Nine out of ten Americans have fallen behind financially as the well-to-do – especially the ultra-wealthy – capture an ever-increasing chunk of our national income. This inequality threatens the entire economy’s future growth and stability. But whenever someone offers a solution to this growing problem, someone else on the right is likely to accuse them of “class war.”
Class war is precisely what we’ve been seeing for decades now – but it’s been waged for, not against, the wealthy. And Republicans have been its dutiful servants from the start. It might make a good hashtag, come to think of it: #RepublicanClassWar.
The wreckage of this war can be seen all around us. Incomes for the top 1 percent of households have more than doubled since the 1980s. The top 0.1 percent has increased its share of this nation’s total wealth from 7 percent in 1978 to 22 percent in 2012, a level not seen since before the Great Depression. Ninety percent of American households saw no increase in their wealth after 1986.
There’s a war on – but the middle class didn’t start it.
Republicans on the Senate Budget Committee opened up a new front in that war today by targeting disabled Social Security recipients. They didn’t say they were conducting a class war, of course. Instead, they claimed that they were concerned about the future financial stability of the Social Security disability program. They’re expressing that concern by blocking an adjustment between trust funds that would restore it to financial health, something previous Congresses have done 11 times in the past.
The Los Angeles Times’ Michael Hiltzik lays out the flaws in the GOP’s position. We explored some of their arguments, and the human toll their past actions have taken, earlier this year. Among their discredited ideas is the notion that the disability fund is “going broke” (it can pay 80 percent of benefits with no changes, and a slight rebalancing from the retirement trust fund would restore the remainder).
A 20 percent benefit cut would almost certainly be a “death sentence” for many disabled Americans, as Acting Social Security Commissioner Carolyn Colvin told the committee today. Broader cuts to retiree benefits – which the Republicans have made clear is their real goal – would be disastrous for the elderly.
But what makes this assault on Social Security part of a class war?
One clue can be found in a trope that was trotted out by Budget Committee Chair Mike Enzi again Wednesday. “Don’t trust a federal trust fund,” said Enzi. “There are no dollars in the disability trust fund and there are no dollars in the Social Security trust fund (note: he presumably means the retirement trust fund) … We spent the money.”
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What does he mean, exactly? The Treasury Department executes legally binding instruments, similar to government bonds, in return for the money it borrowed from these trust funds. They’re as legitimate as the Treasury bonds held by Wall Street banks. If the government wants to renege on its financial commitments, it would be just as legal to start with Wall Street’s bonds instead.
Not that they would, of course. No Republican would ever tell a bank executive that “we spent your money” – even though that executive undoubtedly benefited from policies that increased government deficits. Today’s conservatives apparently have no qualms about hijacking money collected and held in trust on behalf of working Americans. Can you picture them doing that with funds owed to the rich and powerful?
Then there’s Enzi’s telling phrase: “We spent the money.” Who is the “we” in that sentence, exactly? Republicans drove the government’s deficits with a trillion-dollar tax break for the wealthy and multi-trillion-dollar military spending. “We” – the Republicans and their patrons – have had quite a party, and it’s not over yet. Now they want the disabled and the elderly to pick up their tab – by living lives of ever-increasing privation.
A better alternative, as Sen. Bernie Sanders reminded the committee today, would be to increase contributions from high earners by “lifting the cap” on the payroll tax that funds Social Security. “A Wall Street CEO who makes $20 million a year pays the same amount into Social Security as someone who makes $118,500,” said Sanders. “That is wrong.”
“Lifting the cap” would go a long way toward balancing the books for the next 75 years. It would also be fair. As a recent analysis from the Center for American Progress (CAP) shows, inequality contributed significantly to Social Security’s projected shortfalls.
CAP concludes that the trust funds would have an additional three quarters of a trillion dollars today if wage increases had kept pace with rising productivity – as they did for our three greatest decades of postwar economic growth. But the wealthy have been keeping more of the profits for themselves, aided by deliberate policy choices.
If the payroll tax cap had continued to capture 90 percent of the nation’s earnings, as it was intended to do, CAP estimates that the trust funds would have an additional $1.1 trillion on hand. But rising wage inequality has left a greater share of the nation’s income above the cap’s cutoff point.
A new analysis by Benjamin Veghte, Research Director of Social Security Works, calls for increasing Social Security benefits and notes that this could be funded, not just by lifting the cap, but by raising taxes on other forms of high-net-worth income and earmarking the revenues for Social Security.
Veghte observes that Social Security expansion would help offset the effects of lost middle-class wealth. That’s an important point. Inequality is our era’s gravest economic challenge. When it comes to meeting that challenge, Social Security isn’t a problem; it’s part of the solution.
The Republicans won’t tell you that, of course. They’re too busy waging class war.