The $5 TRILLION SWINDLE: Robbery of Workers’ Social Security

by Wally Linder

October, 2020

The “debate” over the Social Security (SS) “crisis” is a cover for a trillion-dollar looting of the SS Trust Fund, pulled off for over 52 years by every Democratic and Republican president who has occupied the White House — Johnson, Carter, Clinton, Obama, Nixon, Reagan, the two Bushes and now Trump. It IS a crisis, not of SS but one of U.S. capitalism, mired in a multi-trillion dollar debt resulting from illegally spending the workers’ SS surpluses to finance US imperialism’s wars against Vietnam, Grenada, Panama, El Salvador, Nicaragua, Somalia, Yugoslavia, Iraq and Afghanistan. It mirrors a general law of the profit system: shift the bosses’ financial burdens onto the backs of the working class.

SS was first enacted in the mid-1930s during the Great Depression when a third of the working class was unemployed and those still working were barely getting by. SS was a victory of a mass working-class movement, to a great degree led by the Communist Party (CP), which organized 800,000 workers into the National Unemployment Council in a fight for unemployment insurance. Part of this movement included the right to organize unions, mainly into the newly-formed CIO. Communists and left-wingers led strikes in the basic industries, the leading one being the 1936-37 Great Flint Sit-Down Strike against General Motors (GM) for union recognition, a 25 percent wage increase and an 8-hour day. The strike lasted 44 days until GM gave in. It sparked similar strikes in steel, electrical, mining and other industries for similar demands. The country witnessed pitched battles between the strikers and cops and the National Guard in which scores of workers were killed. The CIO grew to four million members by 1941.

President Roosevelt led a ruling class that feared this might develop into a fight against the system itself, even though the CP did not put forward the overthrow of capitalism. In order to protect the profit system, Roosevelt enacted many reforms, which included the 8-hour day and 40-hour week, unemployment insurance and the right to collective bargaining. Among these gains was SS. When World War II ended, the ruling class launched a campaign to take back these reforms. One of their first attacks was passage of the Taft-Hartley Act, which cut down a lot of union rights and was aimed at the forces that had led the mass movement, resulting in expelling communists from union official positions and especially from leadership of the CIO. The latter had been heavily entrenched in the basic industries that had the potential to strike at the core of the system. The corporate attacks virtually destroyed the CIO and reduced the unionized workforce from more than 30 percent to its present membership in private industry of 7 percent. Social Security was one of the reforms that began to suffer from these attacks.

Back in 1968, when the U.S. invasion of Vietnam was in high gear, the Johnson administration’s war expenditures were spinning the Federal budget into bottomless debt.  Since the SS Trust Fund was running a surplus — its income from payroll taxes deducted from workers’ paychecks was exceeding the pensions paid out to retirees — the Johnson gang used a shrewd maneuver to “balance the budget”: fold this SS surplus into a newly labeled “Unified Federal Budget.” This violated the bosses’ own law banning use of SS Trust Fund money for purposes other than SS.

By this sleight-of-hand, Johnson could announce a federal government “surplus,” masking the deficit in federal spending generated by the enormous expenses of the Vietnam War. To avoid the appearance of stealing the SS Trust Fund’s surplus, the government gave the Fund U.S. Treasury notes equal to its “loan” from the Fund, promising to pay back the loan with interest. This meant that the SS surpluses — now part of this Unified Federal Budget — could be used to pay for all government costs, “for everything from jet fighters to thumb tacks” (NY Times, 1/21/90), especially for the proliferating “forever” wars. These wars led to mounting federal deficits, laying the basis for an enormous debt to pay back the trillions “loaned” from the SS Fund: Over the second and third decades of the 21st century, Congress will have to appropriate a total of $5 trillion for Social Security, composed of SS surpluses paid into the Fund by — and stolen from — the working class.

What’s even worse is the older age at which workers are able to collect Social Security. Eligibility for the full benefit used to be age 65. Now it’s as high as 67. The dollar amount — if retiring three years prior to collecting the full amount at 65 — used to be reduced by 20%; now it’s reduced by 28.3%. Furthermore, 40% of retirees pay federal income tax on up to 50% of their benefits. Trump gets away with paying a mere $750 on his millions!

Poverty among workers over 65 is even starker. Single retirees earning more than $11,765 a year are not considered poverty-stricken. Nor are retired couples earning over $14,695 classified as such. Moreover, racism and sexism put 16% of black men and 21.5% of black women even below those amounts.

So these retirees sure could use a chunk of those stolen $5 trillions.

This U.S. bosses’ deficit crisis is part of the general crisis of capitalism. They will always try to solve that crisis on the backs of workers, who produce all the value in society. Such “solutions” will continue until the working class establishes a society in which retired workers will be provided for from the social value produced by our entire class. Bosses, profits and imperialist wars will be buried forever.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.