Saturday, September 16, 2017
Restoring the US Middle Class - 9. Keep Social Security and Medicare as they are
Some Politicians want to Destroy Social Security
Not only do these programs provide dignity to people who have worked all their lives, they provide significant income to help support Aggregate Demand.
There are pressures to reduce or destroy these programs. The stated reason is the budget deficit, but the real reason is simple greed from the financial system.
Countries which have chosen to reduce pensions and healthcare because of a fiscal deficit problem are now experiencing recessions and high unemployment.
No country in history has been able to cut its way to prosperity. Many countries have found prosperity by borrowing in bad times to sustain employment.
Social Security and Medicare are the most successful government programs of all time. And, we cannot cut these programs and expect economic recovery and job growth at the same time.
They have achieved the goals of making old age for United States citizens a happy time instead of a time for terror.
Not only that, but the economic impact of the programs is considerable; any reduction in these programs will have a dramatic and immediate impact on GDP and job creation.
Economics of Social Security
Some facts about Social Security from Roberto Gallardo and Al Myles were published in Daily Yonder [http://www.dailyyonder.com/economic-impact-social-security/2011/12/18/3649] :
Social Security supports 8.4 million jobs and makes annual payments to recipients of about $1.2 trillion. 51 million people receive checks from Social Security - that's about 15.7% of the total population.
Gallardo and Myles have calculated that a 5% reduction in Social Security payments will reduce GDP by $63 billion, reduce employment by 419,000 jobs and reduce federal tax collections by $7.8 billion.
While there may be an argument in favor of adjusting the formulae used in the programs, it is clear that significant reductions must be prevented in order to secure recovery and growth.