Despite its racist beginnings, Social Security has evolved into a vital lifeline for millions of Americans, white and black. Medicare provides a huge safety net for Americans over 65, as well as people who have been on Social Security disability for over two years. Over half of African-American retirees and most of all single retirees depend on Social Security for over 90 percent of their income.
Both Social Security and Medicare benefits could face cuts, as Republican leaders grapple with the financial whirlpool created by the Trump tax cuts, the continuing effects of the George W. Bush tax cuts, and the bills coming due for the unsuccessful wars in Iraq and Afghanistan. The federal deficit has increased a whopping 17 percent, to $779 billion, mostly thanks to Trump’s $1.5 trillion tax cut that benefited mostly the wealthy, and a record $675 billion budget for the Pentagon.
Senate majority Leader Mitch McConnell denies the tax cuts and the ever-escalating price tag for Bush’s disastrous Iraq invasion have anything to do with the red ink. While billionaires and defense contractors reap windfalls, McConnell says the government’s financial black hole is the result of “the three big entitlement programs, Medicare, Social Security, and Medicaid …. There’s been a reluctance to tackle changes because of the popularity of these programs. Hopefully…we’ll get serious about this.”
Meanwhile, the GOP House in late September passed an extension of the Trump tax cuts guaranteed to do two things: put more money in the pockets of the rich, and make it almost inevitable that Social Security and Medicare will have to be cut to pay for the fat-cat windfall. The $3 trillion in lost government revenue would mean that low-income seniors would have both their incomes and medical care reduced, while billionaires would measure the tops of their yachts for a new helicopter landing pads.
These are not unintended consequences. By slashing taxes for the rich and corporations, Republican lawmakers are maneuvering the United States into a position where deep cuts in Social Security and Medicare will be necessary within six years to keep the government from going bankrupt. That’s the GOP long game. Cutting government revenue to the point where social programs will have to be reduced or eliminated is the entire point.
All of this, of course, can be avoided, and Social Security and Medicare can be solvent indefinitely. Most of Social Security, 85 percent, is funded through payroll taxes. Starting in 2019, once you earn $133,000 a year, Social Security taxes stop. Social Security can be saved merely by removing that cap. There’s no reason a worker earning $40,000 a year should pay a far bigger proportion of Social Security taxes than an executive making $700,000 a year.
The capital gains tax on couples earning more than $600,000 a year can also be raised. It’s 37 percent now. Increasing that, and dedicating a portion of the extra tax to Social Security, would be an added guarantee for Social Security solvency. The wealthy who earn income through stock or real estate profits rather than regular wages shouldn’t be able to dodge their responsibility to keep Social Security afloat.
Medicare, on the other hand, is kept from solvency partly by a federal law. It’s illegal for Medicare to use its mammoth purchasing power to negotiate lower drug prices with Big Pharma. Wal-Mart ruthlessly uses its size to force suppliers to give them lower prices. Medicare could do the same, and drastically cut prescription drug costs, one of the big drivers of Medicare expenses.
But since 41 percent of Medicare is paid from the government’s general revenue, we get back to the unsustainable nature of the Trump tax cuts and the disastrous potential of the Tax Cuts 2.0 passed by the House. So far, the Trump tax breaks for the rich have cut corporate tax collections by 31 percent. Restoring tax rates to what they were before Trump would boost general revenue and help fund Medicare.
American conservatives have never been fans of social programs like Medicare and Social Security for two reasons. Paying for them means making the rich and corporate America pay their fair share of taxes, and the benefits go to the so-called “undeserving” poor. That, of course, is an outgrowth of conservatism’s calculus that money is a moral scorecard, and therefore people with money are morally superior to the rest of us.
In fact, that debate about “deserving versus undeserving” has been with us since Social Security was first implemented. In order for FDR to pass the Social Security Act of 1935, he needed support from 141 Southern white Dixiecrats in Congress. They agreed to support Social Security only after domestic employees, like maids and agricultural workers, were exempted. At the time, 65 percent of African Americans in the Old Confederacy were employed either as farm workers or domestic workers. Social Security only became law because it managed to exclude over half of the black people in the South, a problem that wasn’t remedied until 20 years later, when Social Security was expanded.
The modern conservative drive to slash Social Security and Medicare is merely a more sophisticated version of the 1935 vote. Conservatives realize both programs are wildly popular with a huge majority of Americans, so instead of going after them directly, they cut taxes for the wealthy until the government, literally, can no longer pay its bills without taking the knife to Medicare and Social Security.
The sensible options – raising taxes on the rich – won’t be considered by Republicans because they’re joined at the hip to the lie that lower taxes on the wealthy will translate into economic growth. Since the Trump tax cuts, corporate profits have risen 42 percent, while worker’s wages have gone up one percent. Trickle-down economics isn’t even dripping down.
The Trump tax cuts have been a disaster. Now they want your Social Security and Medicare to pay for it.
Charles Jaco is a journalist, author, and activist. Follow him on Twitter at @charlesjaco1.