Labor Groups Launch Campaign to Oppose Cuts in Social Security
Policy + Politics

Labor Groups Launch Campaign to Oppose Cuts in Social Security

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In an all-out offensive against the president’s fiscal commission, a group of labor leaders on Thursday launched a campaign to prevent Social Security cuts, claiming that the venerable old-age benefit program is not to blame for the ballooning deficit and should not be "on the table." One of the campaign’s goals would be to lobby Congress to block the commission’s recommendations, said Ed Coyle, Executive Director of the Alliance for Retired Americans.

"We are united by our concerns over the new fiscal commission, which operates in virtual secrecy and with a fundamentally flawed understanding of how Social Security is financed and operates," Coyle said at a news conference. "There is no government financial commitment at all. Every dime comes from workers and employees."

The speakers, who included leaders from the AFL-CIO, The National Education Association,, and Service Employees International Union, said Social Security is still running surpluses of $100 billion a year and that neither the federal government nor the commission should be tapping into its trust fund as the nation’s Baby Boomers retire and claim benefits. But this year for the first time Social Security will pay out more than it takes in. The July report of the Congressional Budget Office says, "Starting in 2016, if current laws remain in place, the program’s annual spending will regularly exceed its tax revenues, and beginning in 2039 the Social Security Administration will not be able to pay the benefits currently specified in law."

Social Security today accounts for about 40 percent of income for Americans 65 and older and almost half of the income for elderly women, according to a June study by the Employee Benefit Research Institute. It also consumes about 20 percent of the federal budget, according to the Center on Budget and Policy Priorities. The labor coalition says the average benefit in 2010 for a disabled or elderly person is $13,000.

Because Social Security has run big surpluses for years, the Social Security Trust Fund has a $2.5 trillion surplus that is still growing because the Treasury pays interest on the bonds held by the Trust fund. But the surpluses are essentially on paper, in the form of Treasury bonds that the government will have to pay off as Social Security benefits start eating into the trust fund. If nothing changes, some analysts predict that the trust fund itself will run out of reserves in 2037, beating the CBO estimate by two years.

The two co-chairmen of the president’s fiscal commission, Democrat Erskine B. Bowles and Republican Alan Simpson, have both warned that the system is unsustainable without changes to benefits, taxes or a mix of the two.

"The thing was set up when the life expectancy was 57 years, and that’s why they set 65 as the retirement date,’’ Simpson said in a recent video interview. "Now the life expectancy is 78….we have to adjust that and make it work for the future."

Though the labor leaders were united about Social Security being shielded from cuts, they weren’t as clear about what should be changed to reduce the government’s trillion-dollar deficits. They laid blame for the deficits on the 2001 and 2003 tax cuts enacted under former president George W. Bush, as well as on the wars in Iraq and Afghanistan. But they had differing suggestions for what should be on the chopping block.

"The framework they should start from is health care costs," said Richard Trumka, president of the AFL-CIO. "They should be looking at a way to reduce health care costs in the long-run, which is really driving the deficit, rather than just taking benefits away."

Coyle recommended the commission consider raising the $106,000 cap on the amount of salary that is subject to Social Security taxation, so that wealthier people would pay more. And Terry O’Neill, President of the National Organization for Women, said that another stimulus and more job creation measures from Congress are the long-term keys to strengthening the middle class and the economy and eventually paring down the deficit.

Even though the full benefit retirement age has been raised in the past, the speakers slammed proposals to increase it now. "Raising the retirement age for many workers will be a death sentence to them," said Trumka. An age increase will be particularly detrimental to workers in physically demanding jobs "like my father who spent his life in the mines and couldn’t work another day by the time he qualified for Social Security."

People born in 1960 or later can start collecting full benefits at 67. But some members of Congress, including House Minority White John Boehner, R-Ohio, want to increase the age to 70. "Can you picture all the 70-year-old bricklayers, trash collectors, fire-fighters and nurses out there?" said American Federation of State, County, and Municipal Employees President Gerald W. McEntee. "Is that the kind of society we want?"

Fiscal Times senior Washington correspondent Edmund L. Andrews contributed to this report.