How Elizabeth Warren Upset the DC Establishment’s Plans to Weaken Social Security

At a time when we are seeing the largest upward redistribution in the history of the world these organizations have attempted to divert attention from the class war on the nation’s middle class and poor. Instead they are trying to convince young people that their financial difficulties stem from the size of their parents’ Social Security checks.

The Wall Street crew also has allies in this effort in the media and academia. The Washington Post stands out in the former category, using both its news and opinion pages to push for cuts to Social Security and Medicare. There is also considerable funding for academics who want to do work showing how the  young are losing out to the elderly.

For these reasons, Warren’s call for raising Social Security benefits could mark a real turning point. It could mean that we get a public debate which looks at the program with open eyes, recognizing that it is a large and growing portion of workers’ retirement income.

While Social Security does keep most seniors out of poverty, the $1,300 average monthly benefit is certainly not enough for a comfortable retirement for people who lack another source of support. A modest increase in benefits to retirees in the bottom half of the income distribution would make a big difference in their standard of living at relatively little cost to the program.

What is most desperately needed for middle income workers is a new retirement system to replace the failed 401(k) system. There has been much work on this issue over the last two decades at both the state and federal level. The outlines of such a new system are clear.

It needs to have low administrative costs so workers can maximize the amount that they earn relative to financial intermediaries. It has to be portable so workers can keep the same plan when they change jobs. It should be simple and ideally offer something like a cash balance system where workers can be guaranteed a minimal return. And it should allow for easy, if not automatic, conversions to annuities in retirement.

There would be lots of support for this sort of system from across the political spectrum. And it could be set up at the state of level, as  activists in Washington State and elsewhere have tried to do. The only real obstacle are those firms in the financial industry that currently make a fortune from fees managing 401(k)s. But this has been enough to prevent any plan from moving forward to date.

Anyhow, Warren’s support for raising Social Security benefits could be exactly what we need to move the discussion of retirement income in a positive direction. As far as the pain suffered by the young, it is very real but the main causes are the high unemployment budgets coming out of Congress and the over-valued exchange rates.

The young are the biggest victims of unemployment, not only because they are more likely to be unemployed, but because they are also  likely to see their hours cut and get lower pay when they do work. We know how to reverse these policies, but it means confronting Wall Street, not beating up our parents and grandparents.

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This blog is reposted from AlterNet.