According to Pew Research, this year the Millennial generation (ages 18 to 34 in 2015) is projected to surpass the Baby Boom generation (ages 51 to 69) as the nation’s largest living generation — with 75.3 million Millennials vs. 74.9 million Boomers. The Gen X population (ages 35 to 50 in 2015) is also projected to outnumber the Boomers by 2028. Where will Social Security be for them when they retire?
The Social Security trust funds will start paying reduced benefits to the disabled and retirees if Congress doesn't do something very soon to shore up its finances. Via another post at the Economic Populist:
Because the Social Security disability trust fund is projected to pay 19% less in monthly benefits to recipients sometime in 2016, and because the old age trust fund is projected to pay only 75% of benefits to retirees by the year 2033, the current debate is two-fold: shoring up the disability trust fund with revenues from the old-age trust fund (as it's been done 11 times before); and shoring up the old-age trust fund for retirees by raising the $118,500 income cap for Social Security payroll taxes.
In a recent town hall meeting Ohio's Republican Governor John Kasich dusted off a very old and failed idea when he referenced his 1999 Social Security plan (which most Republicans support) that would base future Social Security payments on the Consumer Price Index, which reflects increases in prices, rather than the current formula that reflects increases in wages. The results would have been that the average worker beginning to collect Social Security in 2020 would have received almost $4,000 less in their first year of retirement than he/she would have otherwise expected to receive under the current formula.
Also, the difference increases with time. By 2070, newly retired workers (including young Republicans) would have received almost half as much than they would have received under the current program.
And almost all the career GOP politicians are STILL pushing for this — including some newbies who are towing the old GOP line, just to advance their careers to get ahead in the GOP party machine. After all, the older politicos already have their Social Security benefits locked up, including their federal pensions. It's their aides, secretaries and campaign supports that they plan on sacrificing on the block of "fiscal austerity" — not themselves.
Kasich had claimed that those workers could make up the difference by investing (gambling) part of their payroll taxes in the stock market. Could you imagine retiring during the last recession when the first Baby Boomer had retired — after the DOW had dropped from a high of 14,164 in October 2007 before bottoming out at 6,547 in March 2009? All those old folks (Republicans and Democrats alike) would have been so screwed!
Kasich's plan (then and now) would have allowed workers under age 55 to voluntarily divert some of their Social Security taxes into private accounts. The lowest-wage workers would be allowed to divert the largest portion of payroll taxes (up to 3.5 percent of their wages) into private accounts. Workers earning more than the maximum income taxed by Social Security (capped at $72,600 in 1999) would have been allowed to divert only 1 percent. His proposal would not affect current retirees, nor those workers 55 and older — or as he currently says: "At or near retirement."
In other words: John Kasich and the GOP would stiff young Republicans — and everybody else under 55 — the Millennials, Gen X, Gen Y, Gen Z and your future great-great granddaughters (etc.) on Social Security — but older workers (the Boomers and the Greatest Generation) would have nothing to fear but fear itself.
The older GOP politicos will throw young Republicans under the bus right along with everyone else — and that's why it so odd to see those young fresh faces at the GOP rallies, smiling and clapping, all while they're getting something very unpleasant rammed ... it's just pathetic ... and if anything, we should pity those young people who just don't seem comprehend what their GOP "heroes" are actually proposing for them.
In a post at the Economic Populist, it's noted how stagnant wages has affected the funding of the Social Security trust fund, and why raising or eliminating the cap should be implemented to make up for the shortfall (something the GOP won't do, because it only taxes the rich). Via the economist Dean Baker at the Center for Economic Policy Research (per the 2015 Social Security trustees report) where he wrote:
Wage growth is the key to the program's solvency for two reasons. The first is that the upward redistribution of wage income over the last three decades has played a large role in the projected shortfall. As income has been transferred from ordinary workers to those at the top of the wage distribution, a larger share of wage income has escaped taxation. When the Greenspan Commission set the cap for taxable wages in 1983, it covered 90 percent of wage income. Currently the cap only covers around 82 percent of wage income. If the cap had continued to cover 90 percent of wage income, the projected shortfall would be roughly 40 percent less than it is now.
The other reason why broadly based wage growth is key to the program's continuing solvency is that the burden of possible future tax increases would be much less consequential if most workers will share in the gains of economic growth. The Social Security trustees have projected that real wages will rise by more than 34 percent over the next two decades. (They are projected to rise by another 30 percent over the following two decades.) Even if the payroll tax is increased by three percentage points, it would take back less than one-tenth of the projected rise in before-tax wages if wage growth is evenly shared. On the other hand, if most of the gains from growth continue to go to those at the top end of the distribution, any tax increase will be a major burden.
Currently about 94% of all wage earners pay Social Security tax on 100% of their incomes (those who are earning $118,500 or less a year). Some Democrats want to raise the cap to $250,000 — almost 99% of all wage earners make $250,000 or less a year — so the top 1% still escapes paying this tax, and the top 0.01% (the multi-millionaires and billionaires) are exempt from paying this tax on ANY of their capital gains — where the majority of their income originates (because they aren't paid a "wage" per se).
