A New Mexico “Happy Birthday” to Social Security!

Seventy-five years ago today, President Franklin Roosevelt signed the Social Security Act into law.

In April of that year, at a meeting of the U.S. Chamber of Commerce, Roosevelt and his Social Security plan were roundly condemned – it was declared that this was all part of FDR’s attempt to “Sovietize” America.

Senator Dennis Chavez

Senator Carl Hatch

Despite the hysterical fear-mongering from the Chamber and its allies, on June 19 the U.S. Senate had gone on to pass the Social Security Act by a vote of 77 to 6 – with New Mexico’s two Senators, Carl Hatch and Dennis Chavez voting with the majority.  In April, the House passed the measure the previous April by a vote of 372 to 33. Our single congressman at the time, John J. Dempsey (who went on to become Governor), also cast his vote in the affirmative.

Never knew those guys were all a bunch of Bosheviks.

Yet somehow, seventy-five years later, the Republic has survived. Indeed it reached its greatest heights of prosperity, and built the greatest middle class in the history of the world — thanks to programs like Social Security and the G.I. Bill.

An American Success Story

Here are just a few key facts about the importance of Social Security today, courtesy of the Center for Budget and Policy Priorities.

  • Social Security is more than just a retirement program. It provides important life insurance and disability insurance protection as well.
  • Children have an important stake in Social Security.
  • Social Security provides a guaranteed, progressive benefit that keeps up with increases in the cost of living.
  • Social Security provides a foundation of retirement protection for nearly every American, and its benefits are not means-tested.
  • Almost half of the elderly would be poor without Social Security. Social Security lifts 13 million elderly Americans out of poverty.
  • Most elderly beneficiaries rely on Social Security for the majority of their income.
  • Dependence on Social Security increases with age, as older people are less likely to work and more likely to have depleted their savings.

This last point about elder poverty is worth pondering. Today, without this social insurance program that we all pay into throughout our working lives, almost half of the elderly (13 million) would be living below the poverty line if it weren’t for Social Security. That had been the fate of a majority of elderly Americans in first part of the twentieth century.

Included in that number are the 129,000 New Mexicans (77,000 elderly) who escape poverty thanks to Social Security. This includes 46,000 women over the age of 65. (Here’s some more New Mexico Social Security facts.)

And according to the Census, about 6 million children nationwide under age 18 lived in families that received income from Social Security in 2008. Over 3 million children received their own benefits as dependents of retired, disabled, or deceased workers.

Social Security in crisis? Consider the alternative.

We still hear the drumbeat to “privatize” Social Security by putting the trust fund into the hands of Wall Street. But those drums have been muffled since the stock market meltdown of September 2008 and the collapse of home equities.

There is no question that the stock market can, if funds are invested wisely, yield a better return.  But — and that’s a really big “BUT” — when used to build a retirement nest egg, timing is everything when betting on the casino know as Wall Street. The reality of market volatility makes privatization schemes an extremely risky proposition as a 2008 study by the Center for American Progress Fund makes clear. Looking at a hypothetical portfolio for a typical worker:

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What Combined Reporting Really Means For New Mexico

Fat CatThe New Mexico Independent just got its hands on a newly-released report that puts the lie to the tired old argument that large corporations won’t come to or stay in states that make them pay higher corporate income taxes.

In a story today, NMI senior reporter Trip Jennings reports that Intel and many other companies who do business in New Mexico also choose to operate in states with higher corporate income tax rates.

From the story, based on a report compiled by the Washington-based Center for Budget and Policy Priorities:

At least 71 of the 78 multi-state corporations that have 250 or more employees in New Mexico have a facility in at least one state that mandates combined reporting.

Under combined reporting, a corporation’s nationwide profits are combined – that is, added together – and the state then taxes a share of that combined income, according to the Center.

So what companies are we talking about here? A quick look at the report shows that Comcast, Conoco Phillips, JC Penney Co., Bank of America, ABF Freight System, Wal Mart, Target, Whole Foods and Southwest Airlines are among the many corporations who pay more to do business elsewhere than they do in New Mexico.

You can read the full report here.

I find this report particularly important today, as the House Committee on Business and Industry meets to discuss HB 62, which would institute combined reporting and close the loopholes that currently let corporations shift their New Mexico profits out of state and avoid paying income taxes on them.

Many groups, including a coalition of lawmakers and a diverse group of health, education, social service and religious advocates say that New Mexico must act now to make corporations who do business in our state pay their fair share.

They’ll be at today’s hearing, as will lobbyists from the business community, still attempting to hold up the ridiculous argument that implementing combined reporting will make companies stay away from our state.

Keep checking back here for updates on what happens at today’s hearing and how HB 62 fares in the session.

The economic future of our state could depend on it!