Oct 21

Social Security: The Truth

Social Security and the Survival of Your Retirement—

Social Security is not related to the federal deficit. It is funded by a tax that is withheld from your earnings during your working life. That money goes into a nearly $3 trillion trust fund that is healthy even though it can easily be made still healthier. More about this later. Repeat: The deficit will not be reduced by reducing or privatizing Social Security. The deficit has nothing whatever to do with Social Security. No matter what you are told by politicians and Wall Street parties slavering to get their greedy hands on this huge sum, Social Security is healthy and does not affect the deficit. Anyone who tells you otherwise is lying.

Do you want to privatize Social Security? Let me put it more clearly: do you want your retirement security put in the loving hands of Wall Street? Memories are short, so let me refresh yours: the recent recession that affected the entire world and from which we have not yet recovered was based on risky and even criminal behavior by Wall Street. My own retirement nest egg was reduced by nearly 40% in a matter of a few weeks by the meltdown, and I’m not unusual.

Wall Street is where investment is God. It is run by ambitious people who are subject to the all-too-common flaws of ignorance and greed. Despite what you may think, the conditions leading to the Great Meltdown have not been curbed but are largely still in place thanks to a political establishment whose existence depends on the gifts from the world of high finance.

Eliminations of safeguards—deregulation—starting in the Reagan era and permitted by both parties (albeit the flawed Republican philosophy of mythical “free markets” has largely governed), have been eroded by congress and the conservatives on the Supreme Court. The current Tea Party-dominated House of Representatives wants to further erode the few safeguards that still exist and enhance the fortunes of the 1% who support these congressmen and women.

I don’t give a hoot who you voted for or your party affiliation. What I am doing is paring away the deliberately confusing rhetoric (or downright lies) thrown at you by the political establishment and a compliant media. Too many people I know, relatives, small business owners, the forcibly unemployed, retirees, just average folks have been diddled and lied to by the politicians for too long for me to sit silently on the sidelines. That’s why I have written this piece on Social Security, your lifeline in retirement, the average person’s lifeline in retirement.

Consider this: since 2009, 95% of the income gains have gone to the top 1% of individuals in the United States. Let me repeat that fact: since 2009, 95% of the income gains have gone to the top 1% of income earners. That’s the reason you should be concerned about the renewed negotiations in Congress. Your retirement income will be in play. Your Social Security will wrongly be part of the negotiations.

Just so there will be no doubt about the truth of what I am saying, I hold the philosophy that until we eliminate the gross inequality that exists in the United States, the worst since the Gilded Age, we will suffer a decline in both democracy and the financial security of the little folks. The rich people are the ones who benefit from the system now in place. While I would be ashamed to admit to being a Republican, I have considerable policy differences with the Democratic administration if not all the Democratic Party. However, given the structure of the American two-party system, I will more likely come down on the Democratic side on social policy simply because it is more humane and realistic.

So please pay attention when the budget negotiations are under way. The Republicans want to slash so-called “entitlement” programs (read that as Social Security and Medicare) and President Obama has said that “entitlement” programs are on the table and has even suggested that Social Security be “chained” to a stingier consumer price index. As stated above, this “chained CPI” would significantly reduce the amount retirees receive. As I have already said repeatedly, Social Security has zero to do with the deficit. Bluntly put, your Social Security is at risk.

Raise the Cap—

Before closing, a few words further on my statement in the first paragraph that Social Security is healthy and can easily be made even healthier. The simplest way possible to improve the long-term health of Social Security is to raise the cap on Social Security withholding to last dollar earned rather than where it stands today, $13,700. With the exception of Sen. Bernie Sanders and a few others who want the cap to be raised to $250,000, this has been all but ignored by congress. Why? Because the wealthy people in American society don’t want to pay their fair share. The simple fact is that the wealthy people would find the tax from a raised cap to be a relatively insignificant part of their income (pocket change is the appropriate phrase) while any proposed cuts would be borne by the small wage earner, particularly if the “chained CPI” measure is adopted and the age of eligibility is raised. Put bluntly, such cuts would noticeably reduce the amount retirees receive.

While at Fox, like all the executives I got a “raise” every year when my earnings hit the cap, but the rest of my staff paid the tax all year and did not get that relief. That seemed to me unfair then and still does. It’s an easy fix and one you should strongly agitate your congressional representative to support.

Considerably more could be said in support of this simple fix, like returning the amount taxed to the 90% of total income level of the Reagan era instead of the 80% currently in effect. That’s a separate subject for discussion that could be addressed in the future. However, suffice it for now to say, simply raising the cap to last dollar earned would solve any remote doubts about Social Security’s future. Support improving Social Security, not undercutting it. Don’t listen to the lies. Demand that the cap be raised.

6 comments

Skip to comment form

    • Dave Meyers on October 21, 2013 at 17:47

    Although I collect a monthly Social Security check, I know very little about the system or it’s mathematical state. I, like many others who didn’t plan well for retirement, DEPEND on that check. So, when talk of reducing benefit amounts, or government shutdowns threatening to unplug the check writing machine pop-up…I listen and sweat.