In the 4½ minute video below is the Republican Ohio Governor (John Kasich, now as a 2016 Presidential contender) at a recent town hall meeting in Salem, New Hampshire last week. Jane Lang, a vice president of the Alliance for Retired Americans, asked whether he would look at expanding Social Security and scrapping the "cap" on earnings that are subjected to Social Security payroll taxes (currently capped at $118,500 a year in income subjected to this tax).
John Kasich said that eliminating the cap would essentially make 99% of workers welfare recipients if we start taxing the 1% more by "de-linking" Social Security benefits — meaning, having them pay this tax on all earnings above $118,500 a year, but without also proportionately paying them more in benefits. They won't raise wages in proportion to worker productivity and profits, so what's the difference? Doesn't that in some way also make the wealthy "job creators" welfare recipients?
As John Kasich sought to wrap up Jane Lang's question while reaching for the microphone, she said she wasn't done. Kasich: "How about a handshake and a little hug?" he condescendingly asked her as he pulled her in for a brief embrace (The young fresh faces in the crowd laughed, grinned, cheered and clapped). Then Kasich said, "Listen, she's steamed up, and I don't blame her." Then he launched into a long-winded and meaningless response to her original question — a political tactic that Hillary Clinton and most other politicians often use when they don't want to honestly answer someone's question. Or as W.C. Fields was quoted:
“If you can't dazzle them with brilliance, baffle them with bullshit.”
John Kasich never really gave Jane Lang a direct answer. Later she said, "I thought the whole meeting, the whole thing was danced around." And the same thing happens whenever someone specifically asks for a "yes" or "no" question. The politician always feels the need to bloviate, pontificate and elaborate on a litany of issues that isn't even related to the one simple question that was initially asked by someone (also known as "Clinton Speak").
(* The full unedited video of Kasich's town hall meeting is here at C-SPAN)
John Kasich's views on Social Security are similar to almost ALL Republicans — with the exception of Donald Trump. Via ThinkProgress:
Trump has strongly criticized the rest of the Republican field for advocating deep cuts to programs relied upon by the elderly, the disabled, and the poor. In April at the New Hampshire Republican Leadership Summit Trump said that he was “disappointed with a lot of the Republican politicians.”
“Every Republican wants to do a big number on Social Security, they want to do it on Medicare, they want to do it on Medicaid. And we can’t do that. And it’s not fair to the people that have been paying in for years and now all of the sudden they want to be cut,” Trump said.
Jeb Bush, a favorite of the Republican establishment, quietly proposed [last month] that Medicare — a program relied upon by millions of people — be “phased out.” Virtually the entire Republican field supports reducing entitlement programs through cuts, privatization, or both.
A few of the Democrat's different plans for Social Security
Former Gov. Martin O’Malley of Maryland announced a proposal to expand Social Security, enhancing its benefits while holding the retirement age steady — not raising it to 70 as the GOP would like to do — or eliminating early retirement at age 62 as John Kasich suggested at his town hall meeting.
As to O'Malley's ideas, Senator Bernie Sanders of Vermont [who caucuses with progressive Democrats] has expressed similar views — but Hillary Clinton has yet to weigh in on the issue, and progressive groups that are closely aligned with Senator Elizabeth Warren’s wing of the party (many who now support Bernie) have been pressuring Hillary for more details on her plan for Social Security.
The New York Times did a recent post on this: ("Groups Press Hillary Clinton on Protecting Social Security") noting that progressive Democratic groups want to hear more from Hillary Clinton on Social Security:
The Progressive Change Campaign Committee, Democracy for America and MoveOn.org all pressed her to join her rivals for the Democratic presidential nomination in promising to, not just protect Social Security, but expand the program. “Any candidate who wants to secure the Democratic nomination must commit — clearly — to not only defending but expanding the social safety net,” said Nick Berning, a spokesman for MoveOn.
Jim Dean, of Democracy for America, also asked Mrs. Clinton to show solidarity on the issue: “With Martin O’Malley and Bernie Sanders proudly campaigning on the popular idea of Social Security expansion, the only question is whether the other major candidate in the 2016 race is going to join them.”
The centrist Third Way group [who Hillary Clinton is a part of] panned O’Malley’s plan as "political pandering". [The centrist Third Way group also attacked Senator Elizabeth Warren's plan for expanding Social Security.]
