Don’t swallow Social Security propaganda

By Robert Pilkey
Longmont

As seen in Longmont Ledger

In order to justify benefit cuts, conservative politicians and their followers are deliberately sowing confusion about the relationship between the federal deficit and Social Security, the most popular and effective government program in our nation’s history. The truth is that Social Security has not added one dime to the deficit and claims to the contrary are flat-out false.

Social Security, by law, cannot add to the deficit. The Social Security Act of 1935 requires that funds collected via the Federal Insurance Contributions Act payroll tax, go directly into the Social Security trust fund, to be used solely to pay out benefits. By federal law, general revenue money may not be used to pay Social Security benefits, thus prohibiting Social Security from borrowing.

The Social Security Trust Fund currently runs a $2.5 trillion surplus (www.ssa.gov) and The Economic Policy Institute estimates the surplus will grow to $4.2 trillion in 2024. With no changes at all, Social Security is projected to pay 100 percent of benefits through 2037.

After 2037, Social Security will be able to pay 75 percent of benefits through 2084. The projected shortfall is the result of slower than expected wage growth, a growing share of income accruing to high-income workers (above the $106,800 contribution cap), and a greater share of employee compensation being paid in the form untaxed benefits, like health insurance (www.epi.org).

The projected shortfall, still decades away, is by no means a crisis and can be corrected without cutting benefits. For example, in 1983, 10 percent of all earnings were above the cap of $106,800, and therefore not subject to the Social Security payroll tax. In 2008 however, that share had grown to 16 percent. By eliminating the $106,800 cap, the 2037 shortfall would be fully funded for 75 years (www.prospect.org).

Another deficit falsehood is lumping Social Security’s projected shortfall with the Medicare and Medicaid debt. Social Security does not face the same dept problems as Medicare and Medicaid, because Social Security payouts are not affected by rising health care costs.

Social Security is a defined pension plan sponsored by the federal government. It belongs to the people who work hard all their lives and contribute, along with their employers, from their very first paycheck to retirement. Half of all households have no retirement savings accounts. Of those who do, 50 percent have less than $45,000 in their accounts (www.epi.org). Social Security will distribute benefits to over 53 million citizens this year and according to the Center on Budget and Policy Priorities, lift 20 million of those out of poverty.

Grandpa and Grandma’s monthly social security checks are not the reason we have a huge deficit. Social Security is under attack because its success runs counter to conservative claims that government can’t do anything good.

Americans must not allow themselves to be tricked by politicians bent on cutting their Social Security retirement benefits. Now is the time to strengthen Social Security, not cut it.

  8 comments for “Don’t swallow Social Security propaganda

  1. Gregory Iwan
    March 31, 2011 at 8:35 pm

    EVERYBODY knows that FDR was a Commie. Right? I mean, after all, from where did the “Cold War” originate? Pal-ing around with “Uncle Joe” Stalin, that’s where! Just think: thanks to ol’ Franklin, hundreds of thousands of Americans without hope or food got something to eat and a chance at a livelihood via WPA, CCC, etc. Ok, he allowed the Japanese to bomb us, and that allowed him to get us “into” WWII. Had that not happened when it did, the Nazis might well have taken Britain and, with that, Canada and Bermuda. Hmmmm. Panzers in Manitoba. Not a pretty picture. At least one can thank him for adding to tourism traffic in Hawaii!

  2. FRED BATES
    April 7, 2011 at 3:27 pm

    I watched the Longmont City Council’s “study session” until almost 11 tuesday. What a sad joke! It spoke to me of the methods of the right wing in a very clear way: if there’s something you hate, a program you don’t like, you just find a fault with it. It doesn’t have to be something egregious. Just enough to get the ignorant to wag their heads. Then, rather than FIX IT, you GET RID OF THE ENTIRE program or what have you. Because it’s faulty. I’d say it’s time for open season on everything and anything the right wing has doen or says. Because if that stuff ain’t faulty, then I’m Jules Verne. Or I wish I was.