    I yell at the TV when some elected fool (read Right-Wing) calls SS an entitlement program. Didn’t I pay in? Wasn’t that money in trust waiting for me to beat my family odds and actually make it to 65? I thought it was.

    The last thing we need is some ultra ambitious twenty-something glued to a smart phone messing with MY trust fund!

    You’ve inspired me to pay better attention to this issue Don…..Thank You.

      • Don Bay on October 21, 2013 at 18:19
        Author

      And don’t be shy about spreading the word. The only way the politicians will be forced to move is when enough voters demand that they get with the movement. Way too often I have read and heard it said that cutting Social Security will help reduce the deficit. This is a lie. And as for the cap, the rich folk won’t stand still and allow even a penny to be taken from their obscene incomes. It’s up to a critical mass of people to demand that the cap be raised to last dollar earned. You are helping form that critical mass.

  1. We had this discussion verbally, but I agree about raising (eliminating, actually) the cap. Furthermore, why do only people earning a wage, in other words, working people, have to make SS contributions? If SS is in the dire shape we’re told it’s in, then make investment earnings subject to the tax, as well. And then means-test so that people who make enough money to fund their own retirements get reduced or no benefits.

    Speaking from a personal standpoint, some of the “fixes” under discussion are unpalatable. Raise the age one can collect SS benefits to 70? I work in a physical job. I’ll be lucky to still be doing that job when I’m 60, much less 70. Cut benefits? Like Dave, I have next to no retirement, and that situation is not by choice. Like Don, what little I did have in my 401k was wiped out the the Great Recession. In 2007, my 401k fell to less than its worth in 1995. I frequently say I would’ve been better off putting my money in a mattress.

    Further, the way SS is currently structured, it’s EXTREMELY regressive. I’m a small business owner, so I pay over 15% right off the top of ALL my earnings. That’s pretty darned steep. I pay another 7-odd% as an employer. Now, I do get to expense that, but that’s still a lot of money off my gross earnings. But someone who makes way more than I do only has to pay SS out of a portion of their earnings?

    SS may need to be rejiggered for it’s long-term health, but not in the ways that have been under discussion in the past. And it needs to be made much fairer, so that it’s there for the people who really need it, and everyone pays their fair share.

      • Don Bay on October 25, 2013 at 16:38
        Author

      Kathlena makes a very good point. However, my purpose in writing this piece on Social Security was to make two points without complicating the subject: 1) that Social security does NOT contribute to the deficit and, 2) that the simplest way to improve the long-term health of the Social Security trust fund is to raise the cap to last dollar earned.

      There are other problems with Social Security, as pointed out by Kathlena, but that would have only confused the purpose of my writing the piece. I wanted to keep it as simple as possible so readers wouldn’t buy into the immensely hurtful “fixes” being offered in budget negotiations or to Republican efforts to tie Social Security to the national debt. The Republican purpose is to destroy Social Security as a favor to their rich benefactors who want to get their hands on that fat Three Trillion Dollar trust fund.

      I think a follow-up piece would be appropriate to point out the inequities in Social Security as it is currently structured. In the meantime, Social Security has nothing to do with the national debt and it can be made better by raising the cap.

    • Mary Ann Conley on November 5, 2013 at 01:38

    This is an excellent piece on Social Security and I am so glad you wrote it. I have always thought that raising the retirement age would be appropriate. However, your excellent explanation of raising the cap is something that I will now take on as the best solution. Thank you for your thoughts and comments on this issue!

      • Don Bay on November 5, 2013 at 18:08
        Author

      Kathlena Contreras (Kathy) is a guest blogger on a Social Security piece that will go “live” on Wednesday, November 6, 2013. She rightly points out that raising the age at which a recipient of Social Security (SS) can start collecting the benefit will really hurt the person who has been working at a job that entails heavy labor, e.g., the laborer, floor nurse or firefighter. Put simply, we should throw ourselves bodily in front of any effort to raise the age at which one can collect SS.

      Reader Alert! The words “Chained CPI” means “CUT SS.” The “Chained Consumer Price Index (CPI)” will cut — LOWER — the amount every recipient will receive. SS is tight enough as it is now, but with the “Chained CPI” the amount a recipient will get will be even less. Again, we must throw ourselves bodily in front any effort to introduce a “Chained CPI.” This is one of the so-called fixes the Obama administration has put on the table as a part of a “grand bargain” to win over the Republican Party. This is pure insanity. The Republican Party wants to destroy SS as we know it, not save it. The “Chained CPI” and raising the age at which one can collect SS have been put on the table by an Obama administration that seems not to learn. Let your representatives in congress know that you oppose both! Repeat: OPPOSE BOTH! NOW!

      Share this comment and the SS pieces widely. People need to know they’re going to get screwed if they don’t oppose a proposed “grand bargain” containing SS cuts.

Comments have been disabled.