O’Malley will set himself apart from frontrunner Hillary Clinton by calling for increasing the number of Americans with access to adequate retirement funds by 50 percent over two terms in office ... The plan would boost monthly Social Security benefits for retirees, though O’Malley’s campaign did not say precisely by how much. For Americans who have been in the workforce for 30 or more years, the plan would increase minimum payouts to 125% of the poverty line, and it would also well increase benefits for minimum wage and lower-income workers. It would tie benefits to the Consumer Price Index for the Elderly, which O’Malley’s campaign sees as a more accurate basis for determining payouts. A number of Republican presidential contenders have called for reducing Social Security benefits (except Donald Trump), either by raising the retirement age or privatizing the program. Democratic frontrunner Hillary Clinton has promised to “protect” and “enhance” Social Security, while Vermont Senator Bernie Sanders has promised to expand it with a more detail plan than O’Malley’s. [Sanders’ plan would increase Social Security by a modest $65 a month for most recipients, but it also raisees the cap to properly fund the program for years to come.]
In an op-ed published in the Quad-City Times in Iowa (first, you have to answer an annoying survey question to read the post) O’Malley makes his case with an implicit jab at Clinton, whose call to “enhance” Social Security is seen by some progressives/liberals as intentionally ambiguous. Just like Bernie Sanders, O’Malley writes that Democrats should expand Social Security benefits, “not cutting or merely ‘enhancing’ them.”
As a nation, we must do far more to ensure the retirement security of American families. And we should start by expanding Social Security benefits — not cutting them or merely “enhancing them” — to provide a foundation for a more secure retirement to all those who have worked hard to achieve it ... Social Security is not in crisis. It is not bankrupt, and it would not be better off if it were privatized and run by Wall Street ... We collect the payroll taxes that fund Social Security. Right now those taxes are capped, so that they only apply to the first $118,500 of a worker’s income. This essentially means that millionaires stop paying into Social Security in mid-February, while middle class workers contribute a portion of their wages all year. I am proposing to lift the payroll cap for the highest earners, starting at income above $250,000. In this way, only wealthier Americans would be asked to pay additional payroll taxes, and we could still raise enough revenue to shore up Social Security’s finances for generations to come ... I would also reform Social Security to support, rather than penalize, caregiving. Women who take extended time off to care for their families should not receive lower Social Security benefits when they retire ... It is especially important that we raise wages for all workers, because when 70 percent of us are making the same or less than we were 12 years ago, fewer and fewer of us will be able to save enough for a secure retirement."
Representative Mike Honda (CA) is introducing legislation (CPI-E Act of 2015, or H.R. 3351) that will require Social Security Cost of Living Adjustments (COLAs) to be based on the Consumer Price Index for the Elderly (CPI-E). This index more accurately reflects the actual cost of living for older Americans which can sometimes be higher because seniors spend more on housing and health care than the general population. This is NOT what the GOP or Third Way Democrats want to do (Obama and other Third Way Democrats actually proposed cutting COLAs with chained-CPI — which Bernie Sanders and progressive Democrats were against.)
The progressive Roosevelt Institute Fellow Mike Konczal wrote a piece at Democracy Journal titled The Voluntarism Fantasy: "Conservatives dream of returning to a world where private charity fulfilled all public needs. But that world never existed—and we’re better for it."
In the wake of the Great Recession, charitable donations fell at the moment people needed it the most. Konczal says that a public social insurance state can manage risk better than individual donors. Note the big difference between a privatized program for Social Security vs. a government-backed program. (Konczal's podcast is here at Talk Poverty at the 46-minute mark of Episode #015).
Maybe Konczal should have also noted that, of the charities that we do have, many (such as Bill Gates and the Clinton's foundations) does it's charity on a global scale, and doesn't just concentrate it's efforts on fallen Americans. For example, they wouldn't have paid millions of Americans unemployment benefits. And Religious organizations and local food banks could not have matched the SNAP program; nor could charities afford to pay them a retirement benefit — or a disability income if they were sick or injured.
Here are a few different plans for Social Security proposed by some of the Democrats, just to compare with Ohio's Republican John Kasich's plan and the rest of the GOP:
Elizabeth Warren: Protect, expand Social Security (December 2013)
Friends don't let friends vote for Republicans — or for Third Way Democrats, who are EXACTLY the same as "moderate" Republicans on the economic issues. Vote for either Bernie Sanders (as a Democrat) or Donald Trump (as a Republican) to save Social Security, raise wages and to stop outsourcing our jobs. Even billionaire Donald Trump thinks the rich should pay their fair share of taxes.
As Senator Bernie Sanders said: we need "a political revolution", not more of the same old BS that we've been getting for the past 35 years. It's career politicians who are bashing other politicans as "career politicians". It's government workers (politicians) bashing other government workers. It's government politicians (with their big government salaries and big government allowances) who are bashing "big government". It's hypocrites (politicians) who are hypocritically bashing each other as "hypocrites".
"Fool me once, shame on you..."
The voters are looking for real and genuine people (whether we agree with them or not). You might not like Donald Trump's policy on immigration, but at least he won't be beholden to slimy corporate lobbyists — and he won't cut Social Security. Bernie Sanders may lack Trump's showmanship, but he has very solid ideas on tax reform, reigning in the banks, the offshoring of jobs, raising stagnant wages and strengthening and expanding Social Security so that the program will still be there long after the Millennials have retired — and when the old GOP party guard will have been long gone.