Deficits, deceit, and Social Security


By Norman and Velma Hill

Guest Commentators



Social Security, Medicare, and Medicaid are the foundations for the wellbeing of scores of millions of middle- and low-income Americans. Without Social Security, 14 million more low-income Americans would be living in poverty.

Because of Medicare, 33 million older people live longer, have access to quality care, and are not driven into poverty by rapidly rising healthcare costs. Medicaid is a healthcare boon to Americans not yet eligible for Medicare, which covers some 60 million Americans.

Because of historical and lingering discrimination, racial minorities in particular need these programs. Overall, they have less income and fewer assets than Whites, so a higher percentage of their retirement income comes from Social Security benefits. Also, because they more often have physically demanding jobs, they rely more on Social Security disability and require more health care after retirement.

If there were no such support, the proportion of impoverished, elderly African Americans would rise to 62 percent from 24 percent, and for Hispanics, 61 percent from 19 percent. The disproportionate dependence on these programs has grown as the wealth gap (income and assets) between Whites and minorities has grown.

From 2005 to 2009 wealth fell by 66 percent among Latino households, 53 percent among Black households, and 54 percent among Asians, compared to 16 percent among Whites. We know this statistically and experientially. We are Black and have spent most of our lives in the American civil rights and labor movements.

A 2010 survey found that 86 percent of Whites and 92 percent of Blacks believe Social Security benefits are worth the cost. A recent poll revealed that, by a 51 percent to 33 percent margin, Americans think that preserving Medicare as is outweighs reducing the deficit. A new survey found that only 13 percent of Americans favor major changes to Medicaid.

Republicans have generated a lot of concern about a so-called fiscal crisis. Since the emergence in 2010 of “tea party” organizations, their condemnations of budget deficits have become almost hysterical. But there is no fiscal crisis. Right’s right: no fiscal crisis.

In this period of economic downturn, deficit spending is actually a stimulant that the economy needs. The ”debt crisis” isn’t fiscal; it’s a political mirage, a smokescreen used by right-wingers to justify cuts in social insurance.

Minorities should take the lead in opposing those cuts, particularly through their social organizations, trade unions, and their ethnic-based groups. Their greatest allies are the facts.

Social Security does not contribute to the deficit. Its payouts come from Social Security tax revenues and interest from safe, conservative investments.

Furthermore, even if nothing is done, Social Security can continue meeting 100 percent of its obligations until 2036. Solvency could be extended decades further by modest reforms like raising the cap on taxable income for Social Security from its current $110,100 and by gradually increasing the Social Security payroll tax by 1/20 of one percent (0.05) over 20 years. The eligibility age increases and benefit cuts proposed by Republicans are totally unnecessary.

Medicare, it is true, faces more serious challenges. But it is not going bankrupt, and prudent reforms — not radical changes — can extend its fiscal health well into the future. Republicans say that increased life expectancy and the surge in retiring baby boomers make benefit cuts and increases in age eligibility a no brainer. On the contrary, the main cause of increased Medicare costs is soaring healthcare inflation, which can be contained.

President Obama’s Affordable Health Care Act promotes preventive care by providing free screenings for early disease detection and by offering community-based prevention grants. It also promotes a policy of payment for results rather than by the numbers of procedures performed. Additionally, its Independent Payment Advisory Board will help detect potential cost savings. Significant cost reductions could also be made if Medicare were allowed to bargain with pharmaceutical companies over drug prices.

Despite overwhelming public opposition to social program cuts, and despite the Democratic victory in November, Republicans continue to press their attack, now using the ”fiscal cliff” to attach social spending. The cliff, as you know, refers to legislatively mandated tax hikes and spending cuts of a drastic nature that will take effect after December 31 unless Congress acts to cut the deficit. According to some [but not all] economists, the automatic hikes and cuts will lead to a new recession.

Whatever compromises must be made, the president must draw a red line against reduced benefits in basic entitlements. He must stick to his campaign pledge to let the Bush tax cuts for the wealthy expire and to find ways to cut expenditures that do not hurt the most vulnerable.

The president must stand by his November mandate, and we must do all we can to assure that he will.


Velma Hill is a former vice president of the American Federation of Teachers and the former Civil and Human Rights director of the Service Employees International Union. Norman Hill was staff coordinator of the 1963 March on Washington for Jobs and Freedom, and is presently president emeritus of the A. Philip Randolph Institute.