Apr 142017

by Bill Onasch

An Age Old Question of Solidarity

The number crunchers quietly working for Uncle Trump are preparing a big tax cut for the Middle Class. But we should be wary of geeks bearing gifts.

Social Security is the most important of the few substantial reforms won during the vaunted Depression era New Deal. It wasn’t only the stock market that crashed in 1929—so did many banks, wiping out the life savings of millions. Social Security, passed in 1935, first implemented in 1940, was an effort to prevent such calamities in the future.

A payroll tax on both workers and employers created a Trust backed by the full faith and credit of the Federal government. For the first time, retirement income was guaranteed. Public sector workers could stay in similar plans with comparable, or better benefits—but many of these funds in recent years have been misappropriated by politicians for other uses, creating scandalous crises, such as in Illinois.

Soon after the first SS benefit checks were issued the USA entered the Second World War. During the government imposed wage freeze the bosses offered a new gimmick to attract and retain workers during a great labor shortage–“Fringe Benefits” that included employer provided health insurance, paid vacations and pensions.

After the war the labor movement made a historic strategic blunder. Instead of fighting to improve Social Security, and for legislation guaranteeing health care and vacations for all workers—as was done by unions and working class parties in most industrialized countries–they focused on winning better fringes for their dues paying members. It seemed to work great for an envied minority of the working class—rechristened Middle Class–for decades. UAW members at the Big Three automakers could retire with generous pensions and health insurance after thirty years of service.

Those days are long gone. Some major unionized corporations are too. Currently Multi-employer Pension plans covering over a half-million workers have applied for Treasury Department approval to cut promised benefits.

Defined benefit pensions are an endangered species being replaced by 401(k) schemes skimming fat fees off the top. During the stock market tumble of the Great Recession many of these accounts were decimated.

Social Security has become more important than ever. For nearly half of all retirees it is their only source of income—a group that includes me. Social Security remains the most efficient of all government services. But it has already been whittled away over the years through various “reforms” such as raising the retirement age, inadequate cost of living adjustments, along with “voluntary” deductions for Medicare Part B premiums.

Still, the ruling class would like to get control over much more of the trillions of our SS assets. During Bush II’s administration various scams were floated about putting our retirement funds at work in the stock market. After the 2007 financial crisis these swindles fell out of favor.

Anxious to cover his backside while sounding pernicious false alarms, Obama made several overtures for a bipartisan Grand Bargain to further gut Social Security as well as Medicare and Medicaid. But the GOP was not prepared to cooperate on anything whatever.

Trump has often pledged not to go after Social Security or Medicare. Since I saw his lips move that had me worried. Now we are hearing about schemes being seriously discussed in the Administration that some call a Trojan Horse attack on these programs us old folks depend on.

The complicated scam would require eliminating the present entitlement status of Social Security, which has kept our nest egg more or less independent of the overall budget, reclassifying it a “discretionary” item. Currently, the government can borrow SS surplus funds but must repay with interest as needed. It has worked reasonably well. There has never been a missed payment of benefits—even when most of the government gets shut down during budget disputes.

The spread sheet schemers want to end the 12.4 percent payroll tax shared evenly by bosses and workers—a big income boost for both that they could crow about. Obama did a trial run a few years ago with a one year temporary payroll tax “holiday.”

The lost payroll income for the downgraded discretionary Social Security would presumably be offset by a share of a still to be fully fleshed out new Value Added Tax. Like sales tax, VAT would largely be paid by workers—even those unemployed and retired. Much of this revenue would dry up when consumption declines during economic downturns.

It is likely that, following the model of tiered union contracts where the worst take-backs are inflicted on future workers, some middle age generations would be vested in traditional Social Security benefits. Their kids and grandchildren would be dependent on the generosity of Presidents and Congress.

Conventional wisdom long warned that Social Security tinkering was a political “third rail,” fatal to all foolish enough to touch it. It’s still a hot button issue. But the lies of those like Obama’s Blue Ribbon bipartisan commission, that included ex-union official Andy Stern, about the inevitable demographic collapse of Social Security have done a lot of damage. Most Millenials doubt that there will be anything left for them. And in a period of stagnant wages, a 6.2 percent one time raise in take home pay is tempting to all generations of workers.

It is hard to judge whether this particular proposition, still in early planning stage, will lead to imminent danger. The 45th President has demonstrated a short attention span and a propensity for unexplained, rapid 180 changes of positions. But we can’t count on his flip-flops. Nor can we rely on the Democrat losers, who have wanted to join hands with the GOP in gutting Social Security, to lead the “resistance.” While it may not yet be time to mobilize for this particular battle we should follow the advice of the famous Russian military scholar and Field Marshal Suvorov—Train Hard to Fight Easy.

It is time to teach the new generations—and refresh the old—that Social Security is not a question of bookkeeping or demographics but a gut level example of solidarity of all generations in our class. It requires continuing education that can’t be outsourced to our class adversaries. In the process we will update our program for making Social Security work for us.

L’insurgent extrême gauche

In the last WIR, we linked to an AFP story that credited the Anticapitalist Party candidate Philippe Poutou, a Ford worker, with being the most effective speaker in the French presidential debates. Earlier this week, the Wall Street Journal nervously reported on the surge in the polls for another candidate they describe as Far-Left, Jean-Luc Mélenchon of the electoral coalition Unsubmissive France. Mélenchon is a 65-year old veteran politician who split with the center-road Socialist Party to help form the Left Party. WSJ says,

“At a rally in Marseille on Sunday, Mr. Mélenchon told a crowd of about 70,000 that his rising popularity means he might advance beyond the April 23 first-round vote to the decisive runoff on May 7….In a runoff against Ms. Le Pen, [the extreme right candidate] Mr. Mélenchon would win with 57% of the vote, the Kantar Sofres-Onepoint survey projected.”

Not being fluent in French it’s difficult for me to parse the differences between Poutou and Mélenchon but you don’t need to be a Francophone to understand they are both far to the left of America’s most prominent socialist—Bernie Sanders. The popularity of their campaigns signifies a resurgence of class consciousness and class struggle in France that first became apparent in mass strikes and demonstrations against the neoliberal agenda of the soon to be replaced Socialist government. Regardless of the outcome of the elections we can learn some valuable lessons relevant to reviving the workers movement on this side of the Atlantic.

Back to the Streets

Climate will be the focus for the early round of actions beginning next Saturday, April 22 with the Earth Day March for Science, including the Peoples Climate Marches April 29, and concluding with May Day strikes and demonstrations for immigrant and worker justice on—May 1. An extra WIR or two may get squeezed in to this busy calendar.

I just received a copy of a new position paper from the Labor Network for Sustainability, Jobs for Climate and Justice: A Worker Alternative to the Trump Agenda, and will offer comments soon.

That’s all for this week.

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