The People’s Pension

The People’s Pension is the title of a new book by Eric Laursen to be published in April. With a subtitle The Struggle to Defend Social Security since Reagan, this book is a magnum opus in every sense. Its 800 pages provide the reader with an extensive chronology of events relating to the historical development of the USUS Social Security system from the 1930’s to the 2010’s, with a particular focus on the ideological and political attacks on the system, starting during the presidency of Ronald Reagan, and continuing over the intervening years right up to the present time. The author has compiled a remarkable historical record of events with the aim of enlightening readers by explaining the ideological and political philosophies and proactive campaigns of individuals and organizations that have featured prominently in the continuous sequence of attacks against the Social Security system. The book is both eminently readable and scholarly with its recording and interpretations of events and its references to a vast range of research resources and first-hand discussions with key players and institutions involved in this saga of contemporary history. The author describes the story that unfolds in this book as a history of thirty years of American political life, populated with episodes of deals made and not made, of ideological grandstanding and self-righteousness, and of spin control aimed at inoculating politicians from the public response to their own ruthlessness. Each time, the movement against Social Security acquires new financial backers and new political champions and the sequence of events is repeated over and over as strong protective opposition is encountered from liberal or progressive defenders of the system, and for the most part, the attacks on Social Security have failed. Caught up in the middle of this ideological and political battleground is 2012a program that is a fundamental element of American workers’ lives, set up to provide a basic income for workers and their beneficiaries during old age, as well as on death or becoming disabled.

While no single-page 800-word review can do justice to the full content of this 800-page tome, some noteworthy highlights of the author’s message include descriptions of attempts to make Social Security voluntary; to privatize Social Security; to replace a part or all of Social Security with a system of individual accounts; to reduce future scheduled Social Security benefits by introducing means-testing, postponing the normal retirement age, scaling back on cost-of living adjustments, and reducing the basic benefit formula for determining the key Primary Insurance Amount from which actual benefits are mostly derived. Many of these initiatives were undertaken in the guise of encouraging individual thrift and opposing welfare, claiming that the Social Security System is bankrupt, unaffordable and unsustainable, and moreover constitutes a tremendous burden on future generations from the intergenerational transfer of financing the system. Each of these ideological viewpoints is discussed objectively by the author who notes in passing that the debate would often focus on the arcane technicalities of the program’s long-term financial projections while seemingly ignoring the social and economic reality that the Social Security system is the people’s pension, paid for by dedicated payroll taxes, and that the people who fund the program in turn depend on it for certain future benefits and economic security. The author delivers a powerful message with this quote from a former Social Security Commissioner: “The government may administer and enforce compliance with a social insurance system, but in the final analysis it is paid by, and is for the benefit of, the people of the nation; the government is simply the intermediary that carries out the wishes of the people.”

There is great deal in The People’s Pension to interest both the general reader and the Social Security expert. The chapters on Scary Numbers, Propaganda and Politicization, and The Retirement Crisis should be required reading for every American. Scary Numbers discusses the concept of generational accounting that gave the enemies of Social Security another weapon, however imperfect, with which to attack the program. Generational accounting erred in balancing all taxes paid by each generation against only one group of benefits that generation received back, omitting a host of others. The Congressional Budget Office criticized the erroneous basis for generational accounting and its too narrow tax-and-benefit assessment and the misleading scary numbers it produced. Propaganda and Politicization describes the propaganda campaign that was initiated by the Bush administration with its statement that the current Social Security system is unsustainable in the long run based on an infinite projection of the system’s deficit and its politicization of the Social Security Administration with a campaign to push a political agenda that contained statements that were untrue. The Retirement Crisis serves to put the future of the American retirement system into proper perspective and to focus on how Social Security can be strengthened as the cornerstone of the system.