Recently, there have been talks in Congress about cutting Social Security and Medicare. This would potentially impact over 60 million elderly Americans that depend on these programs for financial support for retirement income and health insurance. These programs are essential lifelines for a population that overwhelmingly lives on fixed incomes. Social Security not only benefits elderly people but also the entire society. It benefits the families of elderly people, by lifting some financial weight of caring for them as well as opening up new jobs as people retire.
Threats to cut Social Security and Medicare are nothing new. However, attempts to cut these programs have long been characterized as the “third rail of American politics.” There are very good reasons why the idea of cutting Social Security and Medicare has been a political taboo – because these programs are valued by wide sections of the American public, regardless of political party affiliation. For example, roughly 88 percent of Democrats and 86 percent of Republicans think Social Security should be expanded, not cut, to accommodate the higher cost of living.
Even Donald Trump argued against the Republican party cutting Social Security or Medicare, seeing that it would be political suicide for the party, even if it was framed in extremely demagogic rhetoric.
However, despite the idea of cutting Social Security and Medicare being extremely unpopular, the intention to cut these programs has been on the agenda for a section of the Republican Party for decades. Discussions about cutting these programs are hidden in a language of “reform” and “strengthening” them. This agenda, to demand massive cuts to social spending, was a key factor in the recent fight within the Republican party over whether to install Kevin McCarthy as the Speaker of the House. The so-called “Freedom Caucus” used their power as a voting block by refusing to support McCarthy in order to push the Republican party further to the right and demand massive austerity in the future. Not only are they demanding cuts to Social Security and Medicare, they are demanding cuts to education, food stamps, housing and more. While McCarthy was ultimately voted in as Speaker of the House, the hardliners were somewhat successful in demanding spending cuts.
Proposals to cut Social Security and Medicare in particular have been justified over the years based the debt ceiling and the premise that these programs face an existential financial crisis in the near future.
What Is The “Debt Ceiling?”
What is the so-called “debt ceiling?” All governments around the world spend money to fund programs and basic services. In the U.S. in recent decades, this spending has been made possible by going into debt rather than raising taxes on corporations or the general public. A large amount of the U.S. debt is borrowed from corporations and rich people, which allows them to potentially collect at the expense of the taxpayers.
In the context of the United States, the concept of imposing limits on spending in the form of a “debt ceiling” is a relatively recent one, only being introduced in by the U.S. Congress in 1917. There are even many, including Janet Yellen, head of the U.S. Treasury, who don’t see any practical reason for this debt ceiling limit to exist at all. In reality, these arbitrary limits have never been very good at slowing down borrowing to go into further debt because the debt ceiling has been raised many times over the years by Congress. In fact, the debt ceiling has been raised or suspended almost 80 times since 1960. Each time the arbitrary marker of the debt ceiling is approached, there are renewed talks of austerity of cutting social programs with the right wing of the Republican party vigorously campaigning for cuts , while the Democratic Party pretends to put up a fight. In recent years, the brinkmanship has led to temporary partial shutdowns of the federal government, cutting off the paychecks of millions of federal workers in the process.
As it stands now, any federal authority to borrow money has run out without the Republican-controlled Congress deciding to raise the debt ceiling again past its current $31.4 trillion limit. According to Treasury Secretary Yellen, the Treasury can engage in short-term financial manipulations to buy time to continue paying the government’s bills, but that is only projected to last until early June. While Joe Biden has recently come out firmly against any cuts to Social Security, his rhetoric over the past four decades as a senator indicate that he is more than willing to make cuts. Biden recently met with Kevin McCarthy over the issue of the debt ceiling, suggesting that there likely will be major cuts to come in future budgets.
If the debt ceiling were not raised to keep up with the growing debt, the U.S. government would to go into default. This would lead to a massive devaluation of U.S. treasury bonds, greatly undermining U.S. power around the world. Doing this could likely trigger a global financial crisis, devastating people all around the world. Playing around with the debt ceiling is reckless.
It is true, the national debt is a real issue that can’t be ignored. The national debt has ballooned more than five times from $5.6 trillion in 2001 to $31.4 trillion today. Why?
Direct and indirect military interventions in Iraq, Afghanistan, Syria, Libya and now Ukraine have not only destroyed the lives of millions, they have also cost trillions of dollars. As icing on the cake, the military recently failed its fifth audit, meaning that it literally has no idea where around 61% of its funding has gone. Massive tax cuts by the Bush and Trump administrations for the wealthiest in society, as well as corporate bailouts following the financial crash and the COVID-19 pandemic are responsible for generating this massive debt. Many of the exact same members of Congress who are currently raising hell about the debt voted in favor of the policies that generated it. Working-class people are not responsible for creating this crisis. There is no reason why any of us should have to pay for this crisis by way of cuts to Social Security or Medicare.
Does Social Security Face A Funding Crisis?
It is true that Social Security and Medicare are huge expenditures. With the exception of the military, they are the two most expensive programs paid for by the federal government.
Social Security is a program in the United States where working-age adults pay into the system to provide benefits for elderly retired people. It is often claimed that Social Security is facing a major financial crisis given that the U.S. population is getting older on average, meaning that there are more and more recipients relative to the people who are paying into the system. But the bigger issue is that the wealthiest recipients of Social Security who currently make more than $160,200 don’t pay any more into the system… even if they are millionaires! In addition, there are no contributions to the Social Security system from incomes made from stock dividends or capital gains – which is how the rich make most of their money. Under this current funding model, Social Security is facing a funding crisis.
What Is To Be Done?
The system that we live under has been in a state of crisis for decades and the question of the national debt is just one manifestation. Behind the question of how to address the national debt lies the question of who should pay for the crisis of this system. If the answer is left up to the people in charge, the banks, corporations and politicians of both major political parties that serve their interests, we very well could expect to see major cuts in an array of social programs that working people depend on.
In the final analysis, the reason that programs like Social Security and Medicare even exist is a direct consequence of the militant struggles of the workers’ movement in the 1930s and the Civil Rights Movement in the 1950s and 1960s. Winning these victories, as incomplete as they were, was not decided in the halls of Congress, nor in the voting booths, but in the streets. Little has changed today, and if we want to defend Social Security and Medicare from the impending crisis, we can only do so by counting on our own forces and fighting back.