by Randolph T. Holhut
Chief of AR Correspondents
November 11, 2010
DEFICIT COMMISSION TAKES AIM AT SOCIAL SECURITY
DUMMERSTON, Vt. -- I'll be 50 next year. I've been paying into Social Security since I was 12, when I picking cucumbers in my first summer job.
I've been paying extra money into Social Security since I graduated from college, as part of a plan to make Social Security solvent when I retire. They also raised the retirement age on me and my fellow Gen-Xers, so I won't get the full benefit until I turn 67 in 2028.
I don't have a pension to look forward to. And, after about three decades in the workforce, I have enough money in my retirement accounts to cover about one year of income.
In other words, like millions of Americans, Social Security is what stands between me and poverty when it's time to retire. Right now, nearly two out of three seniors depend on Social Security for more than half their income. For 14 percent of seniors, it's their only income.
Yet, according to President Obama's bipartisan commission on reducing the federal debt, there is not enough money to pay for our retirements, and that we will have to accept cuts and an even longer wait for full benefits because Social Security is in financial trouble.
On Dec. 1, the commission will release its ecommendations. According to The New York Times, their proposed plan "would reduce projected Social Security benefits to most retirees in later decades - low-income people would get higher benefits - and slowly raise the retirement age for full benefits to 69 from 67, with a "hardship exemption" for people who physically cannot work past 62. And it would subject higher levels of income to payroll taxes, to ensure Social Security's solvency for the next 75 years."
This is a completely and utterly bogus solution to an non-existent problem. The facts, which the commission is conveniently ignoring, do not support their proposal.
Starting in 1983, the year I graduated from college, Social Security prepared for the retirement of the baby boomers by collecting extra payroll taxes. That has enabled Social Security to pile up a $2.3 trillion surplus in its trust fund now.
By 2024, when I'll be ready to collect, the surplus will peak at $4.2 trillion. And its not "a pile of IOUs," as Social Security's critics claim. Yes, the federal government has borrowed trillions from the Social Security Trust Fund and spend it on wars and tax cuts for the wealthy. But those "IOUs" are the legal equivalent of interest-paying Treasury bonds, backed by the "full faith and credit" of the United States.
For all practical purposes, American workers are collectively the federal government's largest creditor, even larger than China. Our government wouldn't think of stiffing China or any of our foreign creditors. Yet some conservative politicians think the federal government can get out of repaying the federal government's debts to workers.
Social Security adds nothing to the federal deficit. The program must pay its own way, which is why there is a trust fund separate from the federal budget to fund it. And, there's already plenty of money to keep paying benefits with no cuts for decades. The Social Security Administration estimates the current surplus is enough to fully fund the system until 2037 with absolutely no changes. After that, they're will be only enough to pay 78 percent of promised benefits.
But that can be easily remedied. The first way is to raise to raise the cap on the 6.2 percent FICA tax workers pay on their incomes. Right now, it's $106,800. The top 6 percent of earners pay FICA only on their first $106,800, and not the rest of their income.
There no word yet on what the deficit commission recommends the new cap should be, but if you ditch the cap altogether and make the wealthy pay FICA on all their income, and there will be plenty of money for Social Security for decades to come.
Another proposed solution is put a 0.5 percent tax on each stock transaction. This would not only cut down on Wall Street speculation, but it also produce enough money to make Social Security solvent for the next 75 years and raise benefits to recipients.
Polls show Americans oppose raising the retirement age or cutting benefits, and that there is support for raising the FICA income cap. Yet the solutions being offered by the people trying to "save" Social Security are trying to take away the benefits that we worked and paid for over the past 30 years to benefit the very wealthiest Americans.
I've written this many times and it bears repeating. Social Security is the most popular and most successful government program ever created. It not only keeps the elderly out of poverty, it does likewise for the disabled and for widows and orphans. It is truly a social insurance program that offers benefits that are unobtainable in the private market, and delivers it at an administrative cost that is less than 1/20th of what private insurers pay.
Protecting Social Security from the privatizers and the budget cutters should be job one for Congress right now. There is a reason why billionaire investment banker Pete Peterson has spent more than $1 billion on efforts to cut Social Security, and it is not his concern about deficits or the financial future of America. He is doing it to protect his outsized slice of the economic pie.
It is not enough for guys like Peterson to have looted our retirement funds and our home equity to line their pockets. They want to use their power and control over Congress and the media to destroy the only thing we have left to ensure we're not eating cat food in our golden years -- Social Security.
For working Americans, it is time to hold the line and tell the Wall Street boys and the preening politicians to cut the nonsense and start working on a real plan that will protect and preserve Social Security for decades to come.
Randolph T. Holhut has been a journalist in New England for more than 30 years. He edited "The George Seldes Reader" (Barricade Books). He can be reached at email@example.com.