gradually, the country adjusted, and no politicians were electrocuted in the process.

Panic! The System Is Going Broke!

With its monies maintained in a separately sequestered trust fund, Social Security, unlike most government programs, is designed to be self-sustaining. Periodically, as economist and New York Times columnist Paul Krugman might put it, serious politicians claim to be concerned about that fund running out of money. There’s a dirty little secret that those right-wing deficit slayers never tell you, though: when the Social Security trust fund runs a surplus, as it did from 1983 to 2009, it’s required to invest it in government bonds, indirectly helping to underwrite the federal government’s general fund.

They also aren’t going to mention that one group who contributes to that surplus will never see a penny in benefits: undocumented immigrant workers who pay into the system but won’t ever collect Social Security. Indeed, in 2016, such workers provided an estimated $13 billion out of about $957 billion in Social Security taxes, or almost 3% of total revenues. That may not sound like much, but over the years it adds up. In that way, undocumented workers help subsidize the trust fund and, in surplus years, the entire government.

How, then, is Social Security funded? Each year, employees contribute 6.2% of their wages (up to a cap amount). Employers match that, for a total of 12.4% of wages paid, and both put out another 1.45% each for Medicare. Self-employed people pay both shares or a total of 15.3% of their income, including Medicare. And those contributions add up to about nine-tenths of the fund’s annual income (89% in 2019). The rest comes from interest on government bonds.

So, is the Social Security system finally in trouble? It could be. When the benefits due to a growing number of retirees exceed the fund’s income, its administrators will have to dip into its reserves to make up the difference. As people born in the post-World War II baby boom reach retirement, at a moment when the American population is beginning to age rapidly, dire predictions are resounding about the potential bankruptcy of the system. And there is, in fact, a consensus that the fund will begin drawing down its reserves, possibly starting this year, and could exhaust them as soon as 2034. At that point, relying only on the current year’s income to pay benefits could reduce Social Security payouts to perhaps 79% of what’s promised at present.

You can already hear the cries that the system is going broke!

But it doesn’t have to be that way. Employees and employers only pay Social Security tax on income up to a certain cap. This year it’s $142,800. In other words, employees who make a million dollars in 2021 will contribute no more to Social Security than those who make $142,800. To rescue Social Security, all it would take is raising that cap — or better yet, removing it altogether.

In fact, the Congressional Budget Office has run the numbers and identified two different methods of raising it to eventually tax all wage income. Either would keep the trust fund solvent.

Naturally, plutocrats and their congressional minions don’t want to raise the Social Security cap. They’d rather starve the entitlement beast and blame possible shortfalls on greedy boomers who grew up addicted to government handouts. Under the circumstances, we, and succeeding generations, had better hope that Social Security remains, as it was in 1981, the third rail in American politics.

Welfare for Weapons Makers

Of course, there’s a second high-voltage, untouchable rail in American politics and that’s funding for the military and weapons manufacturers. It takes a brave politician indeed to suggest even the most minor of reductions in Pentagon spending, which has for years been the single largest item of discretionary spending in the federal budget.

It’s notoriously difficult to identify how much money the government actually spends annually on the military. President Trump’s last Pentagon budget, for the fiscal year ending on September 30th, offered about $740 billion to the armed services (not including outlays for veteran services and pensions). Or maybe it was only $705.4 billion. Or perhaps, including Department of Energy outlays involving nuclear weapons, $753.5 billion. (And none of those figures even faintly reflected full national-security spending, which is certainly well over a trillion dollars annually.)

Most estimates put President Biden’s 2022 military budget at $753 billion — about the same as Trump’s for the previous year. As former Senator Everett Dirksen is once supposed to have said, “A billion here, a billion there, and pretty soon you’re talking real money.”

Indeed, we’re talking real money and real entitlements here that can’t be touched in Washington without risking political electrocution. Unlike actual citizens, U.S. arms manufacturers seem entitled to ever-increasing government subsidies — welfare for weapons, if you like. Beyond the billions spent to directly fund the development and purchase of various weapons systems, every time the government permits arms sales to other countries, it’s expanding the coffers of companies like Lockheed-Martin, Northrup-Grumman, Boeing, and Raytheon Technologies. The real beneficiaries of Donald Trump’s so-called Abraham Accords between Israel and the majority Muslim states of Morocco, the United Arab Emirates, Bahrain, and Sudan were the U.S. companies that sell the weaponry that sweetened those deals for Israel’s new friends.

When Americans talk about undeserved entitlements, they’re usually thinking about welfare for families, not welfare for arms manufacturers. But military entitlements make the annual federal appropriation of $16.5 billion for Temporary Aid to Needy Families (TANF) look puny by comparison. In fact, during Republican and Democratic administrations alike, the yearly federal outlay for TANF hasn’t changed since it was established through the 1996 Personal Responsibility and Work Opportunity Reconciliation Act, known in the Clinton era as “welfare reform.” Inflation has, however, eroded its value by about 40% in the intervening years.

And what do Americans get for those billions no one dares to question? National security, right?

But how is it that the country that spends more on “defense” than the next seven, or possibly 10, countries combined is so insecure that every year’s Pentagon budget must exceed the last one? Why is it that, despite those billions for military entitlements, our critical infrastructure, including hospitals, gas pipelines, and subways (not to mention Cape Cod steamships), lies exposed to hackers?

And if, thanks to that “defense” budget, we’re so secure, why is it that, in my wealthy home city of San Francisco, residents now stand patiently in lines many blocks long to receive boxes of groceries? Why is “national security” more important than food security, or health security, or housing security? Or, to put it another way, which would you rather be entitled to: food, housing, education, and healthcare, or your personal share of a shiny new hypersonic missile?

But wait! Maybe defense spending contributes to our economic security by creating, as Donald Trump boasted in promoting his arms deals with Saudi Arabia, “jobs, jobs, jobs.” It’s true that spending on weaponry does, in fact, create jobs, just not nearly as many as investing taxpayer dollars in a variety of far less lethal endeavors would. As Brown University’s Costs of War project reports:

“Military spending creates fewer jobs than the same amount of money would have, if invested in other sectors.  Clean energy and health care spending create 50% more jobs than the equivalent amount of spending on the military. Education spending creates more than twice as many jobs.”

It seems that President Joe Biden is ready to shake things up by attacking child poverty, the coronavirus pandemic, and climate change, even if he has to do it without any Republican support. But he’s still hewing to the old Cold War bipartisan alliance when it comes to the real third rail of American politics — military spending. Until the power can be cut to that metaphorical conduit, real national security remains an elusive dream.

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