  3. April 9, 2011 at 10:45 pm
  4. April 9, 2011 at 10:51 pm

    Fred, fascists have been trying to get rid of Social Security since before it was signed into law. They laid low while they’ve worked on creating a financial perfect storm. We’re not there yet, but they are trying their damnedest. Start wars that aren’t paid for. Tax cuts to their fellow fascists (corporations controlling government, in case the ignorant don’t understand this), and impoverish the middle class.

  5. David Fromme
    June 14, 2011 at 2:28 pm

    We hear many things about the Social Security shortfall. What we don’t hear much about is the impact that SS laws have. Not the dollar and cents projections but things like a 400% marriage penalty for Social Security recipients. And then there are proposals to raise the early retirement age without understanding that it will cost the government money rather than save it.

    I have done a study of the impact and placed on a web site sites.google.com/site/ssincometaxandchange/.

    I am not trying to be pro or con on any issue. I am trying to insure that issues are handled equitably and without distortion. There is a look at the existing structure and a look at changes that might lie ahead of us.

    I hope you will find this informative and help our representatives in congress to get this information also.

  6. Stan
    July 28, 2011 at 1:36 pm

    I did a little reading on Social Security’s financial future and have the following observations to share. While the “Trust Fund” is solvent on paper it is not solvent in reality. The funds that you pay into the Social Security Trust fund go directly out to current recipients with the entire surplus being invested in government bonds. In essence we take the surplus in Social Security and transfer it to the general fund and spend it. The Bonds are just IOUs in another account that is over drawn. If we were to try and cash in the Bonds today we would not have the money in the account and we would have to borrow the money. It is like writing checks from your checking account and planning to transfer money from your savings account only to find out that there is not enough money in the savings account to cover the checks. The only thing you can do is to borrow money on your credit card to cover the shortfall. This is part of the bigger debate on the budget and dept ceiling, We are borrowing 41 cents on every dollar we spend. Sooner or later you become a credit risk and therefore the interest rate will increase. This is what the credit rating agencies are saying; pay the interest by raising the dept ceiling to avoid default (borrow more money) AND reduce spending by 4 Trillion dollars. Since the federal government is unwilling to cut spending we are going to be charged higher interest. The dollar value will drop even more against stable currencies and gold will increase in value.
    It does not matter who brought us to this point, it matters what we are going to do about it. Raising taxes on the top 2% will not solve this problem because we have a much larger spending problem. If you are willing to tax the people making over $200,000.00 per year then why not include everybody and say that everybody has to pay 2% more and if you don’t pay taxes you get a 2% reduction in any government support. That would be a “Shared Sacrifice”. We can extract ourselves from the wars we are in and that is something that was promised but never delivered on. We need to insist that it happens now since it was always the strategy of Bin Laden to cause us financial harm. We need to reduce all Government spending by at least 4% across the board with few exceptions like veterans hospitals and military benefits. We need to end all special tax breaks and all rebates for all corporations including Ethanol, wind and solar. If the technology is viable it will survive, otherwise abortion is the best choice. We need deep cuts in government salaries for middle and upper management. We could do without some federal programs if needed. The bottom line is we are in deep financial trouble as a nation and we can fix it. We need to understand that our financial Security is a Social problem and we have to deal with it now.
    Stan M.

  7. Tom
    February 19, 2012 at 1:40 pm

    POINT: Social Security was founded based on life expectancy which was some 62 years when it started. That has now moved to about 80 years which in effect cancels the original calculations that formed Social Security. That was the issue used by FDR when he formed the Social Security act which was a play to off set families losing BUYING POWER due to job loss or retirement. The figures in that day said one man loss of income destroyed some 4 to 5 people in a family who no longer had money to expend. That disrupted the economy which DEMANDS that buyers be available. I would admit that we need to reset the benefit based on life expectancy which was the original way Social Security was constructed.

  8. Gregory Iwan
    February 19, 2012 at 2:30 pm

    Today there would be a helluva lot more BUYERS and DEMAND, if corporations would loosen those trillions just gathering dust in the CEO’s desk, and HIRE. That’s how it’s done, in a REAL economy.

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