Republicans Reward the Rich by Blaming the Poor

And they're dead wrong in their oncoming war against federal spending on Social Security.

This guy created Social Security. Republicans are planning right now to kill it. Again.

From 1933, when Herbert Hoover left the White House, to 1981, when Ronald Reagan moved in, it must have seemed to most voting Americans that Democrats couldn’t count and Republicans couldn’t do much else. For 50 years, the GOP mostly ran losing campaigns against debt and deficits.

When Franklin Roosevelt took over from Hoover, he and a Democratic Congress put in place a slew of laws and institutions designed not to eliminate the business cycle, but to soften its impacts and, hopefully, to prevent the kind of catastrophe that was the Great Depression for most people. Republicans and conservative Democrats opposed almost all of these changes. The Glass-Steagall Act, which separated mortgage banks from commercial banks, is one of the relative few pieces of legislation, however, that their philosophical heirs have been able to repeal.

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The keystone of the New Deal, though, was the 1935 passage of the Social Security Act. It imposes fees on workers, matched by employers, that are used to fund a modest base income for retirees. Some additional benefits are set aside for victims of industrial accidents, assistance to people with handicaps, and unemployment insurance. Social Security has withstood most of the assaults from the right until now. Eight decades after its passage, Republicans continue to blame this program for runaway deficits. It’s hard to invent a bigger fib than that one.

Let’s look at two sides of the issue: the spending associated with so-called entitlements, and the revenues that fund the federal government. “Entitlements” is a term used mostly derisively, and mostly by conservatives, in reference to Social Security and its ancillary programs, Medicare and Medicaid. This term is not meant to imply that citizens pay into the funds that support these programs and therefore, in fact, they are entitled to the benefits, although that much is true. Instead, it is meant to imply that people only think that they’re entitled to the benefits but actually aren’t, and are simply being greedy.

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What distinguishes these payments from other federal spending is the fact that they are mandatory. They require no congressional action to be paid directly from the Treasury. These programs make up more than half of all federal spending. In the upcoming fiscal year, that spending is expected to exceed revenues by slightly more than $1 trillion.

Also in the federal budget is discretionary spending, which is controlled, allocated and passed by Congress every year. Roughly 60%, or $659 billion, of our current discretionary budget goes to military spending, where it is never audited. This doesn’t count the money spent on Homeland Security, law enforcement, intelligence, or on foreign operations with close military ties.

The other necessary factor in discussing the federal budget is, of course, revenue. Federal revenue has dropped drastically in recent years, predominantly due to Republican tax cuts, which eat into overall revenue and overwhelmingly benefit the wealthiest Americans. This has been an ongoing problem for the last 35 years, beginning with the “voodoo economics” of Reagan. Without those cuts, none of which can be credibly connected to any economic boom that it was ostensibly designed to stimulate, the federal budget would likely be in a surplus today. Since the tax cuts of 2001 under President George W. Bush, according to some estimates, something like $6 trillion has been added to the deficit — that is, to our ever-mounting national debt. Every year, the interest payments on that debt grows into a larger and larger share of the federal budget.

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The right-wing, which supported all those tax cuts, is now using the runaway deficits they created to attack entitlement programs. They believe and claim that entitlements are the fastest-growing part of the federal budget and, all by themselves, are responsible for our deficits and increasing debt. The assertion is absurd — a lie. Yet, it is true that entitlement spending is growing at an unsustainable rate. Why? Well, entitlement spending is generally growing at a 4.8% annual rate, while healthcare costs are rising by about 6% a year. All of the entitlement growth is mostly in Medicare.

However, if you restored some of the revenue from the Republican tax cuts and if you used it to fund a government-backed, single-payer healthcare system, you could bring the costs of healthcare down to a level similar to what people pay in other countries. That would slow and perhaps even reverse the growth in entitlement spending. It stop all the caterwauling about how America’s poor are bankrupting the government. You’d have better healthcare outcomes, too.

Social Security is a pay-as-you-go program: current workers and their employers bear the burden of supporting a minimal retirement program for their elders. The system is built on a trust fund, which is in a touch of actuarial trouble. Like the rest of the federal budget, this trouble can be addressed in more ways than one. You can cut spending, you can increase revenue. Adopting a single-payer healthcare system would do both.

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For those on the left, like Sen. Bernie Sanders, it is disingenuous to say that Social Security contributes nothing to the deficit. It does contribute to it, but only because the trust fund has been raided for years by the leadership of both parties, to cover funding shortfalls as a result of Republican tax cuts. In short, the trust fund consists largely of a bunch of IOUs. Whether that debt is ever paid, though, is arguably immaterial. That America should ever be out of debt is a far-fetched idea. It runs counter to Alexander Hamilton’s intention when he set up this capitalist economy.

How much debt our nation can carry is debatable, but the limit, if any, obviously has not been reached. Nor is reaching it something that we want to do — so addressing deficits is a good idea. Democrats have been much better about this than Republicans. Since John F. Kennedy was president more than 50 years ago, only Bill Clinton and Barack Obama have proposed and carried out budgets that cut the deficit.

The point is simple. You can’t cut taxes for the rich, allow a for-profit healthcare system to gouge the populace, and then blame payments to the needy for your fiscal problems.