As the news media reported, President Obama proposed in Nov. 2012 to cut the Social Security payroll tax in half, from 6.2 percent to 3.1 percent. It would have decimated the program and accomplished what I believe is the political agenda behind this proposal -- the attempt to force recipients to rely more heavily on the private insurance companies.
About the route to privatization, the plan is always to both weaken and discredit public programs that benefit mainly the vast majority of people. Take for example what is happening to the Post Office (USPS) to the business advantage of USPS and Federal Express. Congress passed a law that mandates a financial burden on USPS which is not required of any other public agency. USPS must pay more than $5 billion a year to assure health benefits to retirees for the next seventy five years. This outrageous requirement even covers future employees who haven't yet been born! Other steps have also been taken to assure that USPS operates at a loss.
The mass media has accommodated business interests by persistently claiming that unavoidable economic factors instead account for its deficit. As a result, many people I meet are convinced that the USPS is running a deficit because of a decline in business, and therefore retrenchment is justified. Post offices are being closed throughout the country, and the direct and indirect inconveniences and problems that these closures are causing will encourage more members of the public to turn to UPS and Federal Express.
With regard to Social Security, which is in excellent shape financially, we should nevertheless not be surprised about President Obama's proposal in his 2014 Budget to change the cost of living index so that seniors would receive much smaller annual increases. Recall his comment in the 2012 presidential debate with Romney --"I suspect that on Social Security, we've got a somewhat similar position." Obama's proposed reduction is sizeable. The average earner when retiring would lose $658 each year until they reach age 75 and a cut well over $1,000 annually by age 85.
Moreover, Obama's proposed cost of living adjustment would be only the beginning. Other assaults on Social Security benefits will certainly follow. Also hurt are veterans and persons with disability, many of whom receive financial assistance from Social Security. To make matters worse, the federal government has been uninterested in repaying the Social Security Fund the money it had borrowed for other purposes. According to the Wall Street Journal, Social Security's "growing obligations will pressure the government to repay money it borrowed from the program to cover other costs". (WSJ, 4-11-13) As a result of the difficulties that recipients could experience, many of them will resort to expanding their protection via the private insurance industry.
Also, consider Medicare, where most senior citizens purchase supplementary insurance from the private sector because Medicare is so structured that seniors must pay 20 percent of their medical expenses in addition to co-payments. These costs are in addition to their premiums, which for medical insurance (Part B) exceeds $100 per month. To make matters worse, Obama's proposal to appreciably increase deductibles for Medicare will impose an intolerable, life threatening burden on retirees Again, the private sector will be ready and willing to rescue these recipients, but of course, at a considerable and even an unaffordable price.
I have a question for organized labor, senior citizen and veteran organizations: why aren't you organizing massive street protests to prevent your constituencies and the public at large from experiencing a severe decline in their standard of living and quality of life?